As Coursera Evolves, Colleges Stay On and Investors Buy In

Three years ago everyone was talking about Coursera, which had begun partnering with some of the world’s most elite colleges to offer free courses. There was overheated hype, as pundits speculated that it could be a magic bullet to bring down college costs. And there were tough questions, as people wondered what the goal was for partner colleges, and how the Silicon Valley company could make enough revenue on free courses to survive.

Today the MOOC hype has dissipated, but the company’s leaders say Coursera has found a way to make money, and that partner colleges have found a clear reason to participate. Those answers, the company announced on Tuesday, were enough to convince investors to give a fresh infusion of $60 million in venture-capital funds.

Richard C. Levin, the company’s CEO and former president of Yale University, said in an interview that the new investment would be used to further expand the company’s reach to students outside of the United States, and that it would extend the company’s “runway” to try new experiments.

So far the secret to bringing in revenue, or what Mr. Levin called a “product-market fit,” has been professional development. The company has created series of courses that add up to mini-degrees that students can earn quickly, and pay a small fee to certify that they successfully completed them. “It’s mostly people in their 20s and 30s who are interested in learning more skills and making themselves prepared for better jobs,” said Mr. Levin.

But he insisted that the company is not pivoting to focus only on professional development. He said Coursera is still committed to offering liberal-arts courses as well, and that one thing the new investment will be used for will be to look for ways to make those courses more sustainable. “About half our content is career oriented and half isn’t,” he said. “One of the things we’re thinking about would be premium content on top of [the free materials] in liberal -arts courses.” He declined to elaborate.

Investors were most concerned about whether colleges would stick with the project and continue to build courses, said Mr. Levin. But he said only one college has dropped out of the partnership, which claims 120 colleges worldwide, and that “increasingly, we’re part of the universities’ strategy.”

The biggest win for colleges: “In a way, we’re kind of a lead generator,” he said. “There are many universities that are very well known in U.S. that are not very well known abroad, and the visibility they get through Coursera is in a way a very efficient way to reach new students.”

Rice University, for instance, reports that it is getting more applicants — and higher-quality applicants — for its computer-science masters’ degree after offering a CS course on Coursera, he said.

As for solving the problem of the high price of traditional undergraduate education: “Right now that’s not what we’re doing.”