Mindflash, creator of a web-based application for online employee training, has raised a new round of funding to help small and medium-sized businesses conduct training and track progress. The investment was led by the Investment Group of Santa Barbara (IGSB), a venture capital firm based in Santa Barbara, Calif.

Led by Donna Wells, former CMO of Mint.com, the startup allows businesses to create training courses in minutes by uploading PowerPoint presentations, PDF documents and videos to an online Adobe Flash app. Clients can build quizzes to test employees’ understanding of the material, while real-time tracking and reporting allow businesses to monitor employee performance.

Based in Palo Alto, Calif., Mindflash offers users an affordable alternative to the costly Learning Management Systems often deployed by large businesses. The company, which launched publicly last September, charges businesses a monthly fee that varies based on the number of active trainees in the system. The service is free for companies with fewer than 10 employees, then ranges from $99 per month for small businesses to $999 per month for large enterprises. Regardless of the number of users, all businesses get the first thirty days of service free.

Since its public lunch, the company’s users have completed tens of thousands of online courses. This winter, ReadWriteWeb named Mindflash as one of the top ten SMB tech tools, alongside big names like the iPad, Square and Google Apps. Founded in 1999, the company previously raised $5M from IGSB in 2009.