We should join in congratulating Instructure's leadership team for securing $30 million in additional venture capital funding.
This is good news for higher ed, good news for edtech, and also good news for the competition.
The investors at Bessemer Venture Partners clearly see the potential for growth in higher ed, and I think that they will end up doing extremely well when Instructure eventually goes public.
Look for other large investments in edtech startups (particularly media management and mobile education platforms) in the coming months.
What are some of the risks and opportunities for Instructure with an investment of this size?
Risk - Be Very Judicious With Acquisitions: Any edtech acquisition that Instructure contemplates should pass a very high bar providing tangible and significant benefits to the core Canvas platform. Integrating technologies, work-forces, and cultures with a new acquisition always takes much longer and is more painful than anticipated. It is very easy to get distracted from a laser like focus on evolving the platform and building deep relationships with existing and potential customers.
Opportunity - But Look to Acquire: Being judicious with acquisitions does not mean that Instructure should not be looking to buy the "right" startup. Technology areas where Instructure could look to complement the core Canvas platform are in media management and mobile. A robust media management platform with a similar architecture to Canvas (multi-tenant cloud based on Amazon S3) would prove a strong complement to Canvas.
Risk - Don't Grow Headcount Too Quickly: I've been very impressed with how Instructure recruits, and the company's willingness to let people go that are not a good match. It is a challenge for any company in this space to keep hiring standards as high as when the organization was small and just getting going. That said, Instructure does need to ramp up to take advantage of all the opportunities to both improve the platform (product managers, developers and learning designers), and build relationships with the education community (communications, sales, services, and again learning designers).
Creating dedicated teams to tackle specific strategic objectives, and letting these dedicated teams play a large role in recruiting their own staffs, would be one way to avoid many of the usual problems associated with rapid growth.
Opportunity - Take A Thought Leadership Role in EdTech: Instructure has the opportunity to do some things differently in the LMS market. The place that I would start would be to commit to open and transparent pricing. To my knowledge (and please tell me if I'm wrong), none of the major LMS providers publishes their prices on the web. My favorite example of an edtech company that does this right is TechSmith, as they publish the prices for Relay online for all to see.
Another area that I think that Instructure could differentiate itself would be to commit resources to developing and training the next generation of leaders working at the intersection of education and technology. Funding existing professional development initiatives would be a good place to start, although I would love to see an edtech company take the lead in bringing together other edtech and non-profit players with the goal of creating new opportunities for leadership development.
How would you advise Instructure to invest this latest $30 million dollar round of funding?