Super cheap online higher ed

Altius raised $8M from Spark and Maveron.  It’s an online community college that partners with 4 year colleges.  This week I also talked to two new $99/mo online schools that offer GenEd courses.  If colleges think they’ve got budget problems, wait until 20-30% of underclassmen are knocking off most of their GenEd requirements online for $2000.
I asked one Altius backers about their areas of interest.  He said online post secondary and language acquisition–both exploding with cross border potential.  He asked why he should care about US k-12 as a market.  Like the Union Square ‘hackers,’ VC interest in learning is growing, but there’s great reluctance to jump into the US k-12 space because it is an inefficient low growth sector.
My answer was $25B x 2.  Of the roughly $600B market, the instructional materials and related services component is about $25B.  That includes textbooks, tests, instructional technology, professional development, and student support services.  This sector will go through a shakeup over the next 10 years and it will more than double in size as education becomes a blend of online and onsite learning.
The second reason is the English language market outside the US.  Learning tools and formats with cross border potential will have an easier time getting funding.  Perhaps even more common will be innovations developed in India and China imported to the more hidebound US market.
A third important reason is improved outcomes–we won’t achieve the results we seek without incorporating innovative learning tools and blended formats.  However, the greater good doesn’t factor in to most venture funds.  But the good news is that there are a growing number of explicitly double bottom line funds like City Light Capital for whom impact is a prime motivation.

Tom Vander Ark

Tom Vander Ark is the CEO of Getting Smart. He has written or co-authored more than 50 books and papers including Getting Smart, Smart Cities, Smart Parents, Better Together, The Power of Place and Difference Making. He served as a public school superintendent and the first Executive Director of Education for the Bill & Melinda Gates Foundation.

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