As ed tech heats up, Desire2Learn raises $80M in its first VC round


Since launching in 1999, Desire2Learn, a Canadian ed tech company that shares a hometown with Research in Motion, has bootstrapped its way to profitability.

But after more than a decade of going it alone, the company on Tuesday said it had raised $80 million from Menlo Park-based New Enterprise Associates and OMERS Ventures, the venture capital arm of OMERS, one of Canada’s biggest pension funds.

Why now?  “The demand for online learning, mobile [learning], analytics and education globally has never been greater than it is today,” John Baker, the company’s president and CEO, said in an interview.

Desire2Learn was a profitable, high-growth firm before the funding, he said, but given increasing interest from institutions and students in digital learning platforms that provide more social and mobile experiences, analytics and other features, the company decided to step on the gas.

With the new funding, Desire2Learn, which competes with companies like Blackboard to provide an online learning platform to K-12 and higher education schools, plans to accelerate global expansion and research and development, Baker said. The company has a strong U.S. customer base, including the New York City Department of Education, Michigan State University and other major education networks. It also has staff worldwide, including Singapore, Brazil, the Netherlands and the U.K., and plans to increase its presence in South America and the U.K.

As we’ve previously reported, investment in education technology, particularly in K-12, has been hitting new highs. According to GSV Advisors, a Chicago-based investment firm that specializes in education, investment volume in 2011 exceeded the peak from the 1999-2000 boom.

The rise of cloud-based, social and mobile platforms, changing policies at federal and local levels and the demand for data and analytics around student performance and engagement are driving interest in new approaches to learning. And, even though the sector has historically struggled to attract funding, investors are starting to see opportunity in the impending shift and new business models that don’t necessarily rely on selling directly to school districts and institutions. In addition to its recent investment in Desire2Learn, NEA, for example, has invested in online course startup Coursera and social learning platform Edmodo.

The uptick in interest in the space means that older companies like Desire2Learn are getting new competition from startups like Lore (which launched as a clear BlackBoard competitor but is now more focused on social learning) and Chegg, the textbook rental company which is now positioning itself as a broader hub for student learning. But its multi-platform approach, strong client base (of 700 institutions and organizations) and long-standing partnerships — as well as new ones — could serve it well.

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