Education is the best investment of time and money in a crisis. “What makes more sense – to get a specialization on Coursera or graduate from a mediocre university?” “I studied to be a philologist, but I have 7 certificates in Big Data from Stepic and EdX (for example, from this list).
The educational startup market, which managed to overturn the classical educational system, was only firmly established in the world in 2012, and in Russia in 2013. It is unlikely that the question of replacing university education with Coursera specialization would have been even more or less understood in USA about five years ago. However, Coursera itself only appeared in 2012. That is when, for example, edX and Udacity were launched.
Educational startups have a fairly wide range of opportunities for the creativity of their founders in terms of presenting material, interacting with the student, and developing a motivational system. However, we are not only talking about startups – non-commercial projects (like edX), associations of universities like (National Platform for Open Education), and large corporations (like Microsoft Virtual Academy) also work in this market.
There are many business models for educational startups in the international market. Below we will talk about the B2C segment and online projects.
Free course with a paid certificate
The sale of a paid certificate confirming the mastery of a course is the most popular model thanks primarily to Coursera (the project has attracted $146.1 million in six rounds from 12 investors, including the World Bank. The last round took place in late October 2015).
On EdX and Coursera, the cost of the certificate is usually $50-100, depending on the course. The peculiarity and key value of such paid certificates is that the courses are held by the world’s leading universities. It is very difficult to obtain the right to hold such a course for a university.
Selling the training course itself
On the EdX platform (registered as a non-profit organization and runs on open source software, the project attracted $30 million from MIT), the courses posted in the “Professional Education” section are for a fee. They are aimed at mastering highly specialized skills.
Paid courses are also available, for example on Udemy (attracted $113 million in 5 rounds from 16 investors, including 500 Startups at the Seed and Series A stage, as well as Insight Venture Partners).
Udemy itself has free courses in the most popular areas – especially Introductions. More specialized and narrower courses that promise a serious level of insight are offered on a fee basis. Most of the courses range from $9 (for example, this course) to $300, but there are also more expensive ones (for example, this one for $600). In contrast to the Coursera project, an individual can become a teacher here, and as of January 2016, the project already has about 19 thousand registered instructors, thus monetizing their experience.
Some projects offer to get acquainted with the beginning of the course (the first video, homework, or set of materials), and then buy the course itself. The learning process itself is a study of the subject by reading an interactive textbook written “for humanitarians,” with sequential problem solving and lots of commentary. The econometrics course, consisting of 10 topics divided into 32 lessons, now costs C$25 and is designed for the mass audience.
Selling a program from a set of courses
This model is also used, for example, by Coursera, which offers several courses formed into a single specialty, and edX, which called it the “Course Series,” and other platforms. For some projects, buying a package is cheaper than paying for parts separately.
Selling one video of a lesson
The well-known project Besmart raised $4 million from Education Matrix in December 2013, which is a trading platform that allows users to post their educational text, graphics, audio and video files for free, set a price and receive payments upon viewing these materials. The idea of the project is similar to Udemy, but apparently the content on the site is not regulated or poorly regulated, so now the platform site hosts videos on card tricks, hypnosis and, for example, on creating evening makeup.
The difference with Youtube channels is that the videos are intended for a narrow audience, so they won’t be able to reach a large number of views.
Selling a subscription for a certain period
Here we should distinguish two types of subscriptions.
- Purchasing access to content
The most famous project in this area is Netology, which raised $2.7 million in two rounds from Inventure Partners and Buran Venture Capital. The project believes that when paying for a period, students behave more disciplined and take, on average, two courses a month.
In the world, one of the most famous projects is Lynda, which attracted a record $ 289 million in 2 rounds from 4 investors, and in April 2015 was absorbed by LinkedIn. The project specializes in courses on the use of computer programs, in particular graphic editors, and is very profitable.
- Using additional features of the educational resource
A similar model is also called Freemium. Here it is impossible not to mention LinguaLeo attracted $3 million in 3 rounds from 3 investors. Despite its high popularity, elaborate language learning system and gamification, the project has problems with keeping users engaged, who quickly lose interest in the platform. According to the company itself, until July 2015, the service only twice reached self-sufficiency. But in the summer the project halved its costs cutting staff, marketing costs, moving to a less expensive office, optimizing hosting and so on, thanks to which it now has a balanced budget, and also shows growth in key metrics.
The “star” project FRI Easy Ten is on a subscription basis as of 01/21.01 an annual subscription in the AppStore costs 20 CAD). The auto-renewable subscription costs CAD 2.99 per month. The program offers to learn 10 words a day (figure can be adjusted) using “smart reminders”, personalization of vocabulary and Brain Boost methodology.
Advertising offers
This is a classic business model for earning from Internet projects and mobile applications.
Webinar programs
Programs with webinars were launched by Netology, which specializes in Internet professions; we talked about the company above. A large number of projects operate in this segment, and more often than not such programs are difficult to fit into the concept of “startup”, but they are a good example of an educational business. The risk in this case is the large number of programs for which you need to recruit participants for each stream.
Programs with private lessons
A great example of such a business model is the Skyeng project which received a grant of $13 thousand in 2012. Unlike other educational projects, Skyeng aims at learning only one subject – English – but with different levels and goals. A student studies with a tutor via Skype. In general, Skype itself is poorly suited for quality learning – the teacher does not see what the student writes, it is impossible to run simultaneously audio or video recordings and so on, and there are difficulties with checks of assignments. In addition, classes with a tutor are often delayed and do not have a sufficiently clear plan. Actually these problems the founders wanted to solve – have created a consistent program and fully transferred it to an automated platform, which is synchronizing the screens of the student and teacher, and the teacher goes to the plan developed by the company, which they improve.
Students most often there is no sense to start studying with the teacher himself, bypassing the platform, and use Skyeng as a place to meet a tutor: the platform itself is done very well and allows you to go through all the tasks again, listen to notes, record new words in the dictionary, and the prices are at a fairly low level.
Providing additional or exclusive services in an educational environment
This is probably the broadest category of business models. Anything can be an additional service here: a platform for educational and scientific Internet conferences with a large number of participants for universities, a discussion platform. You can create storage bases, like the Mendeley project of the social network for scientists; it raised $2 million from four investors and was taken over by Elsevier in 2013. In its premium account, the platform allows for increased personal or group storage.
One of the most well-known platforms in academia, Academia.edu project raised $17.8 million in 4 rounds from 8 investors for a fee offering to analyze user uploaded content and find similar research topics.
The list is not exhaustive, but these business models can certainly be called the most exemplary on the market.
