It’s been an interesting week for LMS providers. Instructure (the owner of Canvas – an LMS (Learning Management System)) just announced that it will be acquired by Thoma Bravo, LLC, a private investment firm for a cool $2 billion.
This news follows closely on the heels of Schoology being purchased by Powerschool (which is also held by a private investment firm).
Keep in mind that private investment firms are designed to do one thing (hint, it isn’t supporting student success). Apparently, there are some smart people who are expecting to make a lot of money from schools.
I’ve written before about Canvas. They were working hard to increase their market share so that they could then raise prices to make money. This seems to be a very real part of the economy right now, collect as many users as possible and somehow figure out how to make money later. This seems to be the plan for many, many companies, not just LMS providers in education.
Powerschool acquiring Schoology makes some sense to me. Powerschool provides an SIS (Student Information System). Powerschool wants to be able to provide a full-featured solution for schools. Powerschool having an LMS as part of that is good marketing and could provide some economy of scale to schools.
However, I remain concerned about investing in a company that pretty freely acknowledges that they want to build things up so that they can sell it off for a profit. I’m not in education for a couple of years, I’m in for the long haul.
The purchase of Canvas makes less sense. (The selling of Canvas makes total sense). The Board acknowledged their goals by gaining customers at a loss to eventually make money. Canvas was losing money last I knew. In their Q2 report, they noted:
“We’re excited by our prospects for 2019 and beyond and we remain focused on executing on our strategy, which we expect will sustain our revenue growth, help us achieve profitability, and generate shareholder value.”
emphasis added by me
For the second quarter ending June 30, 2019, Instructure expects revenue of approximately $61.8 million to $62.4 million, a non-GAAP net loss of ($9.2) million to ($8.6) million, and non-GAAP net loss per common share of ($0.25) to ($0.23).
Emphasis added by me
So what does Thoma Bravo see in Canvas? From the Press Release:
Thoma Bravo will support Instructure as it increases investment in education technology innovation and expands internationally.
CISIon – PR Newswire
Readers of this site will note my passion for Moodle. Moodle is open source. They have a financial revenue stream that makes sense. They have passed on being purchased several times. Martin Dougiamas is pretty dedicated to open source (while still being able to support the project financially).
Apparently, I’m missing out on something. I need to create an LMS and lose a ton of money while gaining market share. Does anyone have many millions that they would like to lose?
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