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Bootstrap First, Raise Money Later, Build an EdTech Unicorn from Canada: John Baker, CEO of D2L (Part 5)

Posted on Tuesday, Oct 6th 2020

Sramana Mitra: Let’s talk about a bit of metrics so we can pin the journey all the way to bootstrapping before you got a funded company model. How far did you get from a revenue point of view, customer metrics, employee metrics? What were the vital statistics?

John Baker: We’re somewhere in the neighborhood of 300 to 500 people when we raised the largest Series A at that time in Canadian history. It was for $85 million. That was back in 2012.

It was 12 and a half years from when we incorporated the company. I had just gone through a massive patent litigation with my main competitor.

Sramana Mitra: Who was that?

John Baker: That was Blackboard. That was front page news on CNN and USA Today. It took us three and half years to clear through that litigation, which is not easy when you’re a bootstrapped company. That was the prime reason why I considered taking on a partner to give us more strength to fight out future battles. 

Sramana Mitra: You just answered the question that I was going to ask you next, which is what prompted you to switch from a bootstrapped to a funded model. In this $85 million round that you took, was it all growth financing or did you take some liquidity?

John Baker: It was a mix. It was primarily growth but some liquidity as well.

Sramana Mitra: Was it a private equity investor?

John Baker: It was the world’s largest private equity investor – NEA.

Sramana Mitra: NEA is actually considered a venture firm. I’ve raised money from NEA as well earlier in my career.

John Baker: I should clarify that it was growth equity not private equity. Private equity are the owners of all my competitors right now. 

Sramana Mitra: In 2012, you have NEA coming in. You’ve taken some liquidity off the table. You have growth capital. What happens next? What lever did that allow you to push to get to the next level of growth?

John Baker: We used some of the capital to support some smaller acquisitions that we’ve made to continue fueling the development of our sales and marketing. 

Sramana Mitra: What did you acquire and why?

John Baker: They were largely technology tuck-ins. I was a big believer that video was going to make a big impact on the future of learning. We bought, at that time, one of the most widely adopted technologies for lecture capture.

It was a company that had an open source platform. We brought them into the fold. We used the capital to fuel our roadmap in terms of building things that we’re still launching today.

We took that money and put that in a long-term investment horizon to build the things that we thought would revolutionize education and learning. One of them is launching later this fall.

It enabled us to make both short-term investments to drive growth and also to make small acquisitions and fuel our long-term vision.

Sramana Mitra: What did you do from a geography point of view? Are all the 300 to 500 employees based in Waterloo?

John Baker: Up until that point, we were largely in the US and Canada. 

Sramana Mitra: Where in the US?

John Baker: We were scattered with one or two people in various states.

Sramana Mitra: It’s mostly a salesforce that was in the US. The bulk of engineering and support were in Canada?

John Baker: Post 2012, one of the things that we loved about NEA is they helped us bring in a number of executives. 

This segment is part 5 in the series : Bootstrap First, Raise Money Later, Build an EdTech Unicorn from Canada: John Baker, CEO of D2L
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