ANGEL Learning creation and growth
With the new ideas in mind, Jafari, Mills and an intern built the ANGEL product in 10 months, completing it in 2000.
“We all had lots of experience, but David is hands-down the best coder I know,” Jafari said. “He was working as many as 90 hours a week to make sure we had the product to commercialize.”
Although the open-source code for OnCourse had provided them with a competitor in Blackboard, the team was confident their product would be superior. But then they ran into an issue common to tech startups: the need for funding.
“One day I was driving to campus and was so disappointed,” Jafari said. “I thought, ‘Maybe if I talk to Ron at IU ARTI, he can spare some money from his budget. We just need $100,000 for marketing.'”
IU ARTI president Ron Henriksen was surprised by, but not opposed to, the request. After a few days of talking with the board of IU ARTI, he had permission to make the investment of $130,000, even better than Jafari had asked for.
“Our goal was to begin generating money before we ran out of cash, and that was it,” Jafari said.
Mills continued taking the lead on development and assumed the CTO position, while Jafari acted as president and ran the company, including all marketing and sales.
“Quickly, we sold a license to Indianapolis Public Schools and to a university in Dayton. After only nine or 10 months, we decided to hire a full-time president and really give the project room to thrive and grow,” Jafari said.
ANGEL Learning scales up, gets acquired
To find the next leader for ANGEL Learning, Jafari and Mills relied again on their strong connection with IU ARTI and Ron Henriksen. Henriksen introduced the company to Christopher Clapp, a Purdue alumnus with a history of business leadership success. In 2001, Clapp assumed the role of president and chief executive officer.
“In the end, people were impressed that we didn’t take outside funding beyond investments from Indiana University and IU ARTI, but the truth is, the bootstrapping was a product of necessity,” Clapp said. “The dot-com bubble had already burst, and then with 9/11, the markets just froze up. There was only one way to proceed, which was to get customers to buy stuff.”
Making it through those lean times meant relying on the strength of the software product and the IUPUI community. The company even shared offices with ARTI to make growth easier with reduced overhead.
With a strong product, the success of ANGEL Learning built momentum until its modest beginnings seemed far away in 2009. That’s when Blackboard began to repeatedly approach ANGEL Learning to acquire the company.
“We were still achieving 60 percent growth year-over-year, so we didn’t feel a strong need to sell,” Clapp explained. “But finally, they made an offer we just couldn’t ignore.”
Jafari agreed, adding, “I was happy to be carrying out the transaction, but I also knew it meant we were giving up on growing something that could be worth more in the future.”
Still, Clapp was happy to share that many ANGEL Learning employees thrived during the transition to working for Blackboard, and some even continue to enjoy roles there today.
“All in all, it worked out ideally for everyone,” Clapp said.
“Producing customer value and receiving compensation for that value were the reasons we grew. And with the benefit of the technology being created at the university, we didn’t have to completely build the product on our own nickel. That is just the beginning of how our story speaks to the benefit of a partnership like IU Ventures,” Clapp said.
And when ANGEL Learning sold to Blackboard, IU recouped a return of over $25 million.