A platform co-op hopes to benefit from the soaring revenues in the UK’s online education and training sector – which are expected to reach £3.8bn in 2021.
Anyone in the world can invest in the offer, and UK investors can seek up to 50% tax relief. Individuals can invest between £100 and £25,000, while organisations can invest a maximum of £100,000. Interest of 5% will be paid annually from year one onwards.
Accessing capital to grow is one of the main challenges faced by platform co-ops, as pointed out in Simon Borkin’s report Platform co-operatives – solving the capital conundrum.
MyCoolClass is no different – the co-op envisions starting to make a surplus on its third year of activity but says external funding is required to achieve these projections.
“We need the money to be able to market and compete and drive the students to the platform,” said co-founder John Hayes.
MyCoolClass will have three types of members – teachers (user members), worker members, and investor members. UK investors will be able to invest in the co-op via Ethex while those in other countries will be able to invest directly via the share offer on the co-op’s website. UK investors will get a 50% tax break on their investment.
Another challenge is communicating what a co-operative is to teachers who have joined it.
Since its launch last June, MyCoolClass has enrolled over 300 teachers who have delivered over 700 classes via its online platform. The co-op also hired 20 staff to deal with the administrative side of the business.
“Most of our teachers knew nothing about co-ops, so this is brand new to them,” said Mr Hayes. “And we’re really trying to get the point across that we’re not backed by venture capital. So a lot of them have the expectations of us, a large company, and that’s just unrealistic right now.”
Money raised via the share offer will enable the co-op to meet members’ expectations and boost marketing, he added. This will increase teachers’ engagement and, in turn, increase revenue.
In addition to the share offer, the co-op is raising money via a loan stock issued in January 2022 to help sustain operation costs until the launch of the share offer.
MyCoolClass receives donations from individuals and co-operative support organisations and has received a £5,000 grant from Solidfund to help fund marketing and purchase business grade Cloudflare and Encrypted Cloud Storage.
The co-op worked with Dave Boyle from the Community Shares Company to develop its share offer, as well as co-operative co-op organiser Siôn Whellens. It also had support from the Hive, the co-operative development programme run by Co-operatives UK and funded by the Co-op Bank, through which it covered consulting costs associated with launching a community share offer.
Current MyCoolClass students come from several countries, including China, Poland and Spain. Available courses include over different 25 language lessons, arts classes and maths, history and biology. The co-op also plans to offer advertised courses, which will allow teachers to offer a course in anything they want.
“It’s really just going to be about sharing information and very unique hobbies and skills with people all around the world,” it adds.
Teachers will be able to pitch courses to the co-op’s in-house curriculum team, to review the content and provide suggestions. Once approved, the course will be branded by the co-ops in-house graphic design and illustration team and added to the marketplace. When their course sells, teachers will earn royalties.
Petra Morris, co‑op development manager, who manages The Hive programme at Co-operatives UK: “Congratulations to My Cool Class for launching their community share offer. We’re proud to be able to support innovative co-operative businesses through The Hive. This is a great example of a business that wants to provide a quality service whilst ensuring teachers and tutors are paid fairly – and who retain control of the business they work for. Our support has enabled My Cool Class to develop their community share offer. We hope they achieve their target so they can continue to recruit teachers and students, and ensure the business’ future sustainability.
“We’re seeing an interesting trend where freelancers join forces through a collectively owned and controlled digital platform to improve the quality of their services and have more control over their work. This is part of a wider emerging trend of platform co-ops – ethical digital websites, apps and online communities working in a number of sectors from social care and food delivery services and even music streaming.
Dave Boyle, director, the Community Shares Company, who delivered support to My Cool Class on behalf of The Hive: “We know Community Shares have been really powerful at helping raise finance for local community co-ops to buy assets that mater to them, but they’re increasingly being used to provide working capital to co-operatives, where networks of supporters can provide the finance to enable the co-op to grow in place of ‘traditional’ start-up investors.
“The life-cycle of many a start-up business is to gather investment based on the premise of a sale to a bigger beast in the same field at some point when the new business has proven it brings something different and attractive to customers. The eventual sale often ends up realising a tidy sum for those investors, but nothing for the workers who drove the business nor the customers who see what was distinctive become part of the same-old same-old.
“By enabling patient long term investors to provide working capital to cash-hungry start-up businesses, community shares is showing it’s a very novel, useful and powerful tool for driven by more that profit, that enables them to better balance the needs of their workers, customer and investors in a more equitable way.”