Exciting Company News
Udemy Instructors,
We’re thrilled to share that Udemy announced some exciting news today - $50 million in Series F funding with a valuation of $3.25 billion. This investment reinforces continued confidence in our work together and will enable us to further scale our business around the globe.
We’re grateful to each of you for sharing your knowledge and making a real difference in people’s lives. 2020 has presented a myriad of challenges for each individual across the globe. You’ve helped millions of people survive and even thrive amidst continued uncertainty.
Thank you again for choosing to teach on Udemy. This is only the beginning - we’re excited for our continued partnership and to improve even more lives through learning.
Comments
-
Hi @Lili
, that is great news! I'm very glad to be part of Udemy and to see it expand continuously.4 -
Thats great news, here is to the continued success story x
1 -
Paging Dr @JohnBura
, you're needed in the pending IPO room. Paging Dr Bura!4 -
Fantastic news! I’m sure this year has also been fantastic for many fellow Udemites, things just keep on getting brighter.
4 -
Superb !
0 -
Awesome news; I believe this platform will become significantly influential, globally, in the coming years.
2 -
Great news. I'm looking forward to the IPO next year if it happens.
1 -
Fantastic news - it is great to be a part of the evolution
1 -
Just Fab!
0 -
Great!!
0 -
These are really great news, but I can't help but wonder:
Series F is quite an advanced series. Most companies don't go beyond Series C, a few go to D.
Now, a round of investment is usually required in one of two cases:
1. The company is not profitable, and it burns cash faster than generating income. In this case, the investment is actually a lifeline that without it - the company will crash and burn.
2. The company is profitable, but it needs the investment in order to explore new markets and opportunities.
Now, being a private company, we don't have visibility into the financial data of Udemy, and I really hope we're looking here at scenario #2, because if Udemy is not profitable after all this time, with so many students, instructors and courses, then Houston, we've got a problem.
@Lili
, could you perhaps shed some light on this? What is the motivation behind this round? And most importantly - is Udemy profitable?Thanks,
Memi
2 -
@MemiLavi
I hope Udemy is not profitable. Profits are of no importance now. They clearly stated the motivation for this round, which is simply to capture market share. Let me explain.
When you are a public company (some are encouraging an IPO which I hope is not done soon) you have an obligation to file quarterly reports and they are scrutizined for expense control, cash flow, etc. The market looks for or demands profitability. That restricts investment in marketing and expansion.
If you are a private company profitability may be completely unimportant. I want Udemy to spend as much as they can in order to expand their presence in the market, capture customers, and build their brand. Goldman Sachs valued Udemy at 3.5 billion value for this funding. Only a year or so ago it was around two billion (I forget the actual number). This increase in value is not because they threw off profits. It is because they reinvested all possible cash flow in hiring, marketing, building out their technology platform, etc. They are now buying advertizing on television to attract new customers and build their brand. I want Udemy to be the dominant brand in online learning as YouTube (video), Google (search), Amazon (retail), Facebook (social media) have become THE go to brands.
The judgment is about the potential market. Let us say that the current online market is a ten billion dollar market, actual current sales. But, let us guess that the market size five years from now is going to be one hundred billion. As we know from emails we receive, there are a hundred small players trying to grow in this market because they recognize that market potential. One or two players are going to grow to dominate the market and it will be the players who make the largest and most effective investment in building their brand and capturing market share.
So we can have Udemy spin off some current cash flow to early investors now which produces no value to us instructors, or we can have them invest every possible dollar in growth, which increases your and my revenue. I think the choice is obvious. I don't give a flip about them spinning off profits and paying taxes. I want them to invest everything in acquiring new customers. This is what Amazon did for years and they created a market dominant position. That I believe is Udemy's strategy.11 -
This: I want Udemy to be the dominant brand in online learning as YouTube (video), Google (search), Amazon (retail), Facebook (social media) have become THE go to brands.
That would be an amazing journey.
0 -
Online education is growing and yes I am very excited about where this platform is going.
Thanks for the news Lil
2 -
@LawrenceMMiller
I definitely don't think Udemy should go public anytime soon.However, you mentioned Amazon, FB, YouTube - all public companies. In fact - Amazon did their IPO only 3 years after its foundation, and Udemy was founded 11 years ago.
I don't believe a losing company can survive. At some point the bank will come knocking on its door. And note I don't talk here about "losing" company, as in - our reports to the IRS show loss. I mean a real loss, one that require cash infusion.
So what I would happy to know is this:
Is Udemy financially stable, and needs this cash to expand to new markets, or is it on a lifeline?
I personally believe the company is profitable, but I have no inside information I can count on.
0 -
@MemiLavi
I am very certain that Udemy is NOT on a financial lifeline. Realize that Goldman just valued them at 3.25 billion dollars and they had total access to their financial records when they did that. Less than a year ago they were valued at 2 billion. That says a lot. I am not sure the word "stable" can be applied to a company that is doubling in size each year. We know that they have hired a very large number of people, opened offices in several countries, are engaged in new ad compaigns, etc. The revenue trend is not stable as meaning "flat" but it is stable meaning an upward slope.I do not believe the company is profitable... by choice. Keep in mind that the moment you declare profits you owe the government money. It would be very foolish at this stage of growth for Udemy to declare profits. Free cash flow is being put back into the company to invest in growth. I believe they are spending every dime on expansion, not on profits. If they stopped expanding they could be instantly profitable. That is not a good thing for us instructors.
As to the bank "knocking on the door" realize that the most prestigeous bank in the world, Goldman Sachs, just did knock on their door... but not to collect money, rather the reverse, to invest money.
1 -
I must admit I'm not overly impressed with bank valuations...
Uber pre-IPO was valued at $100bn, and never had a single profitable quarter since its foundation. They literally live off investors' money.
WeWork was valued at up to $96bn by the same guys from Goldman Sachs, and we all know where they are today.
Again, I don't have real doubts with Udemy, or else I wouldn't be here. just wondering what is this money for.
0 -
That’s great.
Now, what about renegotiate our commision? No offense, but in my point of view the Udemy got relevant due the diversity over our content.
Even Apple, on last Wednesday made changes to its App Store, reducing the commission it takes on sales to 15% from 30%.
Regards,Eduardo.
3 -
That's great news. Congratulations!!!
0 -
Great news!!!!
0 -
Why is Udemy into Series F??? I mean, regardless of how anyone couches it, Series F is rather uncommon, relatively speaking.
0 -
I wish everyone to take a course or two about how startups raise money to figure some things out.
Series F doesn't matter whatsoever.
Here's the story:
They raised $50M on a $3.25B valuation.
Let me do the math for you, they raised 1.53%.They don't need money. If they needed money like a typical startup burning through piles of cash (Uber, Amazon...), they would raise approximately 15% to 20% of equity pre-money.
I invite you to look at Uber's series to get an idea: https://www.crunchbase.com/organization/uber/company_financials
So now, why would they raise so little?
Here are some answers:
- First and foremost: they only need so little. If they needed more, investors would be there for that too at such a high valuation.
- They want to pump some cash into the marketing machine
- They want to keep on hiring talent and invest in their growth
- They want to keep on setting their valuation
But most importantly... who did they raise it from?
Let's have a look... https://www.crunchbase.com/funding_round/udemy-series-f--dafd7d75
Tencent Holding!
What's Tencent? Well, the gateway to China. Tencent is WeChat, amongst other things.
So what Udemy did is a strategic partnership possibly paving the way to a massive distribution deal in China... Yeah, no big deal?
Reading the news besides the headline is difficult, but an effort that's worth it, I promise
4 -
@StephaneMaarek
... You started out by saying they don't need money. They may or may not (neither you or I know that for sure). But, then later on, you said "First and foremost: they only need so little.", which implies they they may need money. I'm only pointing out your contradiction because it highlights the questions people have over it.
The point I made was that Series F is relatively uncommon. Have I taken a course on startups? Nope. But I do know that companies that get into the later stages of funding usually do so because they are either prepping for an IPO or maybe because they aren't where they thought they would be. Either way, there is nothing wrong with asking questions.1 -
I think this discussion is centering around the word "need." I am very certain that they do not "need" this funding to survive or even to continue their growth. They "need" the funding to maximize their growth, to exploit opportunities for capturing market share.
In part this is about the life cycle of this marketplace. We are in the maximum growth period of the online learning marketplace and this is the time when dollars spent to capture marketshare will have the greatest long term return on invetment. That is the "need."
When they decide to do a public offering and be listed on a stock exchange, the value of the company will largely be determined, not by current cash flow, but by market dominance and therefore the projection of future cash flows.
4 -
@StephaneMaarek
well said that man1 -
Also, if you read the article, it said that UFB has a good ROI. Most likely we will see more UFB income, but less marketplace income.
The marketplace is underperforming IMO. With a few tweaks, I bet the marketplace could 10x.
1 -
@JohnBura
Based on my data set, which is different than others, you are right that the growth rate of the marketplace is slower relative to the growth of UFB. Year over year, and just looking at October, my marketplace revenue increasaed 47%, while my UFB revenue increased 82%. Which is why in their announcement they emphasized the growth in UFB more than they emphasized the growth in the marketplace.We really don't know anything about the ROI because we have no insight into expenses.
0 -
Udemy is slowly moving away from being a marketplace and moving towards becoming a LinkedIn Learning competitor
0 -
Congrats! Fantastic news!
I hope a good portion of that goes towards supporting instructors.
0
