Forty years ago, the United States government spent $16 billion on workforce and job training programs. Today, it spends less than half that amount. It's up to the private sector to fill the gap.
One of the companies stepping up to fill that void is Lynda.com, a California-based online service that offers a catalog of instructional videos and how-to segments from industry experts.
Today, the company announced it has raised $103 million in venture financing--the first outside capital it has received in its 17-year lifespan--from Accel Partners and Spectrum Equity, a growth equity firm. Lynda.com was founded in 1995 by wife-and-husband duo Lynda Weinman and Bruce Heavin in Carpinteria, California. The founders chose to bootstrap the business and grow it organically--a strategy that has clearly paid off. Since 1997, the company has been profitable.
The business offers subscribers a database of 1,500 courses with more than 87,000 videos from 250 authors and experts from various industries. Lynda.com's CEO, Eric Robison, says the financing will be deployed gradually over time, and used to increase content. Eventually, Robison plans to expand the business internationally.
He also noted that investors had been pursuing the company for at least four years, trying to invest in the company, which now has 400 employees. So, why take on the capital now?
"The timing felt right," he says. "We're now in a position to be able to leverage an investment like that." He added that the company recently added several new members to its executive team.
The investment also underscores the shifting dynamics in the field of online education and job training. Although the company has about 2 million individual subscribers (who pay as little as $25 per month for access to the site's database), the lion's share of the company's revenue comes from its corporate customers. According to the firm, more than half of country's largest 100 companies are customers--along with 31 state governments, all branches of the milirary, and the U.S. Congress.
"Companies in the past sent people to conferences or brought in trainers," says Lynda Weinman, the company's co-founder and executive chairman. "It's been very expensive. The entire model of the 20th century is improved in a virtual setting."
Robison added: "It's a combination of cost-savings, but it's more effective because it lets their employees access this content any time any where at their convenience. It's so much more efficient training. Instead of sending their employees to class, the companies look at our library."
Weinman also noted that "how-to" video content in the library's business vertical--which offers tools about using Excel, for example--has become the most popular on the site.
Venture capitalists are recently betting heavily online education start-ups. The Minerva Project, which aims to upend the Ivy League school business model, raised $25 million last year. Coursera, which hosts online courses, has raised $22 million since it was founded in early 2012. And Chegg.com, the online textbook start-up founded in 2005, has become the industry's behemoth, raising $195 million.
"It's a general comment that online education is bridging a gap," says Weinman. "There's more demand than there are schools. Online has transformed so many industries. It hasn't yet really transformed education. But it's ripe to."