With $1.1B Valuation, Course Hero Joins the Edtech Unicorn Stable

Feb 12, 2020

Another U.S. education technology company has reached the billion-dollar valuation mark, and with that comes bragging rights to being a “unicorn.” But its CEO winces when he hears the word. He really, really doesn’t want to talk about it.

“I am careful about that term being the focus,” says Andrew Grauer, who co-founded Course Hero in 2006. The word, he notes, “can be backward looking. It becomes problematic if that’s the end goal.”

Soft spoken yet excitable, Grauer would rather let the numbers speak for themselves. The valuation—$1.1 billion, to be exact—comes courtesy of a $10 million Series B round from NewView Capital, whose founder and managing partner, Ravi Viswanathan, will join Course Hero’s board of directors.

NewView Capital also contributed $30 million in what’s known as an employee tender offer, a process in which NewView purchased company shares held by Course Hero employees. (That money went directly to the staff.)

Letting his team cash out some of their stock “was a step in the direction of energizing our employees to build for the next three, five, 10 years,” says Grauer. But, he cautions, “let’s not rest on our laurels.”

By conventional business standards, Course Hero has already hit milestones that have eluded many peers in the same industry. The company has been turning a profit since 2012, according to Grauer. Last year, he says it surpassed $100 million in revenue, largely from the estimated 1 million subscribers who pay $10 to $40 per month.

The Redwood City, Calif.-based company last raised money in 2014, when it was best known as an online destination where students could share notes, assignments and other course materials from classes they have taken. That ruffled feathers early on, particularly as professors claimed copyright over their lecture and test materials, and said that services like these made it easier for students to cheat.

Like online marketplaces—in education and elsewhere—Course Hero has also wrestled with issues of copyright infringement.

Sharing clearly copyrighted print or digital materials is a no-go, as is posting a verbatim transcription of a lecture, says Grauer. But notes are still a gray area and the policies vary from school to school. Grauer says the company enforces the Digital Millennium Copyright Act rigorously, and will usually remove offending materials within two business days.

These concerns have not deterred or disrupted the company’s growth. If anything, Course Hero has doubled down on its model by replicating its resource-sharing platform for instructors and faculty members. In 2017, the company started building a place where they can share their own syllabi, presentations, lesson plans, test questions and other course materials with their peers.

The platform doubles as an opportunity for them to build their personal brands as well. Each faculty member gets a profile page listing their credentials, publications and awards, as well as whatever course materials they choose to share. They can connect with their peers within and across institutions. It looks eerily similar to LinkedIn.

“We’re trying to help educators find and create teaching materials and assessment materials, while helping them get recognized and celebrated for what they do,” says Grauer.

Around this time, Course Hero also started hosting an annual conference to spotlight innovations in teaching practices. Strategically targeted for higher-ed faculty members, the event drew about 450 attendees who joined in person and via livestream last year.

According to Grauer, more than 30,000 college educators across the U.S. and Canada have signed up for the faculty portal.

“When you’ve taught a subject for 20 years, your brain is fried trying to come up with a new twist on a lesson or a problem,” says Barbara Oakley, an engineering professor at Oakland University in Michigan. (She’s taught for 22 years.) “Having these kinds of resources at hand can be very helpful,” she says of the Course Hero platform, where she has a profile.

Still, the issues that emerged with the student platform could rear its head again with this one. Oakley says she wouldn’t be surprised to hear if university administrators got upset at the idea of their faculty members sharing their materials with peers at other institutions.

“There’s always going to be a choir you can sing to, and there’s always a group that you simply cannot reach,” Oakley says of the company’s forthcoming opportunities and potential challenges.

Across its student and faculty resource-sharing platforms, Course Hero claims it has amassed more than 40 million digital resources. Users who upload class materials can access the full library for free. Non-contributors need a paid subscription.

A more nascent effort for Course Hero is developing original content. It has an in-house team that has created study guides for more than 1,200 book titles (think animated Cliff Notes). The company is also working with textbook publishers on interactive experiences that pair reading materials from the book with quizzes on Course Hero. These quizzes can then direct users to study materials from Course Hero’s resource libraries.

The company currently has a little over 200 employees, according to Grauer, and could add another 100 more to its staff by the end of the year. The funding will also support its efforts to grow overseas; international visitors accounted for more than 30 percent of the 400 million visits to its website last year, he claims.

A series of large fundraising deals in a record-setting 2019 for U.S. education technology companies have propelled Coursera, Duolingo and Guild Education to the unicorn stable. Course Hero is the first entrant in 2020. “I think it is a nice milestone, and it does represent scale and accomplishments,” Grauer acknowledges.

But don’t expect him to celebrate too much. He’s already thinking about the next steps for growing the company into a one-stop shop for digital educational materials. “If we can grow the number of subscribers, and grow the associated revenue with it, how do we invest that revenue back into building a bigger and better library platform subscription offering more content from different contributors?”

To aid in that effort, Course Hero could also buy other companies, Grauer adds.


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