Outschool Valuation Reaches $3 Billion | After-School Enrichment
Outschool Secures $110 Million in Series D Funding, Reaching $3 Billion Valuation
Over the past year, Outschool, a leading marketplace for enriching educational experiences for children, has successfully completed its Series B, Series C, and now, Series D funding rounds. The company recently announced a new investment of $110 million, elevating its valuation to $3 billion, a milestone achieved just four months after attaining unicorn status.
Pandemic-Driven Growth and Expansion
This rapid influx of capital is directly linked to the increased demand for virtual learning opportunities spurred by the COVID-19 pandemic. Currently, Outschool provides access to more than 140,000 virtual, small-group classes for learners aged 3 to 18.
The platform has also experienced substantial growth in its educator base, expanding from fewer than 600 teachers to over 7,000. Consequently, class bookings have surged by 1,500% within the same timeframe.
From Startup to Growth-Stage Company
“Initially, we were an early-stage venture with promising growth and a clear vision, which led to our Series A funding,” explained Amir Nathoo, CEO and co-founder. “However, we’ve quickly transitioned into a growth-stage organization, scaling from a team of 25 to 164 employees and increasing bookings from single-digit millions to over $100 million.”
Balancing Growth with a Mission to Serve Children
While Outschool’s growth trajectory is remarkable, it raises an important question: Can a company focused on serving children effectively maintain its core values while experiencing rapid expansion? Growing concerns surrounding the impact of platforms like Instagram on young people are placing increased scrutiny on startups to demonstrate alignment between business objectives and the well-being of their users.
Nathoo acknowledges these concerns as “reasonable,” emphasizing the importance of considering this dynamic.
Commitment to Values and Mission
“From the outset, we’ve been venture-backed, and I firmly believe our actions demonstrate our commitment to our values,” he stated. “Our mission-driven and values-driven approach remains unchanged, despite receiving venture funding.” Previously, Outschool allocated 2% of its stock to reward teachers upon a liquidity event.
The company also established Outschool.org, which has provided $2,500,000 in free classes to low-income families across the United States. Furthermore, Outschool has carefully structured its cap table to maintain control over key business decisions, though Nathoo refrained from providing specific details.
The Benefits of Venture Funding
Nathoo believes that venture funding offers significant advantages for Outschool’s customers, enabling the platform to invest in product improvements ahead of revenue generation. This translates to a wider variety of classes, enhanced network effects, and improved scalability.
“This year, we’ve prioritized expansion over profitability,” he added. “Therefore, the latest funding round reflects our current focus, as we are not yet profitable.”
Shifting Focus to Enterprise Partnerships
With this growth phase underway, Outschool’s primary objective is to broaden its customer base beyond individual consumers, focusing on establishing partnerships with schools and employers. This strategic shift aims to alleviate the financial burden on parents and increase accessibility to after-school learning opportunities.
Nathoo anticipates that, within the next five years, over half of the platform’s enrollments will originate from employer and school partnerships.
Growing Employer Benefit Program
Outschool’s employer benefit program has garnered considerable interest in recent months, with employees spending over $1.1 million in employer-provided credits on the platform in the past year.
The company creates customized landing pages for employers, who then offer the service to their employees. A concierge service is also available, allowing parents to share their children’s interests and schedules, with an Outschool team member booking classes using employer-paid credits.
Additionally, Outschool provides a dashboard for human resource teams to track employee engagement with classes and topics, enabling them to assess the impact of the benefit on employee retention.
Future Vision: Integrating with Schools
Nathoo envisions a future where online learning becomes an integral part of K-12 education, with students spending a significant portion of their time learning virtually with peers. He believes in the value of both local communities and the ability to personalize learning and connect with individuals worldwide who share similar interests.
“There’s enormous value in having a local community, but also enormous value in being able to really personalize your learning and find others around the world who have exactly your interests and learn in the same way,” he said.
Note: Following publication, Outschool clarified that bookings increased by 1,500%, not 150% as initially reported. This correction has been implemented in the article.
