Utah Startup Loading Up for Education Battle

Teachers and students, like many company employees, rely on mobile devices and social networks in their personal lives and want similar new-wave tools in their work. A Utah-based startup is trying to close that gap, aided by a new cash infusion.

Instructure, a closely held company led by veteran tech entrepreneur Josh Coates, on Friday plans to announce an $8 million funding round by investors that include OpenView Venture Partners, TomorrowVentures (an  investment vehicle of Google Chairman Eric Schmidt), Epic Ventures and Tim Draper, of the venture-capital firm Draper Fisher Jurvetson.

The company is taking aim at entrenched players like Blackboard in offering colleges and universities what the industry calls learning management systems. Such software helps teachers manage interactions with students, distribute assignments, grade students’ work and so forth.

Instructure, founded in 2008, is the brainchild of two former graduate students in computer science at Brigham Young University. Coates was teaching there at the time, after a lengthy career in Silicon Valley–including a stint at search-technology pioneer Inktomi, co-founding the storage software company Scale Eight and most recently the online storage provider Mozy, which was purchased by EMC for $76 million. He later decided to help bankroll Instructure and become its CEO.

The system it developed, called Canvas, is run as an online service rather than software installed by an educational institution. It exploits recent advances in Web programming, Coates says, to help connect with other online offerings like Google Docs, Facebook and Twitter. When a teacher changes the date of a quiz, for example, students could automatically receive text messages to their cellphones, a message on Facebook or conventional email, the company says.

To hear Coates tell it, investors came calling after Instructure’s announcement in February that it would offer a free version of Canvas on an open-source basis as well as a paid commercial version. So did educational institutions.

“We had almost four thousand schools contact us,” Coates says. “We were inundated.”

It’s not that schools like fooling around with software source code. Indeed, Coates expects most customers will wind up buying the conventional offering, which comes with technical support.

But the open-source approach–pioneered in education by offerings such as Moodle–gives customers assurance that if a startup goes out of business or is sold its technology can live on. The new funding for the company, which claims 30 customers, provides additional assurance that Instructure won’t go away soon, Coates says.

Coates, a World War II history buff known for restoring his own tank (technically a Hellcat Tank Destroyer), may need the financial ammunition to survive a long war against segment leader Blackboard. “It’s not the sexiest thing I’ve ever worked on, but I think it’s the most important,” he says.