Lands $103 Million in Biggest Education Financing

Over the past two years, as money poured into online education startups, Lynda Weinman sat back and operated her profitable bootstrapped company to little fanfare. With 2 million members signed up for’s tutorials on web design, photography and business skills, the company has generated four straight years of 40 percent growth and sales in 2012 that topped $100 million.

Still, the 17-year-old company hasn’t received the publicity of newer ventures such as online higher education startups Coursera and Udacity, computer programming site Codecademy and the nonprofit Khan Academy.

That’s about to change, in a big way.  In the largest U.S. venture financing round on record for an online education company, is announcing today that it raised $103 million led by Accel Partners and Spectrum Equity. The company, located near Santa Barbara, California, plans to invest internationally, bolster its content library with 400 new courses this year, grant stock options to employees and soon air television and radio commercials to promote the brand.

“Our biggest problem is people don’t know who we are,” said Weinman, 57.  “We’ve grown organically and watched other people get all the glory.”

According to the National Venture Capital Association, no education company dating back to 1980 has raised this much money in a single round. Only five have raised more than $100 million total, led by Chegg, which has pulled in $193.2 million over 10 financing rounds, the NVCA said. Since the end of 2010, 36 education startups have raised at least $10 million in venture capital, led by 2U, which brought in $58.6 million in two rounds.

Late last year,’s Tech Deals Blog published a five-part series on startups that have succeeded without venture capital. The founders we highlighted resisted taking money because they wanted to maintain control, were concerned about investors with different visions and didn’t want to be pushed into selling their business or going public.

For all of those reasons and others, has spent the past five years skirting venture capitalists. The company has had term sheets on the table with unimpressive valuations from investors who expected a definitive return within a given amount of time, said Chief Executive Officer Eric Robison. Though he isn’t disclosing the valuation, Robison said this deal is much more favorable and comes with no expectation of an IPO or sale.

“Today, the types of interactions we have with investors are very different and the deal terms are very different,” Robison said. “We got an amazing deal because we waited. There’s no exit plan, no deadline.”

Accel’s Andrew Braccia and Spectrum’s Vic Parker are joining the board. Spectrum is a private equity firm with offices in Boston and Menlo Park, California. Accel is a Palo Alto, California-based venture firm with multiple strategies, including a growth fund that invests in more mature companies, like Growth investments include game company Rovio, the maker of “Angry Birds,” and business software maker Atlassian.

“We look for companies that are bootstrapped and have flown under the radar but built incredible businesses,” said Braccia. “This is a great coming out party for the company.”

Weinman, the author of an early textbook on web design, and her husband  Bruce Heavin, 45, started in 1995. They later opened a brick-and-mortar school in Southern California that offered in-person training. After the dot-com crash and Sept. 11 terrorist attacks in 2001, business dried up because people were less willing to travel and there was waning demand for web experts.

So in 2002, they started producing online videos at a time when many people still accessed the web via dial-up connections. A decade later, with ubiquitous high-speed web access, sells access to its library of 83,000 instructional videos to schools including Harvard University, Yale University and the University of Southern California, as well as companies such as Qualcomm, Walt Disney and Apple. Individual memberships start at $25 a month, and the company sells institutional licenses with discounts.

Along with its 40 percent sales growth, increased its staff by about the same amount last year and now employs 400 people. Even with new players jumping into the online education market, the company insists that it doesn’t need money to fend off competitors. And that’s why the terms were so attractive.

“The best time to take money is when you don’t need it,” Robison said.


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