2tor Raises $26M D Round To Put Online Degrees In The Same Class As Their On-Campus Rivals

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If you’re unfamiliar with 2tor, this may do the trick. Today, the education startup is announcing that it has closed a $26 million Series D round of financing, led by an affiliate of The Hillman Company, WestRiver Capital, and Silicon Valley Bank Capital, with participation from its existing investors, which include Bessemer Venture Partners, Highland Capital Partners, Redpoint Ventures, Novak Biddle Venture Partners, and City Light Capital. The startup’s significant new infusion of capital brings its total investment to just under $97 million, making it one of the highest-funded education startups in the country — if not the top dog.

So, what is it about the four-year-old 2tor that has attracted this kind of heavy investment? Well, for starters, in spite of growing by leaps and bounds over the last few years, online education is still kind of a joke. Traditionally, it’s been seen as the source of simple (or ineffectual) micro-correspondence courses designed to be supplemental to — not a replacement for — on-campus education. Well aware of the unexceptional quality of many online educational programs, 2tor was founded in 2008 to take the long-view: For online education to become more than just an afterthought, the job would require more than a good idea and some sexy technology.

Rather than point and laugh at higher education, the startup set out to partner with universities to build, administer, and market their own online degree programs, collaborating with institutions to create digital education programs that would not just be equivalent to in-classroom education, but perhaps even better. To do this, 2tor has endeavored to supply universities with the tools, expertise, capital, and global recruiting necessary to lift up online ed by the bootstraps.

Specifically, 2tor has been partnering with graduate-level, degree programs to provide technology platforms that help institutions extend the classroom experience. So far, the startup has partnered with USC’s Rossier School of Education for their online Master of Arts in Teaching degree, as well as the Masters program for Teaching and Social Work, Georgetown’s nursing program, UNC’s MBA program, and today they’ve announced the addition of another program: UNC’s Master of Public Administration. (With plans to go after another eight or so degree programs.)

To give these programs a viable digital educational platform, 2tor developed a web-based infrastructure that enables professors to share materials with their students, provide lectures and interactive lessons, student support service, social interactivity and more. On top of that 2tor has been moving into mobile, releasing an iPad and iPhone app this year that gives students the ability to participate in live, synchronous class sessions via webcam — from anywhere, via 3G or 4G networks. Last month, 2tor added support for Android.

When we last spoke to the startup, it had grown to a staff of more than 370 and had over 3,500 students participating in its first three degree programs, hailing from 30 different countries. And because its mobile and web combo platform gives graduate students access to stuff like an interactive whiteboard, along with the ability to flip through the deck of a slideshow, split off into a break-out session with other students, then hop back into a live webcam class, is a pretty serious upgrade for online education programs.

Of course, it’s not easy (or cheap) bringing institutions on board, especially with the stigma that’s surrounded online education, and that’s much of the reason why we’ve seen 2tor raise nearly $100 million in funding. As Co-founder Jeremy Johnson told us, 2tor has been investing as much as $10 million in each program it creates. Customizing the platform for each program, working with faculty to get them on board, designing intercampus social networking, and synchronous video capabilities has required significant capital investment.

And so far it’s been working. CEO Chip Paucek and COO Rob Cohen tell us that its first three programs have seen nearly 50 percent adoption of 2tor’s mobile apps, and the online programs are collectively seeing a retention rate of over 80 percent. Obviously, with the amount of capital 2tor puts into these programs, it’s in a sense not a surprise, but these programs are being judged by the same criteria with which one evaluates on-campus, in-classroom education. From class size and student-to-faculty-ratio to retention rate and how, for example, graduates of the USC Teaching program place after completing the program.

This allows the programs to keep the same admissions process they have for on-campus education, applying the same criteria for selection to online degree candidates. That, in and of itself, is largely unheard of in online education. Both Cohen and Paucek said that their wives are participating in 2tor’s programs at these institutions, and report that the digital courses are “hard.” And in that way, the startup is on a mission to create online student experiences that graduates talk about as if they’d been living on campus for two years — even if they were living in Siberia the whole time. Not only that, but ensure that the program is just as rigorous.

2tor has also begun to launch a fleet of microsites intended to become online resources for teachers across the country, regardless of level. Certificationmap.com, for example, is a guide to teacher certifications and lays out the steps necessary to becoming a teacher in each state in the U.S., while Teach.com offers info on teacher salaries, prep work, how to teach abroad, etc.

We’re beginning to see a lot of startups take flipping the classroom more seriously, and from digital textbooks to online education, there’s a lot of exciting stuff happening in the space. 2tor is taking just one approach, and so far, it seems to be working well for them, but higher ed is the low-hanging fruit, next, it will be interesting to see if this formula can be applied to undergraduate degrees, then high school, and on and on. The trick is maintaining the quality, and 2tor may be proving that if startups aren’t willing to take the long-view, and get the necessary capital backing, it’ll be an uphill climb.

For more on 2tor, check ‘em out at home here.