2U

2U, Inc. was an education technology company that partnered with universities to offer online degree programs, boot camps, and short courses.²³⁷ 2U emerged from bankruptcy as a private entity after restructuring its debt.¹

Timeline

Money raised

2U raised a total of $480 million according to Netfigo.⁷ In 2012, 2U raised a $26 million Series B led by Redpoint Ventures.⁷ In 2013, 2U raised a $65 million Series C led by Bessemer Venture Partners.⁷ In 2014, 2U raised $119 million in its IPO, with a valuation of $1.6 billion.⁷ Prospeo lists 2U's total funding as $331 million from one funding round in 2018.⁸ aVenture lists 2U's total raised to date as $426.9 million, with a last deal of $331 million in post-IPO equity.⁹ 2U acquired edX for $800 million in 2021, funded with debt.⁷ 2U's market capitalization peaked at $6 billion.⁷ In November 2023, USC agreed to pay approximately $40 million to exit its partnership with 2U.¹⁷ 2U recognized $88 million of revenue from portfolio management activities in 2023.¹⁷

Investors named in the sources: Redpoint Ventures⁷⁹, Bessemer Venture Partners⁷, Novak Biddle⁷.

What happened

2U was founded in 2008 by Chip Paucek and Jeremy Johnson.⁷ The company's business model involved partnering with universities to create and operate online degree programs, splitting tuition revenue roughly 50/50.⁷ 2U's first partner was USC's School of Social Work.⁷ 2U provided technology, marketing, enrollment, and student support services for its university partners.⁷ The company went public on NASDAQ in 2014.³⁷

2U acquired Trilogy Education in 2019, adding boot camps to its offerings.² In 2020, 2U announced a $3 million scholarship fund for tech boot camps at over 30 universities.² In 2021, 2U acquired edX for $800 million, funded with debt.⁷ The company's market capitalization peaked at $6 billion.⁷ 2U's revenue share model became unsustainable as universities realized they could build online programs internally.⁷

Competition from Coursera and direct university online programs grew.⁷ In May 2023, graduates of USC's online Master's in Social Work program filed a lawsuit against USC, alleging the program was largely outsourced to 2U.¹⁰ In November 2023, USC announced it would end its long-term contract with 2U for nearly all online programs.¹⁰ On November 9, 2023, 2U announced that USC would pay approximately $40 million in connection with the exit.¹⁷ 2U also announced it would recognize $80 million in the fourth quarter related to partners seeking negotiated exits from degree programs.¹⁷

The company disclosed a 21% decrease in full course equivalent enrollment, primarily driven by its transition to a new marketing framework in mid-2022.¹⁷ On November 10, 2023, 2U's share price fell 56.72% to close at $1.03.¹⁷ On February 12, 2024, 2U disclosed substantial doubt about its ability to continue as a going concern.¹⁷ The company reported full year 2023 revenue of $946 million, missing its guidance of $965 million to $990 million.¹⁷ 2U issued full year 2024 guidance estimating revenue would decline to $805 million to $815 million.¹⁷

On February 13, 2024, 2U's share price fell 59.33% to close at $0.37.¹⁷ A securities class action lawsuit was filed against 2U on June 13, 2024, in the U.S. District Court for the District of Maryland.¹⁷ The lawsuit alleged that 2U made materially false and misleading statements regarding its ability to sustain university relationships and the stability of its revenue sources.¹⁵¹⁷ The bankruptcy filing followed increasing legal pressure and the loss of key university partnerships.¹⁰ 2U entered Chapter 11 with an agreement with lenders and bondholders that would halve its debt.¹⁸

The company filed customary motions to ensure operations continued as usual during the bankruptcy process.¹⁴ 2U executives received retention bonuses amid the bankruptcy, a practice criticized by legal experts.¹³ The Project on Predatory Student Lending called on the Department of Education to protect students following 2U's collapse.¹⁰ 2U emerged from bankruptcy as a private entity after restructuring.¹ On April 9, 2025, the bankruptcy court signed a decision on the reorganized debtor's motion to close the case.¹⁶

A former 2U executive launched an AI startup in 2025.¹

Legal outcomes

• filedGraduates of USC's online Master's in Social Work program filed a lawsuit against USC in May 2023, alleging the program was largely outsourced to 2U.¹⁰
• filedA securities class action lawsuit was filed against 2U on June 13, 2024, in the U.S. District Court for the District of Maryland.¹⁷
• filedThe securities class action alleged that 2U made materially false and misleading statements and failed to disclose material adverse facts.¹⁵¹⁷

Where the founders are now

A former 2U executive launched an AI startup in 2025.¹

Sources

1. Former 2U exec launches AI startup to democratize data ..., technical.ly, Mar 12, 20
2. 2U, Inc. Announces $3 Million Scholarship Fund to Expand Access to Tech Boot Camps at 30 Top Universities Nationwide, 2u.com, Jun 10, 20
3. Our Foolish Interview With 2U Inc CEO Chip Paucek, Fox Business, Mar 31, 20
7. 2U Funding 2026: $480 million Raised | Netfigo, netfigo.com
8. 2U Revenue, Funding & Valuation, Prospeo
9. 2U Funding History, Valuation and Investors - aVenture, aVenture, Jun 28, 20
10. STATEMENT: Department of Education Must Protect Students Following Collapse of For-profit Education Company 2U — Project on Predatory Student Lending, Project on Predatory Student Lending, Jul 25, 20
12. 2U: Rapid Prepack Restructures $945M Debt Stack, ElevenFlo, 2026-03-06
13. 2U's Bankruptcy Bonanza: Executives Pocket Millions in Bonuses, New America, Aug 28, 20
14. EX-99.1, sec.gov, Jul 25, 20
15. 2U, Inc. Lawsuit Submission Form | Levi & Korsinsky, LLP | Securities Class Action Attorneys, Levi & Korsinsky LLP
16. In Re: 24-11279-mew 2U, Inc. | Southern District of New York | United States Bankruptcy Court, nysb.uscourts.gov, Apr 9, 202
17. Bragar Eagel & Squire, P.C. | 2U, Inc., bespc.com, Aug 12, 20
18. 2U files for bankruptcy, highereddive.com, Jul 25, 20

How this case file was put together

Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.

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