Instructure goes public, raising $70m on 4.4 million shares
Instructure, maker of the Canvas learning management system (LMS), went public on Friday, raising $70m from the sale of 4.4 million shares. edSurge reports revenues have steadily grown in recent years, but Instructure is not yet profitable, disclosing $44.4m in revenue and a net loss of $41.4m in 2014. As the first major initial public offering for an ed tech LMS company since Blackboard in 2004, Jeremy Friedman, CEO of Schoology, sees Instructure's early success in the market as indication the ed tech space has room for growth.

Yes, the panda got to ring the bell, too.

On the auspicious day of Friday, Nov. 13, Instructure became a public company on the New York City Stock Exchange, opening at $16 a share under the symbol INST and ending the day at $18 a share. Instructure sold 4.4 million shares, raising approximately $70 million.

Based in Salt Lake City, Instructure offers a cloud-based learning management system, Canvas, first to universities and more recently to K-12 schools. The company got started in 2008 by two computer science graduate students who wanted to create a platform for organizing learning materials. Their advisor, computer scientist, Josh Coates, had previously started several companies (Scale Eight and Mozy.com) that were sold to bigger industry players.

Coates first invested in his students’ venture then rolled up his sleeves and joined as chief executive in 2010. He brought both a discipline of how to build a company—and a quirky sense of humor. The company’s annual user conference, InstructureCon, has the usual keynotes and panels—interspersed with music, mini-golf and trapeze artists.

That means that when Coates traveled to New York to ring the opening bell on the stock exchange, he brought not only the company’s chief financial officer, but its mascot, a panda.

In an interview with EdSurge, Coates said he had always intended to build Instructure into a publicly traded company.

“From the founding of the company, we wanted to be an independent company, one that was capable of being a public company,” Coates said. “There’s an enormous scrutiny that happens before a company becomes a public company,” he observed. Clean finances, strong security, a path to profitability—those are just the table stakes for going public, he added. “That’s what we wanted at Instructure. We wanted to be a long-term, independent force.” And being a public company, he said, “will allow us to innovate in software and grow, and be here for a long time.”

Instructure still has a long path to profitability. Revenue has grown steadily over the past three years. Even so, according to the company’s S-1 filing, the company had $44.4 million in revenue in 2014, and reported a net loss of $41.4 million. The company had previously raised approximately $80 million in capital from investors including: OpenView Venture Partners, Epic Ventures, Bessemer Ventures and Insight Venture Partners.

Instructure is the second pure-play education technology company to go public in the past few years. 2U, which builds online masters programs for universities, went public in March 2014 at $13 a share; it closed on Friday at $21.69.

“Instructure’s IPO is the first major edtech LMS company IPO since Blackboard [in June 2004],” said Jeremy Friedman, chief executive of Schoology, a New York-based startup that offers a learning management system. (Blackboard was later purchased by a private equity firm in 2011.) “This is validation for the industry and it illustrates that there continues to be major growth possibilities in the space.”

There’s more to come, too: “This industry has legs,” Coates said.

Instructure’s Finances

2012 2013 2014 6mo (June 30, 2015) Revenue $8.8 million $26.1 million $44.4 million $30.5 million Net profit (loss) ($18.5 million) ($22.5 million) ($41.4 million) ($30.6 million)

Source: SEC documents