Online education startup Udemy recently raised a $12M Series B. The startup has plenty of competition in the video-based learning market which includes players like the Khan Academy, Coursera, and Skillshare. However, Udemy is in a great position to be one of the ultimate winners in the space. It has recorded impressive growth in the number of students and courses on its platform, with four hundred thousand registered users able to choose from among over five thousand courses. Most important, Udemy is demonstrating its ability to monetize this user base. Students pay $20 to $200 per class, and some classes are taken by over 500 students. Udemy takes 30% of the total revenue generated by each class.
Although Udemy’s funding announcement is a clear indication of the immense potential of online education, it also stands out on another dimension. The co-founders of the company, Eren Bali and Oktay Caglar, initially tried to build Udemy from their home country, Turkey, back in 2006. As Eren states in his personal blog, they failed. Fortunately, they were able to move to Silicon Valley where they secured $1M in funding to launch Udemy in 2010.
While the example of Eren and Oktay shows that great entrepreneurs can come from anywhere, it also draws attention to how many similar entrepreneurs are unable to build their startups in their home countries because they do not have the supporting resources necessary to do so. The ability to move to Silicon Valley is not available to everyone, and if Eren and Oktay hadn’t been fortunate enough to make this move, Udemy probably wouldn’t be the company that it is today. For every example like Udemy, there are tens of other startups that never get the support they deserve because the entrepreneurial ecosystem in their home country is too limited.
Fortunately, Turkey’s entrepreneurial ecosystem has come a long way since 2006, when Eren and Oktay first tried to build Udemy. Led by the success of e-commerce, marketplace, and gaming companies on a local and regional scale, both Turkish and foreign investors are showing an increasing interest in the country’s tech startups. However, what’s necessary for Turkish startups to succeed is more than just capital. Especially for startups like Udemy who are attacking a market with global competition, the most important value add of a potential investor is their global connections. Although a startup targeting a global market may certainly launch in Turkey, it is very likely to soon find itself needing to move to a global startup hub to build on its success. Global startup hubs provide a greater concentration of venture capitalists with relevant experience scaling tech startups, repeat entrepreneurs to learn from, and customers who are likely to be early adopters of your technology. All of these factors significantly increase a startup’s chance of success.
As Udemy shows, entrepreneurs from countries that are not global startup hubs can certainly build world-class companies. If Udemy had been supported in Turkey when it first tried to launch in 2006, it could have likely built its product and made the move to a global startup hub like Silicon Valley by 2008 at the latest. This is two years in advance of when it actually secured its first funding. Perhaps this head start would have made it the online education market leader by now. However, to expedite its move it would have needed to partner with a local investor who not only has global connections, but also recognizes that it needs to let go of its baby so that the startup can surround itself with those resources that will make it most likely to win in a global market. If you’re an entrepreneur pursuing a global vision, it is these investors that you need to find and convince to be your partner.