A 5-year-old tech startup founded in downtown San Diego has been snatched up for $43 million by Salt Lake City-based education technology company Instructure.
Portfolium, which employs 32 people in San Diego, makes portfolio software for college students and new graduates seeking jobs. The company is keeping its local office — and all of its employees, said Portfolium’s founder and CEO Adam Markowitz.
The acquisition means Instructure, a public company with a market cap of $1.5 billion, will make San Diego its first California outpost. The edtech company has offices all over the globe, including in Chicago, Budapest and London.
Portfolium makes software for academic institutions that allows students to create digital portfolios to showcase their projects, skills and credentials to potential employers. The company also offers student assessments and job matching services. More than 4 million students from about 3,600 colleges, universities and high schools have used the service.
The acquiring company, Instructure, makes a teaching platform called Canvas that competes with older offerings like Blackboard. The company is used by more than 4,000 educational institutions and corporations. After the acquisition, Porfolium’s software will live inside Instructure’s platform.
“Portfolium is still at the early stages, and so part of the acquisition is based upon their feedback that we’ve received from common customers and organizations out in the market, but there’s still a huge opportunity moving forward to expand,” said Instructure’s CEO Dan Goldsmith on a recent earnings call.
Portfolium raised about $8 million in a series of financing rounds since its launch. The company was sold for $25.8 million in cash, with the remaining $17.2 million in stock.
Markowitz, who founded Portfolium in 2014 when he was 27, answered questions about what happened behind-the-scenes of the deal. Here are some excerpts:
How did the Instructure deal come about?
We've been partners of Instructure since 2016, which essentially gave them front-row seats to view our progress and rapid growth. They were able to closely follow our 300 percent revenue growth last year as we doubled our number of customers, and of course continue to have big plans for 2019 and beyond. The partnership evolved into a serious discussion around acquisition, or in other words, Portfolium was "bought," not "sold."
Was this the exit strategy you were shooting for from the beginning?
When you’re fundraising, a common and appropriate question from investors is, ‘What’s your exit strategy?’ Acquisition was always in the back of my mind, but never in the front dictating strategy. We stayed focused on our vision and always prioritized execution above all else. I knew that if we continued to execute on our vision, there would ultimately be exit opportunities down the road simply because of how important the mission is to so many people and companies.
How does your role change after the acquisition?
Portfolium will continue to execute as part of the Instructure family. I'm now the general manager of Portfolium at Instructure with the same focus on execution and continued growth as we integrate and accelerate our combined objectives.
What was the turning point where Instructure decided acquiring Portfolium was a smarter idea than partnering?
With so many shared customers, success stories would often surface organically and be shared from both Portfolium and Instructure customer success and sales teams out in the field. Customers would tell us how they loved the combined and integrated solution that our partnership allowed, and so we started pursuing an even deeper partnership in this regard. In those discussions, it became obvious that both our companies were aligned not just on vision, but also culturally, which was very important to me. Of all our accomplishments, I'm most proud of the culture my team has created and maintained over the years.
Will the San Diego Portfolium presence change at all?
We’re staying in San Diego and will continue to grow here. We’ve been in San Diego since the beginning — starting in my apartment, then in the EvoNexus incubator before moving into our own office at Symphony Tower. We have no intention of leaving. San Diego has been good to us and we're proud to be another great success story for the city.
Your team said they see this acquisition as a win for the San Diego startup scene?
The acquisition is a huge win for a city that's been behind us from the beginning, and one that we couldn't be prouder of. We're thankful to our initial investors like Seed San Diego, and to our advisers, and fellow San Diego startups. For those looking to start their own companies here, my team and I hope that they can look at this acquisition and find inspiration in the fact that you really can start something in your garage or apartment and grow it into something of incredible value. We also hope it attracts even more venture capital to San Diego, as it’s another proof point that great exits do happen here.