USV has invested in the education sector for a bit more than ten years. We kicked things off with an event we called Hacking Education back in March 2009.
We have focused on “direct to learner” businesses and have mostly avoided investing in companies that sell to the established education system.
This has been a good strategy and we have assembled a fantastic direct to learner portfolio that includes companies like Duolingo, Quizlet, Skillshare, Codecademy, and Outschool.
We’ve been doing some work to understand this portfolio in the light of this remote learning moment we are in.
This portfolio reaches hundreds of millions of learners all around the world each month. Many learners use these products for free. A small percentage of learners pay. And yet this portfolio will generate close to a half a billion dollars of revenue in 2020.
Another interesting thing about this portfolio is that none of these companies have spent a lot of capital building their businesses. They have all been very capital efficient and most are cash flow positive at this point.
What this tells me is that direct to learner businesses are very attractive. They can serve a very large number of learners very efficiently, they can lightly monetize and yet produce massive revenues because of their scale, and they don’t require a huge amount of capital to build.
We hope to find more businesses like this to invest in as we think we are just at the beginning of rethinking how we want to learn and educate.
If you want to see some of this in action, you should check out Codecademy’s Learn From Home Day tomorrow, May 13th, starting at 10:45am ET. It looks to be a fun day of learning.
