Why 65-Year-Old Benesse Invested $50M to Lifelong Learning Platform Udemy?
Recently, Benesse Holdings Inc., a leading education and publishing provider in Japan, has agreed to invest $50 million to Udemy, a San Francisco-based online learning marketplace. The deal valued Udemy at $2 billion.
Based on the core principle of well-being, Benesse has served a wide range of ages from children to the senior. Still, the working adult group is not the primary target among its current business domains. Udemy, which just celebrated its tenth anniversary in January 2020, mainly provides adult education services, including workforce and corporate training.
Why has Benesse agreed to invest $50 million to the adult education platform? JMDedu has talked to Kotaro Ueda, Director of Strategy, R&D, and Business Development of Benesse, and Tomonori Iida, the head of adult education, to learn more about the deal.
The investment represents the second partnership between Benesse and Udemy. Back in 2015, they have cooperated for the first time.
Back then, Benesse set up a new organization called Edtech Business Development Division. “The mission of the team was to strengthen and evolve our existing business for entering the new education business arena, ” Iida said. “Using Edtech was the key mission of the team.”
As an online learning platform targeted for students, businesses, and governments, Udemy adopts the C2C business model, not only providing online courses but also enabling everyday experts to create their courses. It has been called Amazon in online education.
The company was the potential partner when Benesse’s team sought a global player to work with to expand lifelong learning, a new area for Benesse.
“For Benesse, lifelong learning is a new area. C2C is also a new model. It’s a great idea to use this new model to expand the new area,” Ueda said. Meanwhile, Benesse and Udemy share a similar mission to support people’s well-being.
The first partnership has helped add more content offerings in the Japanese language and bring numerous new Japanese students and instructors to the Udemy marketplace.
Since Benesse launched Udemy for Business in Japan last June, as of February, Benesse has already acquired over 100 companies. More than 20,000 Japanese employees are now learning on Udemy, according to Iida.
“As the partnership has been going very well, we thought we could do more together,” Ueda said. That’s the background of the recent investment.
At the beginning of 2020, when Benesse and Udemy just celebrated the fifth anniversary of their first partnership, Udemy announced the recent investment led by Benesse, the single investor.
“Access to the latest workplace skills is crucial for success everywhere, including Japan; and Udemy is the world’s largest marketplace enabling professional transformation,” Tamotsu Adachi, Representative Director, President and CEO of Benesse, said in a press release. “With this partnership, we envision a world where more people can continue to learn continuously throughout their lives.”
As for the reason why Benesse was the only participant in this round, Iida noted that Benesse wanted to be the sole investor for Udemy’s Series E funding round. Both of the companies would like to speed up the investment process as much as possible because they want to focus more on business, rather than a lot of details of work. “The speed is important.”
A tailwind to lifelong learning development
Since founded in 1955, Benesse has always developed products and services as the challenges facing society have changed over time, such as providing senior nursing care services as the number of elders increase in Japan. It now covers five main domains: domestic education, global kodomo challenge, nursing care, and childcare, Berlitz, as well as other/new business domains.
The investment to Udemy is also an action to meet the challenge facing the current society, where lifelong learning is much needed.
According to Benesse Integrated Report 2019, CEO Adachi said Benesse needs to provide new services in each segment that cater to the new demand. “We need to make full use of the advantage Benesse has in collective capability to create new forms of education with medium-to-long-term growth in mind.”
He added one path forward to reach this goal is “supporting education for companies and working adults.” As Japan’s population ages and birthrate falls, Benesse will bolster its approach to the educational and learning needs of working adults.
“There is a gap between the skills and learning needed in the society. We want to make the gap smaller by using Edtech service,” said Iida. His team wants to connect the society with higher education through education, learning, and training.
JMDedu also noticed that, according to the report, Benesse would also use M&As to create a third business pillar, and the main target of new business lines would include working adults.
Which business domain does the investment in Udemy belong to? Ueda and Iida told JMDedu that strategically it belongs to domestic education. However, Benesse also hopes to export the insights gained in the Japanese workforce and corporate training market to the global market through the network channel of Udemy.
Benesse has offered adult education through Berlitz, but with a focus on language learning. With Udemy, now Benesse can start providing diversified workforce training, not just to consumers, but also to companies as well, Iida said.
In Japan, corporate training is a barren market with no dominant player. He thought there is a tailwind for Benesse to grow the business.
Through the investment to an English bootcamp service provider in January, and workforce training platform Udemy in February, Benesse is enhancing its lifelong education portfolio.
As for the tendency that the global lifelong learning market gains much popularity, “I think this trend will accelerate more and more, as many countries will face an aging society,” Iida indicated. “The productivity enhancement of each citizen is a very critical issue that we need to resolve.”
He also said as these social changes happen, he thought the demand for the tendency of corporate training would accelerate.
He mentioned that India, Brazil, and some African countries have a lot of potential for growth in terms of corporate training.