Blackboard Chalks Up $30M Deal

With four rounds of VC-backed financing already in the bag, Blackboard Inc. recently completed a $30 million Series E deal backed by strategic investors such as network giant America Online Inc., computer maker Dell Computer Corp. and textbook publisher Pearson Inc.

In the market for just four weeks, the deal was slightly oversubscribed at $32 million, but the company was unwilling to risk further dilution in order to obtain the additional capital, said Matthew Pittinsky, chairman and co-founder of Blackboard.

AOL, Dell and Pearson’s stake in the deal amounted to $14 million, with an observer seat on the board to be held by Pearson. They joined existing investors Internet Capital Group, The Carlyle Group, Novak-Biddle Venture Partners, Kaplan Inc., Aurora Fund and Merrill Lynch Kecalp LP, all of which exercised their full pro rata rights in this round.

With $51 million in venture financing to date, Pittinsky said that the company is sufficiently capitalized for the next 12 months. Although he would not discuss revenue or growth projections, he did say that the latest round most likely would carry the company through to profitability and launch it into the public equity market.

Blackboard, an infrastructure player for e-education services reaching 3,300 educational institutions clients and 2.1 million users in 70 countries, will leverage its new strategic relationships to fuel international and domestic growth and to develop e-commerce and content delivery services.

“Our focus is building greater depth and exploring other markets – moving into the [kindergarten] through [12th grade] space, commercial education [and] the Internet,” Pittinsky said.

AOL, for example, is set to launch an education platform targeted at the K-12 market in the coming months. While Blackboard’s services are heavily concentrated in the higher education market, since universities tend to be more wired than other schools, Pittinsky is eager to tap into the $250 billion K-12 education industry.

He added that Blackboard’s relationship with AOL could spark growth on the Internet side of Blackboard’s offerings. Dell, on the other hand, represents a distribution platform for Blackboard, while Pearson is migrating more and more of its textbooks into electronic formats.

Blackboard was founded in 1997 and scored its $440,000 angel round of financing in July 1998. Internet Capital Group led the following round in September, which totaled $3.2 million, followed by a $12 million round led by The Carlyle Group in May 1999. The company closed another $3.4 million round in January, led by Kaplan Ventures.

Since its founding, the company has grown from two to 200 employees. Moreover, original client Cornell University is now only one of 3,300 institutions Blackboard counts as customers.