The underdog of learning management systems is learning some new tricks.
On February 19, Instructure, provider of LMS Canvas, announced a $40 million Series E round, led by Insight Venture Partners. Bessemer Venture Partners and EPIC Ventures also participated. This round brings Instructure’s total funding raised to $90 million. According to Instructure CEO Josh Coates, “This is a pre-IPO round.”
Since 2011, Salt Lake City, UT-based Instructure has offered Canvas, a learning management system (or LMS) with an explicit mission: to “displace Blackboard,” according to Coates. Canvas has seen rapid growth. As Coates told EdSurge, the company closes a new institution (a K-12 district, or university) every calendar day, doubling contracts year-over-year. As of February 2015, 18 million students and teachers use Canvas.
Coates differentiates Canvas from other LMS tools as being cloud-based. He sees the seamless updates of cloud-based software as a big benefit for schools. “Say a teacher is really frustrated with a bug,” he explains. “One day, they’ll log in and it’ll be gone. New features and updates just magically show up, and evolve continuously--there’s no downtime, no versions.”
With this funding round, Coates plans to expand Canvas’ resources by 40%, which he translates to “a lot of hiring.” Instructure currently has over 550 employees; Coates hopes to add 250-275 by the end of 2015.
The funding will also support Bridge, a new Instructure product that caters to corporate organizations. Bridge, launched last week, is a LMS designed for learning within businesses. It currently serves six companies, including Oregon State University (which also uses Canvas for its students), CLEARLINK, and OpenTable.
While there are similarities between Canvas and Bridge--both are cloud-based and use many of the same technologies--Instructure has designated a separate product team and engineering team for Bridge. Coates also sees the corporate need as more short-term:
“The need in the corporate world is about getting people certified, or compliant to regulations. Rather than a four-year degree, they need to do a 10-hour corporate training.”
Coates also stresses Bridge’s focus on corporate alignment. “If you have a sales team and a finance team and they don’t understand corporate goals the same way, they’re misaligned, and might be creating friction and slowing the system down,” he says. Bridge offers a tool to diagnose that misalignment, meaning that companies “can ask people about their interpretation of this corporate goal, and target how to educate them.”
Coates sees significant differences between the corporate and education markets. “There are 30 or 40 companies out there” selling LMS to businesses, including Cornerstone on Demand, Saba, SumTotal and SuccessFactors, he explains. “In the academic market, Blackboard dominates, and folks like us are able to differentiate ourselves from them. In corporate, it’s about differentiating from old enterprise software.”
Coates’ approach to develop clients for Bridge will reflect that market difference. “In the academic market, a lot of schools compare notes, and talk to each other--we really had to develop credibility, and that took a lot of time,” he says. “On the corporate side, [companies] don’t really talk to each other. It’s much more of a one-one-one type sale, solving specific problems.”
One group of potential Bridge users are existing Instructure customers: just shy of 10% of Canvas clients are corporations, according to Coates, who hopes to migrate these users to Bridge. “Over 100 businesses use Canvas, and almost all of them shouldn’t be using it,” he tells EdSurge. Why? According to Coates, the requisite LMS tools are “overkill for institutions: training is part of what they do, but it’s not the core part of their business.” He adds: “In an academic institution, your full-time job is to learn.”
Coates also hopes to develop a specialty within the enterprise software marketplace. “There are literally millions of business in the US,” he explains. “We haven’t found our niche yet, but by the end of the year, we’ll probably have some that will occur organically.”
And will that IPO happen in 2015 as well? “I’ll have to stay coy on that one,” Coates demurs.