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Startups Search for the Best Ed-Tech Business Model

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The world of ed-tech is booming, as 2012 was a big year for startups in the industry. Now, plenty of industry analysts are wondering: just what is the best model for ensuring students across the world have access to online courses?

Sixty percent of academic professionals agree teleconferencing and distance learning stand to have a huge impact on the creation of hybrid classes. Many experts are predicting that today's tough economy, changing market dynamics, and new technology will mean only a select few students will be able to afford a face-to-face, campus education in the future.

MOOCs, or Massive Open Online Courses, are open access -- meaning students don't have to register or pay a fee. They're also large-scale and designed to hold a massive number of students. The downfall? Most schools don't offer academic credit for these courses. While plenty of schools are rolling out this model in the next few years, it's still up for debate as to whether or not this is the best approach to bringing academia online. After all, do they lead to real degrees?

Some ed-tech startups are focusing on different models for success. Founded in 2010, Udemy is an online learning platform that allows anyone to teach and participate in online video courses. Students can browse and choose from thousands of topics. Dennis Yang, CEO of Udemy, says the site is

distinct from other MOOCs in that it operates as a true marketplace, and acts as a merchandiser and curator of content, rather than just being a producer of content. As a result, we have a much larger content catalog and have the ability to bring on new content and refresh existing content better than other MOOCs.

Udemy's model appears to be working phenomenally well: the startup already has pulled in 400,000 students and snapped up $16 million in venture funding. The platform offers more than 5,000 courses, with growth steady at 20 percent a month. Udemy provides students with an open catalog of resources they need to take advantage of online education, offering a "highly scalable and compelling learning experience," says Yang.

2U is another business shaking up online education at its very core, but its model is much different from Udemy's. 2U partners with universities worldwide to create online degree programs that feature live video classes, as well as a socially-inclined online platform that allows for close interaction between students and professors.

With a whopping $96 million in venture funding, 2U is certainly giving industry analysts something to talk about. This fall, 2U will launch Semester Online, which will offer a wide variety of courses to college students nationwide. A consortium of 10 leading universities, including Duke, the University of North Carolina at Chapel Hill, and Northwestern will give students an opportunity to skirt geographical barriers to education while earning credit towards their undergraduate degree. The move has plenty of analysts buzzing about the impact of so many distinguished universities turning to online solutions for education.

CEO Chip Paucek says the startup's comprehensive approach brings small classes, career services, and field placements with mentors to students looking to learn online.

Our partner schools want their students to have a high-quality learning experience. 2U allows for two-way interaction between student and professor. Our approach is focused on live, small classes, real degrees, and real outcomes.

With each of these business models getting their start in the ed-tech industry, it's clear the education paradigm is changing in exciting ways.