At the end 12 months, outschool, a marketplace for kid-friendly enrichment classes, has its Series B, Series C and now, it’s Series D. The startup announced today that its latest round, a $110 million tranche of capital, brings its valuation to $3 billion just four months after hitting unicorn status.
The rapid inflow of capital was in response to virtual programming demands arising from the COVID-19 pandemic. OutSchool today offers more than 140,000 virtual, small group classes to students between the ages of 3 and 18. The startup also grew its base of teachers, who lead these classes, from less than 600 people to over 7,000 today, increasing bookings by 150% in the same time period.
“We were an early stage startup, we had very promising growth and a vision for the future, which resulted in our Series A round of funding,” said CEO and co-founder Amir Nathu. “All of a sudden, we had to rapidly grow to be a growth-stage company, we’ve grown from 25 employees to 164, and single digit millions of bookings to over $100 million in bookings.”
While outschool’s growth teardown is impressive, it comes with an asterisk of one question: Does a development-stage company culture mesh well with its mission to serve children? as concerns grow Due to the impact of platforms like Instagram on kids, young startups are under more pressure to show how to align business incentives and their influential user base.
Nathu feels that the fear of big companies with big platforms for kids is a “reasonable concern”. In fact, he thinks about this dynamic a lot.
“We have been venture-funded from the very beginning, and I hope that our actions, and how we go about our work, reflects our values,” he said. “The fact that venture funding hasn’t affected the fact that we’re a mission-driven company and a value-driven company, and that’s not going to change.” In its previous fundraising, OutSchool announced that it has dedicated 2% of your stock to reward teachersin a position of liquidity. It also founded Outschool.org, which has distributed $2500,000 worth of free classes to low-income families in the US. Nathu didn’t provide much details about what it looked like.
The co-founders also think that venture funding has many benefits for outschool clients, namely that the platform can invest further from its revenue to improve the product. This means more specific classes, network effects and better scale.
“We’ve prioritized expanding outschools this year, so we’re not focused on profitability,” he said. “As such, so the latest funding has been raised, we are not on profitability at this point in time.”
With this ethos in mind, it makes sense that OutSchool’s larger goal in the growth phase is to shift the concentration of its customers from single consumers to enterprise deals through schools or employer benefits. Nathu points out that the change in strategy will take away the pressure of paying parents and thus promote access for after-school classes. He expects that in the next five years, more than half of the enrollments on this platform are coming from employers and schools.
In recent months, outschool’s offer of employer benefits has attracted significant interest. In the past year, employees have spent more than $1.1 million in employer-paid credits on outschools.
The company curates landing pages on behalf of employers, who then serve up the service to working parents. Outschool also offers a concierge service in which parents can share their children’s interests and availability, and a member of the outschool team will book classes on their behalf with employer-paid credit. Beyond these efforts, the company created a dashboard that human resources teams can use to understand how their employee base is engaged with classes and topics, and then conclude how benefits affect overall retention.
However, Nathu’s real vision of the future lies in how his product will go to schools. The company wants to build out onboarding and enrollment in schools, as well as get on the same wavelength as state and local regulators.
“I envision a world where children are spending half their time in K-12 education with others online learning,” he said. “There’s a huge value in having a local community, but there’s also a lot of value in really personalizing your learning and being able to find other people around the world who have exactly the same interest as you and learn the same way.”