Udemy raises $1M in seed financing

Bambi Francisco Roizen · August 31, 2010 · Short URL: https://vator.tv/n/1179

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.

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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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Udemy is a website that enables anyone to teach and learn online. Udemy tries to democratize online education by making it fast, easy and free to create online courses. Udemy is an open platform, so anyone can build an online course by posting videos, presentations, writing blog posts, or hosting live virtual classroom sessions.

Udemy tries to solve a simple problem: there are millions of smart people in the world (authors, speakers, coaches, trainers, subject matter experts and teachers) who want to teach over the internet. Currently, it costs $10,000 to create a website to teach, and there are thousands of instructors doing this (we've talked to them; they hate it). We provide instructors with the ability to create their own course without any up-front costs. That way, they no longer have to deal with the technology and can focus entirely on teaching.

Udemy Live is Udemy’s live virtual conferencing and classroom tool. It is entirely web-based and built on component architecture. Each component was built separately, and there is an internal API so third party developers can build components on top of Udemy’s virtual conferencing tool. The API is not currently public.

Udemy was founded by MobileCrunch writer Gagan Biyani, Eren Bali and Oktay Caglar. Eren and Oktay worked at SpeedDate.com, an online dating site that has received over $8M in funding from Menlo Ventures.

Udemy will start by focusing on a specific niche: Poker education. We will roll out Udemy to enter the $100M business of online poker education. Udemy has deals with more than 15 extremely popular poker instructors to teach on Udemy Poker over the internet. After that niche, Udemy will begin to enter additional markets in which there is a willingness to pay by consumers and a clear set of high-quality instructors interested in teaching.


Dave McClure

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Gagan Biyani

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