E-Learning
:
Surviving the Bear Market: April 27th, 2001
By Paul Stacey
The
technology marketplace has been gloomy for months like a
Pacific Northwest winter. The burst of the dotcom bubble
and a bearish economy have created a Darwinian
e-learning marketplace - survival of the fittest.
For
consumers this is not necessarily a bad thing. Everyone
has been complaining about the amount of white noise,
market confusion, and proliferation of choice. Moving
the e-learning marketplace from early innovation to
proven delivery will help. The best will emerge.
At
the US Business of E-Learning summit in Las Vegas
commercial providers of e-learning commiserated. Many
sector players are glad they never added dotcom to their
business name. Some wonder if the "e" in
e-learning will someday disappear the same way. In the
e-learning community the saying used to be "content
is king", now the saying is "cash is
king" as companies with significant cash reserves
weather the storm and startups look for the fastest path
to profitability.
Providers
report that buyers in the process of RFP's, or making
purchase decisions, have a heightened interest in
shorter commitments via an Application Service Provider
(ASP) over large technology infrastructure purchases.
Buyers are shifting e-learning purchases from capital
costs to expenses.
This
shakeout has affected every area of technology. Although
venture capitalists invested a record $2.9 billion in
education and training startups in 2000, the investment
climate was an increasingly difficult one for education
entrepreneurs. A recent report by Adventures outlines
the trend for e-learning.
During
the first quarter of 2000 more than a billion dollars
poured in to education startups and six education
companies went public. When the stock markets began to
fall in late March of 2000 education venture capital
activity slowed with it. Education startups brought in
$814 million in the second quarter and only two
companies were able to go public with an IPO.
But
by the end of the year it was possible to point to two
significantly positive developments. Several publicly
traded e-learning companies, including DigitalThink and
Saba were experiencing great revenue growth. But perhaps
the most important advancement was entrepreneur's and
venture capitalist's deeper understanding of what a
successful e-learning business model looks like.
E-learning is now regarded as a legitimate investment
sector that has considerable stability. For more
information see the whole report at:
www.eduventures.com/research
In
the corporate sector hiring at most companies is frozen.
But amazingly, financial dollars committed to e-learning
have not been cut in the usual "training
first" slash and burn of budgets in tight times.
Dollars remain committed.
Could
it be that learning, knowledge management and
intellectual capital have moved from secondary
importance to primary? Have know-how and employee
retention become mission critical? We're about to find
out.
In
tough times its not a bad strategy to focus on
employees. Corporate competitive advantage and survival
can be fostered by honing process, communication,
delivery, and quality . E-learning provides a means of
doing so with less work disruption.
In
the face of an economic downturn when venture money
seems to have all but disappeared its heartening to note
that some e-learning companies have successfully landed
additional rounds of financing.
Examples
of recent financing clipped from various news sources I
track include:
Thinq
Receives $20 Million in Financing (April 9, 2001)
Thinq,
a provider of corporate e-learning solutions, announced
that it received $20 million in its fourth round of
financing. The investment was led by CIBC Capital
Partners and Mellon Ventures. Thinq's previous
investors, including Charles River Ventures, Bessemer
Venture Partners, BCI Partners, HLM Management and
Windspeed Ventures, also participated in the round.
Thinq will use the funds for operations, product
development and acquisitions. Thinq has raised a total
of more than $65.7 million since February 1999. See http://www.thinq.com
KnowledgeAdvisors
Receives $2 Million in Series A Financing (March 21,
2001)
KnowledgeAdvisors,
a designer of corporate learning programs, announced
that it closed a $2 million series A round of funding.
The round was led by Mosaix Ventures and eBlast
Ventures.
See http://www.knowledgeadvisors.com
Digital
Learning Interactive Secures $13.85 Million in Second
Round of Funding (April 5, 2001)
Digital
Learning Interactive, Inc., a provider of web-based
learning resources for the postsecondary market,
announced that it secured a $13.85 million second round
of financing. The funding was led by POD Holding L.P.
and included S.A.C. Capital Associates, LLC. Digital
Learning will use the funds to expand its marketing
efforts.
See http://www.digitallearninginteractive.com.
E-Learning
Solutions Provider HighTechCampus Gets $4 Million In
Second Round Funding (March 12, 2001)
HighTechCampus,
a corporate e-learning solutions provider, announced
that it secured $4 million in its second round of
funding from Tobat Capital. See http://www.hightechcampus.com
Bigchalk
Secures $43.3 Million in Funding to Fuel Company Growth
(March 5, 2001)
Bigchalk.com,
Inc., an online e-learning network for the K-12
community, announced that it closed $43.3 million in
Series B financing led by Softbank Ventures, Inc. Bell
& Howell Information and Learning, Investment Group
of Santa Barbara and William E. Oberndorf also
participated in this round. The funding will be used for
sales and marketing initiatives, business development
and strategic investments. See http://www.bigchalk.com
Cognistar
Lands $2.3M in Second Round (March 13, 2001) Cognistar
Corp., a developer of online training and education
courses for law firms and corporations, announced that
it completed a $2.3 million second round of financing
led by the Massachusetts Technology Development Corp.
The funding will be used to recruit additional corporate
law firm clients, expand products and recruit staff.
Cognistar received a $1 million first round of funding
from private investors last summer.
See http://www.cognistar.com
In
addition the e-learning marketplace is going through
mergers, acquisitions, and strategic partnerships as
players consolidate and try to build more robust
end-to-end e-learning solutions.
Recent
examples of mergers, acquisitions, and partnerships
include:
Click2learn
to Acquire Intelliprep Technologies, Inc. (April 18,
2001) Click2learn (NASDAQ:CLKS), a provider of
e-learning solutions for the corporate market, announced
that it acquired Intelliprep Technologies, Inc., a
developer of custom learning technologies for
businesses, for approximately $4 million in stock.
Click2learn will integrate Intelliprep's iX learning
management system and platform to expand its learning
and content management system. See
http://www.click2learn.com
and http://www.intelliprep.com
Centra
Software to Acquire MindLever (April 13, 2001)
Centra
(NASDAQ:CTRA), a provider of e-learning software and ASP
services, announced that it will acquire MindLever, a
provider of learning content management systems.
Financial details of the transaction were not disclosed.
See http://www.centra.com
and http://www.mindlever.com
SmartForce
Acquires Learning Management System Provider IcGlobal
(April 11, 2001)
SmartForce
(NASDAQ: SMTF), an e-learning solutions company for the
corporate market, announced that it will buy icGlobal
Corp., a learning management systems developer.
Financial details of the transaction were not disclosed.
See http://www.smartforce.com
and http://www.icglobal.com
General
Motors and UNext Form Innovative E-learning Alliance
(April 4, 2001)
General
Motors Corporation and UNext, a provider of online
education, announced an alliance. Under the terms of the
agreement, UNext and General Motors will co-develop the
General Motors University, providing 88,000 of GM's
executive-level employees with access to online
executive and management development courses and an
online MBA program through UNext's Cardean University.
See http://www.unext.com
NETg
Becomes the E-learning Provider for the University of
Phoenix (March 28, 2001)
The
University of Phoenix announced that NETg, a provider of
corporate e-learning solutions, will provide curriculum
courseware for its business and IT programs. The
agreement provides the University of Phoenix with access
to NETg's library of more than 1,200 course titles. See http://www.netg.com
and
http://www.phoenix.edu
Thinq
and NIIT Join Forces to Deliver Complete E-learning
Solutions (February 26, 2001)
Thinq,
a provider of learning management and content solutions
to the corporate market, has partnered with NIIT, a
global e-business solutions provider. NIIT's experience
in custom content creation and conversion to online
formats will be integrated into Thinq's suite of
services, enhancing marketing and distribution
opportunities for both firms. See http://www.thinq.com
and http://www.niit.com
E-learning
has also been identified as a major national and
international strategy. Particularly interesting is the
Canadian government's Advisory Committee for Online
Learning's report urging that government and post
secondary institutions more aggressively pursue online
learning. This report is available at:
http://www.schoolnet.ca/mlg/sites/acol-ccael/en
And
in Europe the European Commission (EC) recently
announced a three year, $13.3 billion e-learning action
plan to encourage the use of new technologies in
education across all levels of education. The EC's plan
will focus on languages, the arts, culture, citizenship,
science, technology and society. The plan is designed to
foster cooperation between the states of the European
Union (EU), universities, training and industry experts
in order to make the EU a formidable player in the world
economy. See http://europa.eu.int/comm
Certainly
the e-learning marketplace is being affected by the
bearish economy. However, as the news above suggests,
while individual companies may disappear or merge, the
e-learning marketplace is now an established sector that
is here to stay.
Paul
Stacey is the Director of Corporate Education and
Training at the Technical University of British
Columbia, a long time education professional in the high
tech private sector, and an e-learner.
Contact: Paul
Stacey
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