With the entry of an array of new providers in recent years, the company that was the first to stake a major claim in the market for online Advanced Placement courses has been forced to regroup.
For several years after its creation in 1997 by Microsoft Inc. co-founder Paul Allen, Apex Learning flew high.
The Seattle-based company benefited from generous federal and state grants and other funding. One such source was the federal Advanced Placement Incentive program, which uses Title I money to increase AP access for poor students. This fiscal year, the program is funded at $37 million.
At its height, Apex Learning provided online AP courses in 25 to 30 states, in both virtual schools and regular districts, including some of the largest, such as 708,000-student Los Angeles Unified system, according to Cheryl Vedoe, the company’s president and chief executive officer.
But after the dot-com bust in 2001, much state funding for online learning dried up. And many states began directing their aid for online learning to school districts, which tended to spend the money on professional development, Ms. Vedoe said in an interview.
In addition, state virtual schools began creating their own online AP courses to avoid using an outside vendor, she said.
In the meantime, the company burned through $37 million it had received in venture capital. It also halved its workforce, from some 150 employees at one point to 70 in 2001.
“I found a company in the AP business serving state-level AP courses and programs,” said Ms. Vedoe, who came to the company in 2002 from Apple Inc. “And I found very early on that that was not sustainable.”
Clients to Competitors
Meanwhile, other online AP providers sprang up. State virtual schools that once were Apex clients became competitors. So in 2004, Apex Learning started offering other academic courses besides its 14 AP courses.
Now, the company provides college-prep and remedial courses, in which students work during school time, in a school computer lab, under the guidance of an in-room teacher. The company also plans to offer online courses to middle schools in the near future.
The trend in online education is toward providing a broad-based curriculum, said Ms. Vedoe, noting the expansion in the number of virtual charter schools nationwide. Online courses can help students who need to retake classes that they failed, for example, or help fulfill graduation requirements. (“To Tailor Schedules, Students Log In to Online Classes,” Oct. 25, 2006.)
“While AP is a very attractive space, it’s also a niche in the overall education space,” Ms. Vedoe said. “The reality is that where school districts are focused is … on more critical education needs.”
The company declined to share specific revenue information. However, Ms. Vedoe said that revenues grew 20 percent last year, and that sales are projected to grow 40 percent in fiscal 2007. In addition, she said, Apex Learning is expected to turn a profit—for the first time ever—in 2007-08.
Coverage of new schooling arrangements and classroom improvement efforts is supported by a grant from the Annenberg Foundation.
