Photo: John Baker, founder and CEO of Desire2Learn, says an $85-million Series B round will position the company well for accelerating growth in demand for its cloud-based learning platform.

Kitchener-based Desire2Learn has closed an $85-million Series B investment round as its global footprint in educational technology grows at an ever-quicker pace.

It’s the second time in two years that D2L, as it is colloquially known, has taken on  investment, following the $80-million Series A round it closed in 2012, the first outside funding the bootstrapped company had accepted.

News of this latest round comes as the 15-year-old company braces for what CEO John Baker expects to be a period of explosive growth in demand for D2L’s cloud-based learning environment, which it recently branded as Brightspace.

“I think I said we were just getting warmed up last time. I think we’re really now just getting warmed up,” Baker said in an interview with Communitech in D2L’s offices. “I think we’re at just the very beginning of a massive transition to online and blended learning, and the digitization of content for that journey.”

Participating in the Series B round are Columbus Nova Technology Partners (Silicon Valley and New York); Graham Holdings (Washington, D.C.), Four Rivers Group (San Francisco) and Aurion Capital (Toronto), along with existing investors New Enterprise Associates and OMERS Ventures. Silicon Valley Bank provided debt financing.

Baker said the latest investment is “great validation that we’ve been on the right track as an organization, investing in the right things, and that the hard work and passion that our people are putting into building great products for our clients is really having an impact.”

The news follows another banner year of international growth for D2L, which Baker founded in 1999 as a third-year University of Waterloo student. The young entrepreneur appeared at his first Communitech event – a TechWorking Breakfast – the following year, when the company had just two employees.

Today, Baker serves as Chair of Communitech’s board of directors, and D2L employs 783 people full-time, not including co-op students and contractors. The company is looking to fill about 100 positions, 60 of them in research and development.

With more than 1,100 clients and about 15 million learners already using its product, Baker predicts only more growth ahead as learning becomes more personalized and spreads beyond educational institutions and into workplaces.

“We see this being important timing for us to capture those opportunities as these schools, these universities and these companies start to look for their partner in transforming that learning experience,” Baker said.

Communitech CEO Iain Klugman said D2L’s growth is a powerful reminder that the Waterloo Region tech scene is not just about startups.

“I think that over the last little while we’ve built this reputation as being a major global startup hub, and people often forget the fact that this is also a phenomenal place to grow a company,” Klugman said. “We’ve seen many of Canada’s largest tech companies started and grown here.”

Klugman said he’s proud of the Desire2Learn team, and said Baker is “not only building a great company, but he’s a great community builder.”

A full transcript of our interview with John Baker follows:

Q – What’s the significance of this latest round of funding?

A – I think it’s great validation that we’ve been on the right track as an organization, investing in the right things, and that the hard work and passion that our people are putting into building great products for our clients is really having an impact.

It’s wonderful to see existing investors coming to the table, along with us bringing together some thought-leadership investors to help us with our next stage of growth as well.

It’s the combination of those two that’s really exciting for us, because as we go from the stage where we were at when we did our Series A, we need to now look at expanding what we’re doing on a global basis, and we also need to ensure we’re investing in the right technologies to ensure that our team, whether it’s in R and D or in our cloud-SaaS infrastructure, keeps our clients on the very leading edge.

For us it’s exciting, because it gives us the ability to look strategically and make sure we’re investing today to help us accelerate the dream that we have ahead.

Q – What has changed since the Series A round two years ago?

A – In the broad market, when we did the Series A, we thought that the market was at a point where they were starting to embrace online learning in a more serious way. And today, we think it’s flipped. It’s gone from being a nice-to-have to being a competitive necessity for schools, for universities, and increasingly so – even though it’s at an early stage – for companies around the world.

We see this being important timing for us to capture those opportunities as these schools, these universities and these companies start to look for their partner in transforming that learning experience.

And then, we’ve also seen the market really respond positively to what we’ve invested in last time, which is around making learning much more perceptive, much more pervasive and much more personalized.

It’s that personalization of the learning experience that I think will be the next generation of these types of learning solutions. Just like in medicine, you’re starting to hear the buzzwords around personalized medicine, or personalized video for video streaming companies.

In our case, making learning more personal engages those students, helps them achieve better results, and we’re now seeing that show up in the research we’ve done over the last couple of years.

Q – How does the new Brightspace branding play into all of this?

A – Brightspace is the name of our suite of technology. We’ve never had a name for it. It was the idea of being able to put a brand attached to the things that we do each and every day.

For our clients, the company is still D2L; it’s what we’ve always referred to ourselves as, and we’ve finally secured the domain name.

But it’s an opportunity for us to really tell our story in a much more meaningful way, which not only appeals to the client base that we have, but also increasingly so, building a brand that resonates with students and resonates with learners and resonates with people in the workforce that will encourage them to come back and leverage our technology with the use of other clients in the future.

Q – Tell me a bit about the momentum of the company. Have things continued to accelerate for you?

A – Growth has accelerated year over year, and we’re seeing a lot of new clients coming on board, across all of the sectors that we work in.

Our client base has grown to over 1,100 clients globally, and in some regions, we’re even seeing triple-digit growth. So it’s exciting. We see the impact that we’re having, not just on the millions of users who use our system, but on the day-to-day lives of the students, and for the employees who are trying to make the next jump in their career, and it’s those stories that I think resonate the most with our team; get them excited and get them fired up for doing the work they do each day.

Q – Where is the team sitting as far as size goes?

A – I just saw the numbers for full-time, and it was 783 people full-time. If you count students and co-ops and contractors, we’re well over 800, and we’re looking for another 100 or so people, 60 of which are in R and D alone. So, we’re looking for the best and brightest.

We want to build the foundation of the company today that’s going to enable us to build even more in the future.

I think I said we were just getting warmed up last time. I think we’re really now just getting warmed up.

I think we’re at just the very beginning of a massive transition to online and blended learning, and the digitization of content for that journey.

Q – How big a player are you in this space?

A – We are the largest cloud-based learning provider in North America, and we want to grow quickly.

There are larger companies in the space, but they’re more of the traditional on-premise or hosted model, not the cloud model, and we’re working hard to make sure we can upgrade clients to our platform.

This is about really building the foundation for the future. We’re focused on building an enduring company, and this investment is great validation that the work we’re doing is on the right track, and that we’re going to be able to really cement our position as the market leader as clients look to cement their choices in the future.