Though some college officials complained last week about Blackboard’s purchase of Angel Learning, the university that first developed the Angel software heralded the sale as an unprecedented windfall.
Angel’s software was born as a research project at Indiana University-Purdue University at Indianapolis. The university held about a 25-percent stake in Angel Learning when Blackboard acquired the company this month for $95-million. University officials confirmed that the university received about $23-million from the sale, an ample return on its initial investment of about $135,000 and the use of some professors’ time.
“This is the largest commercial transaction of this type that we’ve had,” said Bill Stephan, vice president for engagement at the university.
On e-mail lists and blogs last week, some college officials who are concerned that the deal reduces competition in the market for educational software complained about the university’s role. “I feel that IUPUI sold us all out,” said Travis Souza, a technology coordinator at one Angel client, Truckee Meadows Community College, in an interview. “It feels like they sold out the future of online education for what may amount to less than one year’s operating budget.”
Mr. Stephan said the university’s goal is to bring in new revenue through the intellectual property its researchers develop. “The rationale for the university being involved in this business is so we can really reinvest resources in the research mission and generate resources,” he said.
In fact, the university first decided that it wanted to sell its stake in Angel Learning last year, but it held off while the economy showed signs of faltering, Mr. Stephan said. Blackboard officials approached the company later with an unsolicited offer. “It was actually substantially higher than we would have anticipated,” said Mr. Stephan.
“This was not at all a case of needing cash in a hurry; this was a prudent act,” said Mr. Stephan. “We would not have been acting in the institution’s best interest if we had taken a pass on this.”
The professor who led the software’s development, Ali Jafari, also held a stake in the company at the time of the sale, and now describes himself as “a multimillionaire.”
“I received a huge check that I don’t know what to do with,” said the professor, who would not disclose the exact amount he received.
Mr. Jafari is on leave from the university, where he is a professor of computer and information technology. Since creating Angel, he has built another course-management program, which the university has also spun off into a company. That product is called Epsilen, whose largest shareholder is The New York Times Company. Mr. Jafari is working full-time for Epsilen this year as its “chief architect officer.”
How does Mr. Jafari feel about the sale of his creation to a company that has signaled it will phase out the product in the long run? (Blackboard has said it might eventually meld Angel’s best features with the company’s own product line.)
“It depends on who’s sitting in the boardroom, and what kind of decisions that they make,” he said. He praised Blackboard for appointing a top Angel executive, Ray Henderson, to serve as head of product development for both Blackboard and Angel course-management software.
“I wasn’t involved in the decision making and I shouldn’t have been,” he said, adding that he received a call notifying him of the sale after the deal was already done. By that time, more than three-fourths of the shareholders had already agreed.
In a sense, the course-management market is now a competition among several of Mr. Jafari’s inventions. He also helped design a course-management system for IUPUI called Oncourse, which has become part of the foundation for Sakai, a free, open-source alternative. —Jeffrey R. Young