Ed-tech is on fire! Desire2Learn, a startup that has bootstrapped for over a decade, has raised its first round of venture capital funding from New Enterprise Associates (NEA) and OMERS Ventures, the venture arm of one of Canada’s largest pension fund managers.
The startup hails from Waterloo, Ontario, the birthplace of Research In Motion (RIM). With this announcement, the region is hitting the headlines for far more than its gadgets — according to Thompson Reuters, this is the largest ever investment in a Canadian software company.
Desire2learn (“D2L”), which specializes in cloud-based teaching tools, plans to use the funding to hire more staff and step up its marketing efforts. Since it launched in 2009, it has expanded to 700 customers and 8 million students, according to John Baker, Desire2Learn’s founder and chief executive officer.
In an interview with Reuters, Baker stressed that the company has been profitable for years, and had already approved plans to fill 170 open positions before the financing deal was completed.
“We have built a high-growth profitable organization over the years and we want to continue to see that continuing to grow,” he said.
NEA, the Menlo Park-based firm that specializes in early stage information technology companies, has bet big on education technology. In recent months, the venture firm recently poured millions into fast-growing online education site, Coursera, and educational social network, Edmodo. It recently raised a $2.6 billion fund, one of the biggest in venture capital history.
NEA partner Jon Sakoda said in a statement that with its software-as-a-service (SaaS) solution, Desire2Learn is uniquely suited to meet the needs of the largest educational institutions in the world. “As the $1 trillion-plus education market shifts from older legacy products to best-of-breed cloud solutions,” Sakoda said, “Desire2Learn is the clear market leader.”
Still, the startup faces strong competition from Blackboard Inc., an educational tools provider which sold to private investment group, Providence Equity Partners for $1.64 billion. In 2009, the companies resolved a heated three-and-a-half year legal suit over an e-learning patent. Moodle, an open source competitor, launched in 2002, claims to serve over 50 million users.
Its headquarters will remain in Canada, but Desire2Learn has already extended its suite of tools to schools and colleges across the U.S..
E-Learning Image via Shutterstock