Startup 2tor Rides Surge In Online Education

(By Jillian Kitchener - Reuters) - Long-distance study is rising in popularity and cracking open a market for online educators whose infrastructure brings the portable classroom to life.

In 2010, more than 6.1 million students signed up for at least one online course, about 10 percent more than 5.5 million the previous year, reports the Sloan Consortium Survey of Online Learning.

"It's scaling quickly," said John Katzman, founder of 2tor Inc., a New-York based tech company that has partnered with universities including Georgetown, UNC and USC to build, administer and market online postgraduate degree programs that he says seriously compete with traditional on-campus study.

"By every metric, the quality of the students coming in and the quality of the work they are doing (according to the faculty) and the satisfaction of the students - I think we've made our case this is as good or better than the classroom program," he said, adding 3,000 students aged 21 to 81 are currently enrolled in 2tor programs.

The tech darling remains the highest funded startup in online education with a total of $65 million raised since its seed funding round in March, 2009. Its VCs including Novak Biddle, Highland Capital Partners and Bessemer Venture Partners and it currently ranks in the top ten highest-funded tech start-ups in New York in 2011, the New York Post reported last July.

2tor programs include an MBA from UNC Kenan-Flagler Business School, a Master of Science degree in nursing from Georgetown University and from USC a Master of Social Work degree and a Master of Arts in Teaching.

Katzman was no stranger to the business of education when 2tor was first conceived.

Founder and CEO of the test prep and admissions company the Princeton Review, Katzman spent 25 years watching the strength of his brand grow while the Internet transformed a wide range of industries.

"It just made sense that someone would come along to transform higher education," he said.

The question remained: "What would online education look like if it were fantastic? And how could one make it as good, or better, than an on-campus program?"

Back in 2008, Katzman started a conversation with his contacts at the University of Southern California and took his vision for high-quality online education to the Princeton Review's board.

They didn't jump at the proposal.

So Katzman left to build upon his idea and in 2008, launched 2tor with Chief Marketing Officer Jeremy Johnson, a technology entrepreneur with a background in education, and COO Chip Paucek, former CEO of Hooked on Phonics.

So far they haven't looked back.

The ninth annual survey by the Babson Survey Research Group and the College Board found almost two-thirds of for-profit institutions now say that online learning is a critical part of their longterm strategy and the rate of growth for online enrollments is 10 percent, far exceeding the 2 percent growth in the overall higher education student population.

As for investing, Katzman doesn't believe there are shortcuts. "These are incredible institutions and if we can help them unlock their value, and scale up while making education better (both online and in the classroom) it's a pretty big opportunity. I think 2tor has a chance of remaking higher ed in a really great way. If we do that, those investors will do well," he said.

While there are other companies in the space of online education, both Johnson and Katzman agree 2tor doesn't have an parallel competitor offering the same level of to their high-quality but welcome the emergence of one. "I would love for more people to try to do what we're doing," says Johnson.

"It would validate the world of higher education is taking online more and more seriously."

"Our goal is to make sure we are the leader and there is a very small number of followers," says Katzman. The company will continue to ramp up, and continue to perfect, their existing programs to position them as leading programs in their field.

At the same time, 2tor has six more programs on the launch pad (including an undergraduate concept) and will roll them out in the next 12 months.

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