Every year as broadband reaches more people, online education keeps growing and growing. So far, though, most online education focusses on vocational courses, test preparation, or supplemental tutoring. One startup trying to bring entire degree programs online is 2tor, which just closed a $20 million Series B funding at a rumored valuation of around $100 million. Highland Capital Partners led the round, with previous investors Redpoint, Novak Biddle, and City Light Capital participating. Last June, the company raised $10 million in a Series A.
“What is unique about 2tor is they are the first online education program to go after the high end—elite programs at elite schools,” says Paul Maeder, a founder and general partner at Highland who will be taking a board seat. 2tor was founded by John Katzman, who previously founded test-prep giant Princeton Review. Originally, he wanted to start 2tor as a division of the Princeton Review, but it goes after such a different part of the education market that he decided to pursue it as a standalone startup instead. In partnership with universities and graduate programs, 2tor designs and produces fully-accredited online degree programs, and even recruits the students as well.
The first school to use 2tor is USC for its Masters of Art in Teaching. USC faculty teach the course, which they help design, and 2tor provides the technology platform. Students from all around the country can take classes online, watching high-quality video lectures, check assignments, sign up for online office hours, and use online chat to talk to other students. “It is more like Facebook than like Blackboard,” says Katzman, (Blackboard is one of the more established online learning platforms). “What’s great about a great university are the other students. You want a platform that at its core is conversation,” says Katzman.”
The USC graduate program in teaching has about 75 students on campus, but almost 750 online who all pay the same tuition. “The notion that if you are a professor there you can help dozens of students in southern California is great,” says Katzman, “but the notion that you can help thousands of students across the country is even better.” The promise of online education is that schools are no longer constrained by physical location or classroom size (although each online class itself can be smaller in number of students).
Katzman is in negotiations with more universities to open up two or three more programs this year. Initially, he is concentrating on graduate programs for nursing, MBAs, and possibly engineering. Each program is designed in partnership with the faculty who come up with the curriculum and teach it, with 2tor then acting as the producer, student recruiter, and IT shop. Revenues for each class will be split between the universities and 2tor.
“Education is an enormous market still being delivered by and large the way it was by Socrates,” says Maeder. “It is a mediocre educational experience to lock people in a room and talk at them for an hour and a half.” He thinks 2tor can help change the way people learn.