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Instructure Canvas, Flip Video, and Ed Tech Funding
April 14, 2011 - 10:00pm

Two big pieces of news this week in ed tech.

Earlier in the week we found out that Cisco is shutting down the Flip video camera division, two years after purchasing the company for $590 million.

And then today we hear that Instructure Canvas, an up-start LMS start-up company out of Utah has received $8 million in a Series B round of financing, led by Open View Venture Partners, EPIC Ventures, TomorrowVentures and Tim Draper of Draper Fisher Jurveston. For those of us who fantasize about Google getting serious about the education market, the fact that Google Chairman Eric Schmidt is behind TomorrowVentures may give us some cause for hope. Closing this funding round is a major accomplishment for Instructure and its CEO Josh Coates. These investments show the importance of having experienced leadership, leadership with serious skin in the game, such as Coates.

I have no idea if the learning management system offered by Instructure will gain enough traction to succeed in the marketplace. I see many things that I like about the technology that Canvas is built on and the platform they have developed, and I also have some serious critiques of the companies strategic business model. You can read my 2/6/11 post "Instructure's Canvas LMS: 7 Cheers & 7 Critiques", to see my ideas, as well as the great discussion that this post generated.

What I do know, however, is that $8 million (or $80 million) is a very smart investment for these VC firms, exactly the sort of bet on education technology that funders should be making. Investing in ed tech start-ups is also what big companies like Cisco (and Microsoft and Google and Oracle and Apple and Amazon and HP and IBM etc.) should be doing with the massive amounts of cash they have on hand, rather than chasing yesterday's hot technology, as Cisco did with Flip.

The global education market will be disrupted, and some ed tech start up will reap the massive rewards of catalyzing that disruption. Instructure thinks that it has cracked the code to disrupt the academic technology market by offering Canvas as an open source product, and indeed the company reports that "thousands of universities" have downloaded the LMS to poke the tires. To date, Instructure has signed contracts with over 30 institutions to provide Canvas as the LMS. At what point of adoption does Canvas get on the radar of Blackboard or D2L, or of institutions thinking about re-signing with either of these companies or moving to Moodle?

This investment in Instructure Canvas, and the recently announced $20 million 3rd round at Kaltura are early signs of this investment trend. Most of these investments will not pay off, but a few will enjoy massive returns. Who knows, Instructure could be one of those winners.

On a program note, this blog and its author will return from vacation on Monday, 4/25.


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