MOOCs: Understanding the Financial Picture
There are three main academic providers that offer MOOCs from a wide range of colleges and universities. The types of financing they received is as follows:
EdX: Based in Cambridge, Massachusetts, this nonprofit educational organizer was founded and jointly governed by Harvard University and Massachusetts Institute of Technology (MIT). EdX received $60 million in start-up costs from both colleges, plus an additional $1 million from the Bill and Melinda Gates Foundation.
Coursera: Founded by two Stanford University professors, the organizer has received in $65 million, of which $43 million is from various capital ventures such as the World Bank, entrepreneur Yuri Milner, GSV Capital, International Finance Corp. and more.
Udacity: Born from a Stanford University experiment, Udacity is the smallest of these three educational organizers. It has raised $21.1 million, of $15 million was received in Series B funding from venture capital firm Andreessen Horowitz and other investors.2
For startup companies, these MOOC providers seem to be doing well. However, there will come a time when they will want a return on their investments. There are several ways they can do this:3
- The colleges could pay to sponsor a MOOC class on their own campus
- The educational providers could offer University-branded certifications upon completion of courses that do not offer college credit
- Secure third-party sponsorship of courses
- Charging tuition for some courses
- Face-to-face tutoring, peer assistance, manual grading or academic support
- Mandating state subsidization of MOOCs
- Creating custom courses that would require a fee