As Course-Management Market Gets More Competitive, Instructure Raises $30-Million in Funds

Instructure, a company that sells course-management software, announced on Wednesday that it had won $30-million in venture-capital funds, and some observers said the company was gaining ground on Blackboard, which has long dominated the market for learning-management systems, or LMS.

The choice of which software a college uses to manage class activity—for both online and in-person courses—has become increasingly competitive in recent years, said Casey Green, director of the Campus Computing Project, which conducts an annual survey of campus-technology leaders. He said that a few years ago Blackboard controlled about 70 percent of the market, but by 2012 it had only around 45 percent.

“A lot of campuses have been with one provider for a long time, and maybe it’s time to go into a bake-off,” he said. “Blackboard won some of those, and other companies won some of those.”

Phil Hill, an educational-technology consultant, said that Instructure, which is a relative newcomer to the market and operates entirely over the Web, has benefited by being the new kid on the block. “Instructure has changed the LMS market,” he said. “Most of the other vendors—their original product architectures came out 10 years ago or more. Instructure has been part of a new wave of LMS.”

Instructure’s growing roster of clients includes Auburn University, Brown University, and the University of Washington. The University of California at Berkeley will begin trying out Canvas, Instructure’s LMS platform, this summer.

Josh Coates, Instructure’s chief executive officer, said that about two years ago the company had only 20 employees. Today it boasts more than 220.

In the past Blackboard has bought up competitors once they reached the size that Instructure is nearing. In 2002 Blackboard acquired Prometheus, in 2005 it bought WebCT, and in 2009 it purchased Angel Learning.

Mr. Coates, however, stressed that Instructure would remain independent. In fact, he said, the company aims to go public within the next few years. The $30-million Instructure just raised will help the company expand, he said, to “get gasoline to throw on the fire, to really increase growth.”

Instructure’s new venture-capital funds were provided by Bessemer Venture Partners, with participation by existing investors, including EPIC Ventures and TomorrowVenture.

Although Instructure has successfully positioned Canvas as new and intuitive, the actual product may not be that different from Blackboard’s LMS, said Richard Garrett, vice president and principal analyst at Eduventures and a specialist in online higher education.

“A lot is about look and feel and positioning and novelty,” he said. “I don’t think schools are ending up in different places,” with each product, he added. “It still comes down to individual preferences.”