UPDATED 14:59 EDT / NOVEMBER 03 2020

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Now profitable, Udacity raises $75M in debt to drive enterprise growth

Udacity Inc., the startup behind the popular online technology education platform of the same name, today said that it has closed a $75 million debt round underwritten by Hercules Capital.

Udacity previously raised about $170 million in equity funding from investors that include Andreessen Horowitz. It received a $1 billion valuation after its previous financing round and, early last year, an executive disclosed that the startup was on track to close 2019 with more than $100 million in revenue.

Nine-year-old Udacity provides online “nanodegree” courses in programming, data analytics and a wide range of other technology topics. The startup originally focused on providing courses for individuals looking to expand their skillsets or change career paths. Over recent years, it has also been targeting the enterprise with education offerings that help organizations train existing employees in technologies such as the public cloud and artificial intelligence. 

Udacity’s bet on the enterprise is paying off: The startup disclosed today that bookings from corporate and government customers rose 120% in the third quarter. This part of Udacity’s business now reportedly accounts for 80% of overall revenues and helped it achieve profitability recently. Given that the startup was expecting to hit the $100 annual million sales mark in 2019, it’s quite likely that enterprise revenues are now in the nine figures as well or will be soon.

Udacity offers organizations the same catalog of nanodegree courses that it offers to individuals plus the ability to create custom education programs for employees. A company looking to adopt software containers, for example, could partner with the startup to develop a series of Kubernetes courses. Udacity’s pitch to enterprises is that retaining existing employees is a better approach than recruiting external candidates, particularly in fields such as artificial intelligence where there are talent shortages.

It’s a value proposition that has helped the company amass a sizable enterprise customer base. Among the organizations that have partnered with Udacity for internal employee training are IBM Corp., Qualcomm Inc. and BMW AG. 

“Our clients clearly understand that investing in current talent, versus hiring from the outside, has proven to be a far more effective way to accelerate their digital transformation strategy,” said Udacity Chief Executive Officer Gabe Dalporto. “This new financing will help us continue to scale and provide global workers with the skills they need to future-proof their careers.”

Photo: Udacity

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