Udemy raises $1M in seed financing

Startup attracts 11 angel investors, including Keith Rabois, Russ Fradin, Dave McClure and more

Empowering people with an ability to make connections and the tools to attract an audience is what the Internet is all about. And, Udemy hopes its new round of financing will help them do that for education.

Udemy, the winner of Vator Splash (May), on Tuesday announced it's raised $1 million in seed financing, from some notable names in Silicon Valley, including Keith Rabois (prolific angel investor), Russ Fradin (who sold his company Adify for $300 million), and Dave McClure. 

The San Francisco-based, three-person startup has developed a platform to enable anyone to teach an online course, and make money by charging students. To-date, Udemy has signed up 1,000 instructors, ranging from people teaching poker, to technology geeks teaching Web development/design and Photo Shop. So far, Udemy has attracted 10,000 registered users (including the instructors). 

"The fundamental philosophy [behind the concept] is that people want to share what they know," said Gagan Biyani, co-founder and VP of marketing at Udemy, in an interview with me. On the flip side, people also want to learn. So, they will spend thousands of dollars to buy instructional DVD's and take online courses, Gagan added.

As part of its plans to get traction with both students and instructors, the company plans to focus on building out its instructor base to find brand-name teachers, though it's unclear at this point which vertical - sports, cooking, higher education, etc. - the company will pursue.

"We don't know for sure which brand name teachers we'll be going after first," said Gagan. "But I imagine it will be folks that have an existing online audience and have previously monetized their content (either by writing a book or selling DVD's or something)."

When asked about how Udemy will compete with so much "free" educational material on the Web, Gagan responded: "We believe the value in Udemy is not simply information but a full learning experience about a given topic. For example, it is very easy to get one-off Photoshop tutorials online, but it is near-impossible to find a site that provides you an introduction to Photoshop from A-Z. Furthermore. We believe that higher value instructors don't give as much of their content away for free - and that buying a course will be like buying a book in some ways. Sure, you can find out how to be productive anywhere on the Web, but thousands of people still bought Tim Ferriss's book on the 4-hour work week."

For now, instructors will have to offer their courses for free. But in about a month, Udemy plans on rolling out its monetization strategy by allowing instructors to charge their students. Udemy plans on taking 20% of the fees. Additionally, Udemy will start hiring now that it has some capital to work with. Be sure to check out Udemy's Vator profile to see the job openings.

So, how does it work for an instructor?

It's pretty straight forward. You can check out the lesson I created called: "Lessons Learned for Entrepreneurs." (See image) With the Udemy platform, I can upload video, course material and hold a live session. There's even a virtual white-board feature for diagrams. Students can also talk amongst themselves.

Udemy isn't alone in this education field. There are many sites that are serving as brokers between an educator (of any stripe) and his/her student.

As I've written in the past, Udemy is an enhanced version of iAmplify.com, which launched years ago and had ambitions to get classes online and take a broker fee from each teacher/instructor. Today, it's a platform for teachers/experts to sell their video or audio kits.

There's also EduFire, which was  purchased in July for an undisclosed amount by Camelback Educaiton. Other sites are similar but more narrow in focus. For instance, Tutor.com and TutorVista focus on helping teachers provide tutoring. Learnissimo, Linkua, and iTalki help language teachers find language students.