Corporate Vendors Still Attract LMS Investment Funding
February 13, 2019
As frequently reported here at eLearning Inside, edtech companies continue to experience success drawing VC investment. This begs the question of whether the same holds true on the corporate learning management system (LMS) side of the equation – especially when thought leaders such as Josh Bersin continue to proclaim the death of the LMS as we know it today. To paraphrase Mark Twain, reports of the death of the LMS are an exaggeration, and corporate vendors will continue attracting LMS investment funding for the foreseeable future.
Edtech and Corporate Vendors Continue to Attract LMS Investment Funding
Edtech companies have continued to attract significant amounts of venture capital both in the US and around the world. As we outlined recently in our announcement of the upcoming launch of our new EdTechnically podcast and video series:
American and international venture capital continues to set records with total edtech investment. VC funds around the world poured over $1 billion into edtech startups in July 2018 alone. American rounds exceeded $1.45 billion, matching the previous high-water mark set in 2015. And despite these massive investments, 2018 still didn’t exceed the international record set in 2017 when $9.5 billion entered the sector. There’s reason to believe 2019, however, will push the bar higher still.
The global corporate LMS market continues to grow, having reached $2.06 billion in 2018, and is projected to grow at a compound annual growth rate of 28.2% in the coming years to reach a market size of $7.12 billion by 2023. Corporate vendors are also continuing to attract LMS investment funding, as indicated by the following:
- OnCourse Learning, which specializes in digital training for healthcare and financial services firms in the US, was recently purchased by German publishing group Bertelsmann for $500 million.
- Obrizum, with AI features created by CamBioScience, just received $1.4 million to scale up its operation.
- Everfi raised $190 million in its most recent funding round last year. With clients like Airbnb, Google and Oracle, it wants to achieve $150 million in revenues and double its workforce to 1,000 employees.
- Coursera raised $64 million in 2017 at an $800 million valuation.
- BenchPrep, a leading provider of an advanced white-label online learning platform for education and training organizations, just received $20 million in funding.
- Degreed, an online skill training LMS, a year ago closed $42 million in funding.
- Andela, an African-focused training outsourcing system, just raised $100 million in its latest round of funding, led by an investment firm co-founded by former vice president Al Gore.
What’s Driving Corporate LMS Investment Funding?
As outlined by Alex Hicks on the PE HUB Network, one of the main drivers that attracts private equity funding to corporate LMS vendors is the perceived skills gap that has much of corporate American worried. Each year, corporate America registers a higher percentage of people who are anxious about the growing skills gap, from 60% in 2014 to 78% in 2017 to 84% in 2018. This means increasingly fierce competition to hire skilled talent and indicates a greater focus on trying to “upskill” current employees with the right learning and training programs, most of which will be delivered via eLearning. Investors are willing to inject funds into the LMS companies that are going to help fill the skills gap, and they view it as an essentially recession-proof investment because companies will have to engage in learning to keep their employees up-to-date.
This is all happening as thought leaders such as Josh Bersin, a learning and talent development expert with consulting firm Bersin by Deloitte, continue to claim that the LMS is quickly dying if it’s not already dead. In fact, he recently predicted in Chief Learning Officer that the “end of the LMS as we know it is coming.” But if this were true, why would the corporate LMS market continue to grow by leaps and bounds? Why would investors continue pouring funds into a dying venture? To put it simply, Bersin’s predictions have not yet come to pass. While it may be true that some corporations are moving away from the traditional LMS to learning experience platforms, this only applies to a select group of the largest corporations with the resources to do it. There are nearly 6 million small-to-medium-sized businesses (SMEs) with fewer than 500 employees who will not be on that cutting edge for many years to come. These SMEs will continue to benefit from having an LMS, driving both market growth and investment funding.
Featured Image: Hector J. Rivas, Unsplash.