Launched in 2006, education startup Course Hero started its life away from the attention of venture capital. After launching, the company waited eight years to raise a $15 million Series A. Then, after going another nearly six years without raising venture capital, Course Hero closed two financings in 2020.
Yesterday, the edtech company announced yet another tranche of capital: a $380 million Series C at a $3.6 billion valuation. The financing, led by Wellington Management with participation from new investors Sequoia Capital Global Equities, OMERS Growth Equity and D1 Capital Partners, as well as existing investors, brings a 227.3% increase to Course Hero’s valuation in a little over a year. The business has been cash flow positive and profitable on an adjusted EBITDA basis for over five years, it claims.
The raise comes as a stark contrast to CEO and co-founder Andrew Grauer’s comments in 2020, when he spoke on the “risk and reward of raising capital.”
“If you raise too much money early on, you can get misaligned expectations based on different time horizons set up by different terms of incoming shareholders or investors,” he said. Course Hero’s rapid capitalization today thus suggests that Grauer now thinks that the startup has graduated past a point of dealing with unfavorable incentives from its investors.
And to be fair, his new vision for the company makes a good argument for why he needs so much capital in this given moment.
The founder believes that Course Hero has evolved past its main business model — a place where students can come to access more than 80 million course-specific study resources and guides — into a platform play. Going forward, Course Hero will formalize its mass consolidation mindset, as we’ve seen through its acquisitions of Symbolab, LitCharts, CliffsNotes and QuillBot, as a business strategy.
“We’re working to build a platform that serves the entire learning journey, almost like a productivity suite for learning,” he said. “Each business will continue to build their products and brands, and there’s an opportunity for us to build an ecosystem to integrate the products into each other that create more value for learners and educators.” PR-speak aside, the capital will be used to fuel acquisitions. And we know edtech is full of them.
Grauer estimates that he can grow Course Hero from gaining 2 million subscribers per year to 50 million subscribers per year by 2030 by serving more than just as a “study platform for students and a resource for educators.” Going forward, students will be able to go to coursehero.com like they traditionally have, but also navigate to its broader product and brand suite.
“The last two years we have seen a bigger shift in advancing pedagogy online and the way that we evaluate and assess student comprehension is evolving as a result,” he told TechCrunch. “All of these changes require better, more affordable and effective resources, tools and services to meet the needs of today’s students and educators.”
The co-founder explained that he plans to use the new capital to acquire businesses operating in new verticals, subject areas, grade levels and countries. “This definitely includes a focus on technical topics and skills as well as tool-driven product solutions,” he added. And clearly, there’s still solid room to grow.
Grauer said that Course Hero hasn’t yet begun to “fully dive into crypto and web3,” a movement that could definitely use some translation help to the legions of people who haven’t fallen down the rabbit hole just yet. As the company’s total addressable market becomes broader, and hopefully more diverse, Course Hero will need to evolve to support a whole range of learning needs — not just requests for 24/7 homework help or study guides on the latest lit assignment.
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