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Instructure Raises $8 Million To Add Staff

Instructure, the relative unknown that swooped in last December and won learning management system business away from entrenched competitors at the Utah Education Network, has just finished a new round of financing that will help the company scale up its staffing. The startup's LMS, Canvas, mixes social networking functionality with standard course management operation.

Instructure has received an infusion of $8 million in Series B funding from four sources: OpenView Venture Partners, Epic Ventures, TomorrowVentures, and Tim Draper of Draper Fisher Jurveston. TomorrowVentures is a venture capital firm in which Google Chairman Eric Schmidt participates. Epic was an early investor. According to the company, from start to finish, this latest funding process took fewer than six weeks to accomplish.

"We were compelled by Josh and his team's vision of delivering outstanding user experiences to those in the education market," said OpenView's Firas Raouf. "We received passionately positive feedback from Instructure's customers that was driven primarily by their user experience with Canvas. The LMS market is long overdue for a new learning platform built on the latest Web-based technologies."

The new funding will primarily go into growing the company headcount, said Instructure CEO Josh Coates. To keep up with market demand, most new hiring will take place in sales and support operations. "Across the board, the whole company needs to grow. We're trying to bring on customers as fast as we prudently can."

That includes addressing several dozen requests for proposals from institutions of higher education and K-12 school districts interested in learning more about the Web-based LMS. "What's great is that we've got hundreds of schools in our active pipeline that are in decision mode in the next six months," Coates noted. "We've just been slammed. That's both the opportunity and the challenge."

Coates has been in this position before. In 2005 he founded Berkeley Data Systems and its backup service, Mozy.com, from a Utah location. Within two years the company had 300,000 customers and 8,000 business contracts. In 2007 Mozy was sold to EMC, which runs it as a wholly owned subsidiary.

"This feels a lot like Mozy. It's a very familiar feeling," Coates said. "That's why I'm more nervous than excited. I've seen this movie before. It's exciting in that we've got a market that's ready for our product and we want to step up to this growth challenge. The nervous part is that we've got a lot of work in front of us in growing the company at an appropriate speed. That's an operational challenge. We've got fantastic technology. We've got a real product. We're really hitting on all cylinders. The message we're sending out resonates with customers. It feels like we're riding a rocket."

In February 2011 Instructure announced that would make an open source version of Canvas available. Since then, the company said, thousands of schools districts and universities have signed up to evaluate the application.

The company currently has 30 customers. Among the most recent wins is the University of Mary Washington in Virginia. According to the institution's Web site, the university is replacing its Blackboard implementation with Canvas tentatively beginning in fall 2011.

"We're here for the long haul," said Coates. "Our mission is to relieve teachers and students in all levels of education of antiquated technology."

About the Author

Dian Schaffhauser is a writer who covers technology and business for a number of publications. Contact her at dian@dischaffhauser.com.

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