Social Networkers Bet on Education as Next Frontier

The entrepreneurs-turned-venture capitalists today led a $15 million investment in Edmodo, a free learning site for teachers and students that claims almost 5 million registered users. The cash pile, from Greylock Partners and Benchmark Capital, gives the management team the runway to hire developers and add products without doing the one thing they prefer not to talk about: making money.

“The platform will always be free for teachers, students and schools and we don’t plan on advertising at all,” says Nic Borg, founder and chief executive officer of the San Mateo, California-based company. “The purpose of this raise and the folks that are coming on board is about driving forward this grassroots movement.”

A free Web service with no ads? Sounds like the early days of Facebook, where Cohler was one of the first employees. But that was back in 2005. This year, the social-networking site is poised to reap more than $2 billion in display-ad sales, according to EMarketer, thanks to brands such as Coca-Cola, Subway and Adidas.

Then there’s LinkedIn, the professional-networking site founded by Hoffman, and Cohler’s employer before he joined Facebook. While many of the site’s 100 million plus users don’t pay a cent, they’re subsidized by premium subscribers and advertisers. LinkedIn’s revenue more than doubled in the third quarter to $139.5 million. Cohler is now a partner at Benchmark and Hoffman is at Greylock.

In the press release today, Hoffman called Edmodo the “educational graph for learning,” similar to Facebook’s role as the connector of friends and LinkedIn’s position in the workplace. Teachers at more than 60,000 schools, three-quarters of them in the U.S., are using the site to assign and grade homework, post educational videos, and share content with other teachers and classrooms. Edmodo works in the browser and on mobile devices such as smartphones and the iPod Touch.

Rob Hutter, the company’s chairman, said the new financing gives the company “several years” to build and expand the product without worrying about generating revenue. He and Borg are looking for developers who are passionate about education and want to build something that they say is helping change education.

Of course, venture capitalists don’t invest in startups unless they see the opportunity to make several times their money back, and Greylock and Benchmark have been among the most successful firms in that regard.

While expectations for Edmodo are surely no different, Cohler wouldn’t divulge any more than the company, reiterating that the emphasis now is on reaching more people and hiring engineers.

“Revenue opportunities that emerge over time that we get excited about will be ones that are consistent with the mission of the business,” Cohler says.

As for generating revenue today? “That’s not what we’re focused on at this point,” he says.



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