Did 2U's core business model work before the edX acquisition?

2U's original university partnership model worked, but was under increasing pressure. Revenue share arrangements giving 2U 50-60% of tuition were politically difficult for universities to maintain as their own online capabilities improved. The edX acquisition was partly a bet on diversifying before the core model eroded — a reasonable strategic instinct executed at the wrong time and price.

What happened to edX after the bankruptcy?

During the bankruptcy proceedings, 2U sold edX to a buyer that took over platform operations. edX continued to operate as an online learning marketplace with courses from partner universities. The original nonprofit mission of Harvard and MIT — making education accessible — had effectively been subordinated to a leveraged buyout that ended in Chapter 11.

Is the online degree market fundamentally broken?

Not broken but structurally difficult. High student acquisition costs, intense competition from university-built platforms, and the challenge of maintaining quality at scale make margin pressure constant. The market exists but the economics favour universities managing their own online infrastructure over third-party intermediaries taking 50-60% of tuition.

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// HALL OF FLAME · STARTUP AUTOPSY

Founded	2008
Closed	2023
Country	USA
Sector	Edtech
Total raised	900
Collapse type	Bankruptcy
Founder	Chip Paucek, Jeremy Johnson

2U

"The online degree company that paid $800M for edX then filed for bankruptcy two years later"

$900M

RAISED

—

EMPLOYEES

180

MONTHS

unit economicsBankruptcy

// Fatal mistake: 2U took on $800M in acquisition debt to buy edX at the peak of pandemic-era online education optimism, leaving no financial cushion when enrollment growth slowed, competition intensified, and student acquisition costs inflated post-pandemic.

Key Events Timeline

2008-01

FOUNDING

2U founded

2015-06

DOWN ROUND

Down round or bridge financing

2023-06

SHUTDOWN

Bankruptcy: 2U ceases operations

🔥 Hall of Flame 60%🏆 Hall of Fame 52%

2U spent fifteen years building infrastructure for top universities' online degree programmes, partnering with Johns Hopkins, Northwestern, and USC to manage their online master's degrees — handling marketing, recruitment, technology, and student services in exchange for 50 to 60 percent of tuition revenue.

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More Edtech →More from USA →More unit economics failures →Raised: 900

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// THE EDTECH GRAVEYARD DOESN'T END HERE

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