The company is already in Dizraptor’s portfolio since Jul 10. New offerings are possible in the future
About the Company
MasterClass is a streaming platform with training courses from world-famous experts, athletes, and celebrities. The company was founded by Aaron Rasmussen, a Boston University graduate, and David Roget, a Stanford Business School graduate.
The project was founded with the motto “Everyone should have access to genius.” That's how in 2015 the MasterClass platform appeared, where you can take cooking classes with Gordon Ramsay, make movies with Martin Scorsese or James Cameron, play tennis with Serena Williams and master anything the most famous professionals in their field can teach.
There are more than 150 courses available on the platform, and each month this number is growing. David Roger, the company CEO, admits that he would also like to invite J. K. Rowling, Elon Musk, Barack and Michelle Obama, but there is no exact information whether he has started negotiations with them. The learning process is organized in the form of video lessons, after which a user can do the homework and share the results with other students. The service works on a subscription that costs $180 per year.
The company's business model is a two-sided platform that links its users and celebrities. The former get an opportunity to share the accumulated knowledge and experience and make money on it. For the latter – it's the opportunity to get closer to their role models, get access to exclusive content, motivation and knowledge. The platform is beneficial for both sides, which creates positive network externalities and accelerates the platform’s growth.
Market Opportunities
The global E-learning market size is projected to grow to $370B by 2026, from $226B in 2020, at a CAGR of 8.5% during 2021-2026. The pandemic has contributed to the market expansion by increasing interest from both students and investors.
Unlike courses on traditional e-learning platforms, MasterClass content is aimed at a wide audience – it is both informative and entertaining. The company's activities go beyond the educational sphere and cover the vast online entertainment market, which is projected to reach $652.5B by 2027 with annual growth of more than 20%.
In spring 2021, MasterClass held another successful investment round. The company plans to invest the accumulated funds in its global expansion – so far, the platform only has classes in English, but almost a third of MasterClass students live outside the United States. Over the next year, it plans to offer classes in Spanish, French and German.
The company plans to allocate a separate direction for work in the B2B segment. According to the management, companies are interested in working with MasterClass – they can provide their employees with access to the platform as a bonus and use it as a training tool. This will open up new opportunities for MasterClass: according to forecasts, the corporate online learning market will grow by 13% annually and will exceed $37B by the end of 2025.
Financials and Valuation
Over 8 investment rounds, MasterClass has raised a total of $461.4M from 35 investors, including Fidelity Management (invested in Alibaba), UTA Ventures (invested in Lyft and Radish), Baillie Gifford (NIO investor) and others.
In May 2021, as part of the Series F round, MasterClass raised $225M at a valuation of $2.75B. The company's growth will be driven by international expansion, the opening of the new business segment that targets the B2B market and the launch of new courses on the platform. The presence of stars on the platform will help MasterClass promote its public placement.
Risks
MasterClass competes with many players in the market. On the one hand, these are online training platforms: Coursera, Udemy, Udacity. On the other hand, the company also competes with various media content producers, including such streaming platforms as Netflix, Disney Plus, HBO Max, Spotify’s music platform, and the audiobook and podcast service Storytel, etc. Like Netflix and other streaming platforms, Masterclass constantly invests in the production of video content. This makes the business less profitable than traditional online learning platforms and slows the company’s break-even.
Masterclass’s success depends heavily on its ability to attract celebrities and experts, and problems in finding them can lead to lower revenues and the loss of clients.
Sources
eLearning Market Report 2021, Size, Statistics, Trends, Valuates Reports, May 2020
Global Corporate e-learning Market 2021-2025, Reportlinker, July 2021
MasterClass more than triples valuation in one year, CNBC, May 2021