Bloom Institute of Technology, also known as BloomTech, is a for-profit massive online course. When it launched in 2017 under the name Lambda School, it gained attention for being a coding bootcamp that offered income share agreements as a method of financing. Following several layoffs and cost cutting measures, it transitioned from a bootcamp model to MOOC, and refocused on traditional student loans. It currently faces several lawsuits for deceptive marketing, allegedly lying about how many students find jobs, among other issues.
History
BloomTech was founded by Austen Allred and Ben Nelson in 2017 as Lambda School. Nelson was an instructor for the code bootcamp DevMountain, and Allred was a manager at the payday loan company LendUp. BloomTech began as a single short course in functional programming. The previous name Lambda refers to lambda functions, a concept in functional programming. The company offers online coding programs in Full Stack Web Development, Data Science, Backend Development and Web3.
BloomTech joined Y Combinator in 2017, and raised seed capital in 2018 from Ashton Kutcher's Sound Ventures, Gmail creator Paul Bucheit, and Zynga co-founder Justin Waldron. In January 2019, investors including Google Ventures, Y Combinator, and Ashton Kutcher placed $30 million in BloomTech investments. Enrollment was 700 in October 2018 and 2,700 in late-August 2019, at which point enrollment was expanding by 10 percent a month. By 2019, the curriculum had expanded to a full nine-month course, longer than most comparable bootcamps.
As of February 2020, over $48 million in venture funding had been raised and the school was valued at $150 million. However, that April, the company announced a layoff of 19 employees, explaining the decision as an effort to focus. In August 2020, the company raised a $74 million Series C. In April 2021, the company laid off 65 employees.
In November 2021, the company rebranded as BloomTech.
In December of 2022, the company laid off 88 employees, half of its staff at the time.
Funding and payment model
BloomTech gained early notoriety for its income share agreement (ISA) model. Rather than pay tuition up front, students agreed to pay a percentage of future income after acquiring employment. The specifics of its payment structured have changed over time. In its early years, students paid 17% of income after acquiring a job that pays over $50,000 in the technology field, ending after either $30,000 or 24 months of 17% payments, or after 5 years without a job in the technology sector.
However, BloomTech sold a portion of ISAs to third-parties before the students obtained jobs. As of August 2018, they sold half of their ISAs to a hedge fund for $10,000 each. In December 2019, the company partnered with Edly, a digital marketplace for accredited investors to trade ISAs. In 2020, BloomTech removed all statements about this partnership from their website.
In November 2021, following layoffs and cost-cutting measures, the ISA terms significantly changed. Students paid $2,950 upfront, and once they make $50,000 in any job (including outside the field of technology) they paid 14% of their income for four years. The ISA cap was raised to $42,950, with the contracts lasting up to eight years.
At the same time of those ISA changes, BloomTech began offering straightforward loans at 12.5% interest. The company marketed it alongside a "Tuition Refund Guarantee," saying students could receive 110% of their tuition if they did not receive a job offer for $50K or more per year within a year of graduating. However, the offer drew criticism in the tech community for its onerous requirements: a graduate must apply to ten jobs every week, and make five open source code contributions every week, for one year.
Controversies
In May 2021, three former students brought suits against the company for a number of misrepresentations, including operating illegally without informing students, and misrepresenting their job placement rates. In April 2022, another former student filed a lawsuit for the same misrepresentations, this time adding Allred as a defendant. In March 2023, a class action lawsuit was filed against the company, Allred, and unnamed officers and directors.