Blackboard Inc. outlasts rivals, eyes stock sale by end of May

Blackboard Inc. has acted like a public company for years. The Washington-based software developer began to issue earnings in 2002 even though it is privately held.

Now Blackboard is on the verge of holding an initial public offering of its stock and becoming the public company that its founders long wanted.

Blackboard said in March it would hold an initial public offering. In a filing last week with the Securities and Exchange Commission, the company disclosed plans to sell 3.8 million shares at $13 to $15 each. The sale, which likely will occur before the end of the month, will raise an estimated $53.9 million.

Going public will be a significant step for a fast-growing company that once had to lay off workers, only recently began to make money and faced questions about the youth of its founders.

But Blackboard has outlasted competitors in an industry that has become smaller in the seven years since the company formed. Blackboard’s education software, which it markets primarily to colleges and universities, lets schools place information from class assignments to grades online. Another software application lets students manage meal plans and tuition payments online.

Blackboard Chairman Matthew Pittinsky and President and Chief Executive Michael Chasen — who declined to be interviewed for this story in light of the impending public offering — met at American University and worked together at KPMG Consulting’s online-education practice in 1996, when they decided to develop their own software to accommodate electronic learning.

Both men were in their mid-20s then.

Venture capitalists such as Novak Biddle Venture Partners in Bethesda viewed Mr. Chasen, now 32, and Mr. Pittinsky, now 31, skeptically because it was not clear whether the men had the experience to run a successful business, but ultimately decided to invest in Blackboard.

Ching-Ho Fung didn’t have the same initial skepticism. He was searching for companies in which to invest after selling his own software firm, Performix Inc., when he met the Blackboard founders in 1996 in a basement office they rented a block from their current headquarters near 19th and L streets NW.

“They did what they could to make it look professional,” Mr. Fung said.

He recalls being impressed with their enthusiasm and knowledge of education software.

“They answered all my questions,” he said. “It was a good sales job. That was pretty much it. I was very anxious to give them money.”

Including the money Blackboard got from Mr. Fung, which he declined to disclose, the company has raised $102.8 million from investors.

But it has struggled to make money. Until the third quarter last year, the company never turned a profit. Its SEC filing last week showed it had modest net income of $786,000 in the first quarter on revenue of $25.2 million. It was the third consecutive quarter the company made money.

Blackboard has outlasted competitors such as Pensare Inc., Z University and Mascot Networks Inc., all of which have gone out of business.

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