Udacity Leads Way as VC Turns Eye to Digital Universities

Through the first three quarters of 2012, venture capital investments in education technology already totals $463.1 million, compared $457.2 million in all of 2011. In a report at Bloomberg, Ari Levy examines the trend in light of the $15 million raised this year by Udacity, a digital university offer free courses in computer science, math, and other sciences. 

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The startup, co-founded by AI and robotics specialist Sebastian Thrun, has already drawn more than 753,000 students worldwide in effort to make learning more interactive and self-directed.  

“Our aspiration is to make learning as much fun and engaging as a video game, so people get addicted to learning,” Thrun told Bloomberg.

For many years, venture capital has shied away from education startups due to regulatory restrictions and dim interest from existing universities. With the early success of startups such as Udacity, Coursera, Codeacademy, 2U, Everfi, and Edmodo, digital learning appears now to have the financial backing to make its impact felt by traditional universities. VC firms such as New Enterprise Associates, Andreessen Horowitz, and Charles River Ventures have all taken steps toward ensuring that these digital universities have the resources to compete and flourish. 

Part of the appeal in online education comes from its global reach, where millions of people without access or means to afford higher education can now take courses designed at a Stanford level of quality. 

Udacity is hoping to generate revenue by creating a talent pool for employers, offering certifications in specialized areas, and providing lessons for corporations that seek to train employees in high-tech skills. 

As the Internet continues to reach more and more users worldwide, and as devices tailor-made to deliver educational content reach more and more hands, it is finally possible for online education to make the kind of advances that have seemed only inevitable.