Coursera Inc. is an online education provider that offers students access to massive open online courses (MOOCs), specializations, and even degrees. Founded in 2012 by Stanford computer science professors Andrew Ng and Daphne Koller, Coursera doesn’t actually create educational content itself. Rather, the company partners with universities and other organizations to provide them with an online platform that students pay to gain access to.
Coursera first began working with a handful of pilot schools (Stanford, Princeton, University of Michigan, and University of Pennsylvania) to bring a handful of their more popular courses online. Today, Coursera also partners with businesses, governments, and nonprofits. As of this writing, Coursera is partnered with 192 institutions from 43 countries and offers more than 3,200 courses in 13 languages. Its base of users, who Coursera calls “learners,” has grown from 26 million in 2017 to 40 million in 2019. This makes Coursera the largest provider in the online education market, which is projected to be worth between $42.97 billion and $65.48 billion worldwide by 2026. Partners are are incentivized to use Coursera because the company pays their partners 6% to 15% of gross revenues for the courses of that partner.
Coursera is a private company that, according to Crunchbase, has raised $313.1 million over nine rounds of fundraising and currently has $180 million in the bank. According to Forbes, the company is worth well over $1 billion and earned an estimated $140 million in 2018, up from an estimated $100 million in 2017.
The Business Model
MOOCs were first created by people with utopian visions for the internet. This means the idea for platforms like Coursera was likely conceived without a business plan in mind. Nonetheless, over the past seven years, Coursera has managed to monetize its platform. It is worth noting, however, that monetization has lead to the effective elimination of the original MOOC idea, which is predicated on ideals like free and open access, as well as the building of online communities. Today, Coursera users must pay to engage with material in a meaningful way and take courses for individualistic purposes. This has been a consistent trend among all major online education platforms.
Coursera has achieved a stable business model by offering products at a wide range of prices. These include over 3,100 courses that are free to audit, “Signature Tracks” for $30 to $100, “Specializations” for $39 to $89 monthly subscriptions, online degree programs for $15,000 to $30,000, and “Coursera for Business” for $400 per employee per year.
- Coursera offers products at a wide range of prices, from free-to-audit courses to $30,000 degree programs.
- Coursera has raised $313.1 million over nine rounds of fundraising.
- Forbes valued Coursera at over $1 billion and estimates the company made $140 million in 2018.
- Coursera is partnered with over 190 universities, businesses, and nonprofits.
Coursera has raised over $313.1 million over nine rounds of fundraising. On April 25th, the company secured a $103 million investment in a round lead by SEEK Group, an online employment marketplace and a global leader in investing, scaling, and operating online employment and education businesses. This latest round has increased speculation among industry experts that Coursera might be nearing an IPO.
The lectures for the majority of the courses Coursera offers are free. However, students who wish to earn a certificate of completion can opt to pay a per-course fee to participate in the "Signature Track." This feature, which Coursera launched in January 2013 and that became a platform-wide norm in 2015, gives paying students access to graded assignments, homework, and examinations. If completed in a satisfactory manner, Signature Track students earn a verified certificate at the end of the course, which is emblazoned with the name of the course and the university that provided its content. Students can then show these certificates to employers to prove their professional qualifications and acquired skills. They cost between $30 and $100, depending on the course. Coursera also offers financial aid to students who can demonstrate need, although the requirements for such aid have become increasingly stringent as the company has grown.
These certificates, which afford the platform legitimacy in the eyes of employers, have become the backbone of Coursera's business. Coursera's other business sectors, like "Specializations" and degree programs, also use certificates.
The Signature Track was the Coursera’s first successful attempt to monetize its platform. Just over a year after launching the Signature Track, Coursera had generated more than $4 million in cumulative revenues from it.
Although most courses on Coursera can be audited for free, students must pay for access to graded assignments and course certificates. This model is the backbone of Coursera's business.
A year after it launched the Signature Track, Coursera launched “Specializations.” This feature is essentially a bundle of different courses designed to help students deepen their expertise in a certain area; to specialize, if you will. Students pay monthly subscription fees of between $39 and $89, depending on the Specialization, for access to graded assignments and the eventual certificate.
Coursera for Business
In 2016, Coursera launched Coursera for Business. Through this feature, Coursera began partnering with businesses who need an online platform to train their employees. At least 27 businesses offer courses through Coursera and over 1,800 businesses use the service, up from 500 at the end of 2017. This includes massive organizations like the Abu Dhabi School of Government with 60,000 users. This service costs businesses $400 per employee per year. Due to its high price and growing customer base, especially among massive organizations, Coursera for Business has quickly become a key piece of Coursera's monetization strategy.
Finally, Coursera offers students the possibility to earn fully-accredited degrees on its platform. Coursera offers 14 degree programs from top universities, including popular programs like MBAs, machine learning programs, and computer science programs. In Jan. 2018, Coursera announced 1,632 students were enrolled in degree programs and that the company had earned $9.8 million in revenue from said students. These programs cost between $15,000 and $30,000.
The average age of Coursera students in degree programs.
Backing up High Growth with High Revenue
In order to secure more rounds of investment, Coursera will have to demonstrate predictably high revenue growth going forward. New features and a quickly growing user base is one thing, but the ability to monetize these things effectively is another. Currently, only 40% of paying students finish the courses they enroll in. Coursera needs to find ways to boost this number, because more completed courses means more additional courses purchased. According to Dil Sidhu, the company’s Chief Content Officer, Coursera is planning on employing more data analytics tools (read: AI) to study why students don’t complete courses and adding behavioral sciences lessons to coach students to be more disciplined.
During its 2019 partner's conference, several panelists also urged those offering courses to "break the fourth wall" by adding more personal touches to lessons. The thinking here is that by making online education a more accurate simulation of classroom learning, it will become more engaging. To the same aim, speakers spoke about the need for more interaction between teachers and students. This would mean that universities would have to make more professors available to interface with online students.
Partnering with Governments and Big Business
Coursera’s deal with the Abu Dhabi School of Government, as mentioned above, is representative of another growing trend in Coursera’s business: partnering with governments and businesses with massive workforces. Coursera also currently works with Singapore, Egypt, and India. In a conversation with Forbes, Coursera’s CEO, Jeff Maggioncalda, cited a McKinsey report that warns of 50% of today’s jobs being at risk of replacement by automation. Coursera plans to capitalize on a product of this trend: increased demand for retraining and lifelong education. And the company seems to be doing just that. It already services over 60 Fortune 500 companies, including Amazon (AMZN), Google (GOOGL), and P&G (PG). And as automation continues to increase the demand for retraining, this number will likely rise.
The number of American jobs that could be eliminated by automation by 2030.
Coursera’s biggest challenges are maintaining its revenue growth and competition. The details of this first challenge are difficult to parse, since Coursera’s financials are still confidential. However, it is easy to see that the online education space is becoming increasingly crowded. Companies like Pluralsight, edX, Udacity, and LinkedIn all offer services comparable to Coursera’s. In order to stay on top of the heap, Coursera will need to grow at increasing rates in the years to come. Perhaps the company’s keenly-awaited IPO will inject it with the capital it needs to do this.