Investors Open Checkbook for OER: Lumen Learning Raises $2.5M

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Local investors in the drizzly Pacific Northwest are making some rain of their own for Lumen Learning, whose mission is to create and help schools adopt open educational resource (OER) alternatives to the 75 most popular higher-ed courses in the US.

The Portland, OR-based company has raised $2.5 million in a seed round led by the Oregon Angel Fund, with the Portland Seed Fund, Seattle’s Alliance of Angels, and local investors Ray Henderson, David Mills and Tom Rubin also participating.

Lumen Learning was founded in 2012 by Kim Thanos, an edtech strategist, and David Wiley, an adjunct faculty at Brigham Young University who regularly shares insights about the OER market and its adoption on his blog. Thanos says a new textbook and online homework platform for a beginning college-level Algebra course typically costs $150. Lumen Learning currently offers them for $10.

“We have a strong bias for re-using materials,” says Thanos, CEO of Lumen. “Public agencies have invested hundreds of millions of dollars to create OER. The largest challenge is not quality, but in discovering them.” California, for instance, passed a bill in 2012 to create 50 digital OER textbooks for lower-division courses.

For each course, Lumen works with group of faculty advisors to identify and vet the existing resources. Approved materials go through editorial and instructional review and are then made available on Lumen Learning’s online platform. Faculty members can create new materials for each course, and are encouraged to share them under a Creative Commons license.

For math and other quantitative-focused subjects, Lumen Learning has also created test items and an online homework platform; student performance on these questions inform both the faculty and company of the efficacy of materials. “We should not have new revisions of textbooks driven by only the market economics,” says Thanos. “It really needs to be driven by student learning.”

So far the company has created materials for 50 courses and worked with more than 60 higher-ed institutions, of which 70 percent are community colleges. (The rest are four-year universities.)

In addition to saving students money, Thanos asserts that courses that use Lumen materials see a 5 to 10 percent increase in student success, based on the number of students who complete the course with a C or above grade, and on a decline in the number of students dropping or withdrawing from courses. Some students who use Lumen materials sign up for more classes the following quarter or semester, suggesting that the textbook savings help them move through their studies faster, Thanos says.

Lumen is a for-profit company. Even so, its founders had long been leery of taking venture capital financing.

Wiley told EdSurge in 2013 that “we are definitely not seeking venture capital as we’ve seen what it has done with other startups when the revenue model takes over.” What’s more, foundations including Gates, Hewlett and Shuttleworth, are channeling grants worth more than $5.5 million to Lumen. (Much of that funding, however, gets passed through to school partners that provide feedback during the content development process and pilot the courseware.)

But the need to grow and scale the business drove the founders to seek additional capital. “Having traditional [venture] funding creates a healthy tension between the impact of our work and the sustainable growth we need to be a vibrant entity,” explains Thanos. The majority of grant funding has supported the research and development of OER materials, she noted. By contrast, the venture capital will help the company scale and implement its OER courseware to more schools.

All course materials created by the company are publicly available for individual professors and students. For schools that want to integrate the materials into their learning management systems and provide support and training for faculty, Lumen Learning will charge a fee based on course enrollment.

Thanos believes the public tide is shifting in favor of OER materials. Even investors, she says, have realized that “the textbook market is broken.” She’s optimistic that larger universities will follow their smaller counterparts.

“It’s a different pace of change [between large and small schools]. Bigger institutions have a slower adoption process, with more committees and a lengthier evaluation process,” she explains. “With community colleges, they’re more willing to jump in and try something new.”

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