Moving the needle in Education. Our thesis on investing in Labster.

Marta Sjögren
Sep 6, 2017 · 6 min read

Has technology already disrupted how we learn? If so, what does the future of education look like? What is the role of the teacher in today’s classroom, and what will it be in tomorrow’s learning environments? What makes a truly disruptive educational product? In an era when “education is the currency of the information age” (Obama), what will it take for equal access to education to become a global reality? How can we train more scientists than ever before in a more cost-efficient way than we ever have? These are some of the questions that we find ourselves pondering here at Northzone, when considering investment opportunities in edtech.

Today’s inherently non-scalable educational system, struggling to keep up with population growth, is poised for disruption. Inflation in cost of higher education has grown nearly fivefold compared to the equivalent rise in housing or healthcare cost over the past 40 years.

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The costs are mainly bulked around staff and administration, and because these feed off one another, they continue to grow into a monolithic cost behemoth, with ever decreasing productivity levels. The third largest cost category for higher education is that of buildings and labs; these tend to be multi-million dollar investments, with continued maintenance required during the lifetime of the buildings. This means that the supply of science education, in particular, is inherently limited from a cost perspective. In short, so as to prioritise bringing more scientists into the market, we need to radically rethink how we go about scaling supply of quality education, whist maintaining an efficient cost structure and increasing student engagement/retention.On top of the heavy cost base, universities continue to struggle with churn of students (ie revenue), particularly in science degrees, further worsening the economics of educational institutions. One of the core reasons for churn is lack of engagement.

Whilst a whole generation of digital learners has entered higher education, augmenting their studies with alternative sources of knowledge (eg Youtube, Wikipedia, etc.), there has been surprisingly little innovation within content delivery formats. We are fortunate to have seen how Kahoot is changing the way classrooms are run from very early on, and invest into taking their gamified-learning vision global. Today Kahoot is a worldwide phenomenon, having reached over a billion players thus far, whilst genuinely helping advance education. Ever since, we have been on the lookout for equally compelling products that positively affect other areas of education, such as science, where demand for graduates continues to rapidly rise.

In fact, the most sought after talent group today and for the foreseeable future, is graduates with scientific degrees (aka STEM). These coincidentally also happen to be amongst the most expensive academic disciplines to finance. Between high staff costs, high dropout rates, and even higher lab construction and maintenance costs, the current system simply cannot scale. This is a major problem for innovation. Science and engineering workers directly contribute to an economy’s capacity for innovation. As economies become more knowledge-intensive, STEM skills will be needed in science-heavy industries, but also for jobs not traditionally considered part of the STEM workforce, such as marketers, nurses, and sales.

This is why we are thrilled to have invested in disruptive Danish edtech startup, Labster, as part of the company’s first institutional investment round of USD 10M, along with our friends at Balderton Capital, as well as Unity co-founder and former CEO, David Helgason. Through its immersive, advanced virtual labs, Labster is moving the needle when it comes to STEM education. It does so by addressing several aspects of the currently dysfunctional higher education system at once: Labster provides scalable, state-of the art, scientifically advanced lab simulations at a fraction of the cost of a real-life lab. This means that universities can make science courses available to more students, in a safer environment, whilst engaging them more than within the confines of textbook-based education.

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Labster is both B2B (or business-to-academia “B2A”) and B2C, making it widely available to anyone interested in pursuing science education in their own time. Its SaaS model means it is also disrupting how educational institutions think about investing in labs, shifting mindset from CAPEX to OPEX. We strongly believe that the premise of offering state-of-the-art labs to any university and person in the world through a cloud-based solution will be an inflection point in the number of scientists we’re able to train on an annual basis.

Ubiquitous connectivity means that there are now twice the number of connected devices as there are humans on Earth, and this is accelerating. This means that we have never been as close to distributed, equal access to education, as we are today. Thanks to the advent of mobile connectivity and the ever-widening distribution of mobile devices, Labster is increasingly putting content and the teacher into a single device, giving instructors more time to focus on value-add skills.

On top of the the product-market timing making it possible for companies like Labster to really impact the education system when it is most needed, we invested in the company because of two key assets: the team and the product. Since meeting the Founders in early 2017, we have been thoroughly impressed with Mads and Michael’s drive to build a global category leader. The Founders have set a clear vision and are able to eloquently communicate how Labster is making a difference.

Labster’s 70+ strong, global team of passionate scientists, developers, designers, and commercial talent make Labster a great bet on the future of education. The team is also hiring, so do get in touch!

The final, and one of the most important triggers for investing in this round, is Labster’s product. It wasn’t until our team got to test the VR experience, that we realised that Labster can redefine how we educate science students.

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From the hyper-realistic lab settings, to the gamified contextual learning environments and modular database of science knowledge, Labster’s multifaceted product make investing an easy choice. Imagining an educational curriculum that takes the initially somewhat abstract concepts of biology, physics, and chemistry and puts them into context, got us very excited. Sitting down with students and watching them zoom in and play around with molecules, giving the product rave reviews, cemented to us the great product-market fit.

Our learnings from investing in global educational products such as Kahoot have also given us invaluable insight into the central role teachers play in redesigning education. To date, Labster has been fortunate enough to partner with some of the globally leading science institutions in bringing this vision to market. Early adopters thus far include ETH in Zurich, Harvard Medical School, MIT and Imperial College, who are seeing significant improvements in learning outcome from using Labster in live learning environments. The next step for Labster is to partner with more forward thinking institutions, teachers, and professors, in bringing next-gen STEM education into every classroom and lecture hall in the world. This will also revisit the role of the teacher, in our view, giving more time for in-depth learning in the classroom.

We are humbled and excited to work with the team in making Labster a core component of STEM education, pushing academia forward globally.

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