Dive Brief:
- Online learning companies like 2U, which launched an initial public offering in March, hold the most promise for investors in the online higher education sector, according to a former Bill & Melinda Gates Foundation higher-education officer.
- Investor’s Business Daily quotes Josh Jarrett as saying that companies that help schools bring their courses online — offering “schooling-as-a-service” — are “maturing enough to be investable,” and that space is where the transactions are occurring.
- Besides 2U, two examples of these so-called second-wave online learning companies are EmbanetCompass and Deltak.edu, which were acquired by Pearson and John Wiley & Sons respectively in 2012.
Dive Insight:
According to Jarrett, from an investor’s perspective, the market representing the first wave of online learning — which saw colleges and universities put their own content online — has become crowded. The third wave, or companies in the massive open online courses (MOOC) space, aren’t close to an IPO. Maryland-based 2U partners with nonprofit colleges and universities to put their degree programs online. The company, while it has traded higher than its IPO price since March, continues to lose money — most recently with a net loss of $28 million in 2013.
