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, Lynda.com 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, Bloomberg.com’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, Lynda.com 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 Lynda.com. 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 Lynda.com 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, Lynda.com 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, Lynda.com 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.

Original post is Lynda.com Lands $103 Million in Biggest Education Financing by Tech Deals.

Photograph courtesy of Quizlet

Quizlet founder Andrew Sutherland (left) hasn't found the need for venture capital.

This is the third in a five-part series called “No VC,” which highlights startups that have succeeded without venture capital, the lifeblood of Silicon Valley.

(This post was updated to correct the site’s pricing to $15 a year.)

One night this past summer, Andrew Sutherland was eating takeout at the office of his San Francisco-based startup, Quizlet, when a knock came at the door. He answered to find partners from a well-known venture capital firm. Based on the e-mails and phone calls he received from the firm before, Sutherland surmised they wanted to discuss a possible investment.

“I guess they thought that if they couldn’t get in through other channels, maybe we’d take an in-person meeting,” he said. “We turned them away.”

The 22-year-old  Sutherland has rebuffed numerous investors since becoming one of the hottest new stars in education tech. Quizlet, the program he created as a high school sophomore to prep for a French exam, has grown into one of the most popular study tools for students. The website has more than 12 million unique visitors a month and the company’s app has been ranked as one of the top educational programs in Apple’s App Store for the past three months.

Yet unlike high-profile startups such as Inkling and Kno, which have raised tens of millions of dollars from VCs eager to cash in on the boom in smartphones and tablets in the classroom, Quizlet remains entirely bootstrapped.

“We don’t need the money right now,” said Quizlet Chief Executive Officer Dave Margulius. He said the company is cash-flow positive and predicted that revenue would surpass $10 million in two years.

Quizlet became profitable soon after it was created in 2005, according to Sutherland, who built the flash-card program for the Web and supported it by selling Google AdSense promotions that let marketers place ads on the site. As the game grew more popular and server costs rose, he raised $30,000 from friends and family and invested profits from a separate site he helped to create — an e-commerce service called Collectors Weekly — to grow the business.

He also hired Margulius — a tech veteran who founded Boston.com in the early 1990s and worked as an executive at Evite — to help run Quizlet while he attended MIT. Last year, Sutherland dropped out of college to focus on Quizlet and help produce its first app for Apple’s iPhone.

Investors may like Quizlet because it’s not selling anything to school administrators or teachers, which usually involves clearing red tape and waiting out budget approvals. Instead, the simple and fun-to-use app appeals directly to students.

“A kid in California can create a Quizlet around a topic and 45 kids in South Carolina who don’t even know him can leverage that for their own studying,” said Semil Shah, an entrepreneur-in-residence at Javelin Venture Partners who has written about education for the blog TechCrunch.

Aside from selling ads, Quizlet also offers a $15-per-year version with no advertisements.

While Sutherland sees sales continuing to grow at least 150 percent a year for the foreseeable future, he’s more focused on getting his service into the hands of more students around the world. That’s a vision that may be at odds with outside investors, he said.

“A lot of VC companies go for a subscription business and try to monetize quickly,” Sutherland said. “We can build a bigger business that can serve a lot more people if we’re more open and not trying to get money out of every single user.”

Original post is No VC: Education Startup Quizlet Makes the Grade Going It Alone by Tech Deals.

Courtesy of Udacity

More than 753,000 students worldwide have signed up for Udacity since January.

Udacity, the digital university co-founded by artificial intelligence and robotics pioneer Sebastian Thrun, has raised $15 million, joining a crop of online education startups to attract venture capital this year.

The financing was led by Andreessen Horowitz and included existing investors Charles River Ventures and Steve Blank, the startup guru who teaches at Stanford University. Udacity, based in Palo Alto, California, has raised $21.1 million in the past year.

Thrun, who invented Google’s self-driving car and is a professor at Stanford, started Udacity last year to offer free courses in computer science, math and sciences. More than 753,000 students worldwide have signed up since January.

Peter Levine, a partner at Andreessen Horowitz in Menlo Park, California, and lecturer at Stanford’s business school, said Udacity is designed to serve the masses of people who can’t afford the tens of thousands of dollars a year required for a university education in the U.S.

“Around the world there’s a supply and demand problem,” said Levine, who’s joining Udacity’s board. “This makes Stanford-quality content and coursework available to millions of people who don’t have access to any higher level of education.”

Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.

Venture capitalists are flocking to education startups after avoiding the market for decades because of the regulatory restrictions and challenges selling to colleges and school districts.

Coursera, started by two Stanford computer science professors, said it raised $16 million in April from New Enterprise Associates and Kleiner Perkins Caufield & Byers. That month, 2U (formerly 2tor) announced a $26 million financing to bolster its services for offering degrees online. Codecademy, a site that teaches basic programming skills, said it raised $10 million in June from firms including Index Ventures and Kleiner Perkins.

Venture investing in education technology rose to $463.1 million through the first three quarters of this year from $457.2 million in all of 2011, according to the National Venture Capital Association.

With more than 2.4 billion Internet users across the globe and over 1 billion smartphones in use, investors are betting that money-making opportunities will emerge. Over the course of the next decade, the college system is going to have to adapt to these new learning opportunities, said Scott Sandell, a partner at New Enterprise Associates and Coursera board member.

“It’s an incredible productivity enhancement and that has to create economic pressures in higher education broadly defined,” he said. That doesn’t mean Stanford and other top universities will go out of business, just that they’ll have to “reinvent themselves a little bit,” he said.

Udacity plans to generate revenue from employers using the system to seek out talent and by providing certification in specialized areas. The company also offers courses sponsored by corporations looking to teach high-tech skills.

While Udacity is working on its business model, Thrun said his primary focus remains changing the way content is taught to make it more enjoyable. That includes interactive lessons that allow students to work at their own pace and engage with the thousands of other people taking the same course.

“Our aspiration is to make learning as much fun and engaging as a video game, so people get addicted to learning,” he said.

Original post is Udacity Raises $15 Million as Money Pours into Online Education by Tech Deals.

Net Power & Light

Net Power & Light's technology provides virtual gatherings where users can view videos together and interact in real time.

Harvard University Professor Michael Sandel’s lectures on justice, one of the school’s most popular courses, are also a hit on YouTube. They’ve been viewed millions of times and have elicited thousands of comments. But unlike the students in his class who can actively participate in the discussions, the online audience can do little more than sit there and watch.

Now, a 3-year-old startup wants to change that experience. Net Power & Light, based in San Francisco, is making its debut with technology it calls Spin that turns online education into a group activity, even if the participants are on opposite sides of the globe.

The company has released three free iPad apps that allow users to create virtual gatherings where they can all watch educational content together from sources such as Harvard, Stanford University, TED and the National Geographic Channel. Users can also fast-forward to the best parts, pause the program so the group can debate a particular point via videoconferencing, or jump to a different clip.

“Teachers felt web-based learning wasn’t giving them the full experience,” Tara Lemmey, co-founder and chief executive officer of Net Power & Light, said in an interview. “Education shouldn’t live by itself. It’s a world of together.”

The sharing, reacting and questioning that occur in group settings enhance the learning experience, which is why Net Power & Light has focused on enabling those types of exchanges in its technology, said Lemmey, a serial entrepreneur who was formerly the president of the Electronic Frontier Foundation.

“It offers great promise of convening groups of people, students and also citizens in general to engage in discussion and debate of important questions,” said Sandel. “It can potentially be a very valuable tool for civic engagement and enriching public discourse.”

Other features in the apps include a shared chalkboard so users can draw on the screen, and individual audio controls for members in your group. Much like a real gathering, more than one conversation might be going on at a time. Enlarging or reducing a participant’s picture on the screen adjusts their volume.

One of the apps, called Together Justice, is built around Sandel’s course. Users can invite others to watch the 12-part series of lectures, which include discussion guides. The Harvard professor also plans to use Net Power & Light’s technology this semester to connect his students with those at universities in Tokyo, Shanghai and elsewhere. It’s part of an attempt to create a virtual classroom where students from around the world can actively participate, he said.

“The global class is the next stage in the experiment,” Sandel said. “We would listen to one another and learn from one another.”

John Seely Brown, former director of Xerox Corp.’s Palo Alto Research Center and a member of Net Power & Light’s board, called the technology a “breakthrough” that adds a new experiential layer to our digital lives.

“I think we kind of moved to a whole new stage,” he said, referring to the emotional bonds the technology could foster by replicating the experience of a physical gathering. “It’s what makes you feel more connected.”

Original post is Virtual Class in Session: Startup’s Technology Bring Users Together by Tech Deals.

By using Upstart, graduates in just about any field can raise capital for their business in exchange for giving up a small share of their income over 10 years. The idea is to give graduates a real shot at starting a company and not just take a traditional job to pay off student loans.

“I think it can be giant, ” said Dave Girouard, the founder of Upstart and former vice president of apps at Google. “It’s a whole new form of risk capital.”

With Upstart, a student creates a profile that includes achievements and goals. The student then chooses the funding amount, and Upstart calculates the percent of income the student will have to share during repayment. There is no repayment in years when income is less than $30,000. Backers can commit funds in increments of $1,000. Mentoring and support are also provided.

The company will make its platform available to students and recent graduates in September at Arizona State University, Dartmouth College, Rhode Island School of Design, University of Michigan and University of Washington.

College graduates just need some help to get on the path to becoming a business owner, Girouard said.

“They want to kind of do their own thing but most of our economy is not geared to help that,” he said.

Upstart itself has an impressive lineup of backers. They include Kleiner Perkins Caufield & Byers, New Enterprise Associates, First Round Capital, Crunchfund and Mark Cuban, owner of the Dallas Mavericks.

Original post is Upstart Aims to Crowdfund Entrepreneurial College Grads by Tech Deals.

Photograph by Lisa Pines

Venture capitalists have been pouring money into online education services this year.

Education has long been a challenging market for startups because it’s hard to sell into school systems and students tend not to be flush with cash.

New Enterprise Associates thinks that’s ancient history. The venture capital firm announced today it led a $25 million investment in Edmodo, the social-networking service for teachers and students in kindergarten through high school.

Earlier this week, the firm added to its stake in Coursera, a site for higher education classes, which NEA first backed in April as part of a $16 million investment with Kleiner Perkins Caufield & Byers.

NEA and other investors see new opportunities in education, thanks to the increasing adoption of smartphones and tablets, and the near ubiquitous usage of social networking tools.

“As a firm we’re very active in the education technology arena, and Edmodo is far and away the most impressive social learning network in K12 education,” Tony Florence, a general partner at NEA, said in a statement.

Both Edmodo and Coursera offer their services for free with the goal of attracting millions of people and figuring out revenue options later. Edmodo, founded in 2008, recently surpassed the 8 million member mark and is being used in 85 of the largest 100 U.S. school districts. The service lets educators connect with each other and their students via a browser or smartphone and provides technology so they can share resources and assignments.

Edmodo, based in San Mateo, California, has raised $47.5 million from investors including Greylock Partners, Benchmark Capital and Union Square Ventures. LinkedIn founder Reid Hoffman is on the board.

NEA is also an investor in EverFi, a site that teaches and certifies students in areas such as financial literacy, student loan management and substance abuse. The company raised $11 million in September of 2010.

Venture capitalists have been pouring money into online education services this year. In January, college collaboration site Piazza raised $6 million, and two months later, Education Elements, which builds software for schools and school districts, raised the same amount. In April, online university The Minerva Project raised $25 million, and Schoology, developer of a cloud-based learning system, brought in $6 million.

Original post is NEA Boosts Education Bet, Leads $25M Investment in Edmodo by Tech Deals.