Our Manifesto — Emerge Fund I

With two universities needing to be built every single day for the next 15 years to meet demand — an impossible goal — Emerge Education’s founder, Jan Lynn-Matern, argues that significant disruption to the present education system is not only inevitable but highly desirable — and far more attractive to investors than traditional edtech has ever seemed. For professional investors only.

Picture a 16+ education system that can double its capacity in just ten years, align swiftly with employers to provide training for newly invented skills and keep helping people train and re-skill throughout their lives.

That’s not the world we’re living in — yet. But it’s what’s being demanded, with increasing pressure, by the people and industries that are shaping the world of today and tomorrow. It is a fast-emerging fundamental global need and education needs to rise to the challenge. Rapidly.

This matters to me … and will matter to everyone

I’m the founder of Emerge Education and I’m a child of immigrants. As such, I took the traditional route out of poverty. My parents left the Soviet Union in 1979, arriving in Germany with nothing but a strong sense that education was the answer — whatever the question! So my formative years were spent in a household focused on hard work, learning and, to be honest, not much fun. Nevertheless, that commitment to education was a great privilege and, as a result, I gained access to opportunities, scholarships and, ultimately, a place at Oxford University, where my world view — and even more opportunities — really opened up.

It’s a familiar enough tale and one that’s created many entrepreneurs through the ages. But I believe that now, as a path out of poverty, it’s just not working so well any more. Today’s education no longer provides the opportunities we need it to.

The world has changed.

The new normal

Globalisation, automation, skills becoming redundant in a time of rapid transformation and growing demand for different skills — these are the hallmarks of the automation revolution, of Industry 4.0.

By 2030, a global shortage of skilled talent is projected to result in an $8.5 trillion loss in foregone annual revenues. At the same time, over 50% of the one billion global knowledge workers are projected to need upskilling or retraining to avoid being pushed into under- or unemployment.

The demand for new skills and training is huge, growing and ever-evolving, and the current education and training system can’t cope. The old, structured ways that worked for a small and relatively homogenous group of people are failing a much larger, more diverse audience. What has been normal for education is no longer so.

What needs to change?

I have three core concerns about the education system’s ability to provide the skills the world needs: scale, flexibility and alignment to industry.

Scale: The current education system is not scalable enough. It’s taken 200 years to build the number of universities and the number of university places the world presently has … and yet we’re now looking to double the number of university enrolments in just ten years. No-one expects to meet that demand simply by doubling the number of university buildings — but even if investment in infrastructure goes up, creating that many new universities that follow the traditional model, and in such a short time, just isn’t feasible. Today’s system is not scalable to anywhere near what’s needed.

Flexibility: The system is not flexible enough. When we think of post-16 education, the system we usually picture is one designed for people who can spend three years full-time on a residential course.

But in today’s reality, around 40% of learners don’t fit into this neat slot. They are ‘non-traditional’ — they might be mature students or part-time, fitting in a course at evenings and weekends around full-time work or be a first-generation undergraduate student — as I was. We expect this to be the majority of learners by 2030. The learner population has vastly heterogeneous needs and it’s important for education to offer more flexible pathways to meet the needs of these students, including giving them the option of completing their studies more efficiently, in small, stackable chunks, online, with more flexible, less risky financing options.

Skills: The system is often not aligned to industry needs. It’s education-centric rather than employer-centric: courses are designed with educational objectives in mind, rather than employer needs, and then have an attached career service to help people consider what their career should be and where they might apply. And once they’re out there, they’re on their own.

The end result is, on the one hand, people who are struggling to find meaningful work and, on the other, companies struggling to find the necessary high-skilled talent. Why are they not meeting?

It’s a system that’s ripe for disruption.

What does the future look like?

I don’t just want change. I want transformation.

That’s why, at Emerge Education, we are seeding and growing engines of opportunity.

Engines of opportunity are emergent companies that use innovation and technology to bridge the divide between the people who need access to opportunities to acquire skills — and industry that needs access to skilled workers.

They sit in the mid-point between the education providers, the people who study with them and the people who hire them, offering each the ability to transform in the way the world needs.

These engines of opportunity are democratising access to higher skills and meaningful employment by making education more scalable, flexible and industry-aligned.

Together, we believe we can create a world of more equal opportunity.

How will we get there?

We’ve identified six themes which make up our engines of opportunity. These six themes sit across two categories:

1. Enablers work with existing institutions to help them become more scalable, flexible and industry-aligned.

2. Disruptors build standalone providers that compete with the incumbent institutions.

Disruptors

• Online vocational schools: core, online, free/close to free, and live teaching of skills that allow people to access new careers
• Challenger universities: new digital-first universities that challenge the status quo through innovative curricula, teaching and operating models
• Personalised, scalable workforce training: programmes to help corporates upskill and reskill their staff at scale in the flow of work

Enablers

• Employer-university collaboration: platforms that enable industry to co-design and co-deliver courses with universities, at scale
• Operating systems for teaching at scale: the technology needed to make learning more flexible and scalable
• Helping universities enter new markets: supporting universities — the most important providers of skills — to scale and adjust their offerings to meet the needs of learners and employers alike

What do these engines of opportunity look like in practice? Let’s take a few examples:

• Sales skills are often ‘tribal’ knowledge passed on within from colleague to colleague within a small set of companies ‘in the know’. We invested in Sales Impact Academy, an online platform that breaks down the doors to this knowledge with synchronous online classes run by world’s scale-up sales and marketing experts to provide personalised and scalable workforce training.
• For online learning to succeed, it needs to be far more engaging and social than it is today — in fact, we need operating systems that make teaching at scale more attractive than the real-world learning environments of today, too. So we’ve supported Aula, a social learning platform for higher education that brings engagement to the core of the digital student experience.
• The world is moving more quickly than universities can update their courses, so employer-university collaboration may be the only way for students to graduate with knowledge and skills that aren’t out of date by the time they get their diploma. Fourth Rev is making truly mass-scale collaboration on courses possible by connecting leading companies and universities to develop industry-certified skillsets that are up-to-date, relevant to industry, and make students ready to contribute in the workplace from day one.

To do all this on an even greater scale, we’ve launched a new fund. It’s backed by a dream team of top global investors, including US education industry Dan Sommer, founder of Trilogy Education (acquired by 2u for $750m in April 2019) and Rob Cohen, first full-time employee at The Princeton Review, founding CFO of 2U, and early-stage Advisor/investor in Trilogy, UK education leaders Cambridge University Press, Cambridge Assessment, the higher and further education technology body Jisc, and Nesta, as well as Brazilian higher education group Grupo Tiradentes.

The new fund is initially making £250k investments in 20–25 pre-seed and seed companies in Europe, with the ability to increase its exposure to £1m per company in later rounds.

Why Emerge?

Emerge is run by a brilliant team of investors and entrepreneurs who are all equally passionate about creating a world of equal opportunity.

My partner Nic Newman joined Emerge in 2016, after co-founding and exiting 300-person tech company TigerSpike. He is part of the DfE’s edtech leadership group, a mentor on the London Mayor’s International program and a NED specialising in scale-ups.

Having an operator as a partner is valuable not only for our portfolio companies but also for the universities and corporates in our network. On top of gaining exposure to new services that our startups bring to their learners and employees, these organisations want to transfer learnings around agile ways of working into their own teams. Nic’s career spans work in multinationals as well as building his own company and is ideally placed to enable this.

Our third, non-executive, partner is Mary Curnock Cook OBE, former CEO of UCAS. Mary is Emerge’s network chair and convenes our sector network for Emerge.

Together with our colleagues Mario and Shinaz, we’re bringing three key qualities to this challenge: expertise, experience and insight.

Expertise: we have a singular focus on founders addressing the skills gap. It’s not just one of many areas of interest for us. It’s our passion and our backers recognise and value this focus.

Experience: we have a solid track record with 50+ investments over the past five years, with those companies attracting over £100m in funding from VCs such as Local Globe, Stride, Project A, Rethink Education, Learn Capital and Reach Capital. Add to that the formidable track records of building and exiting successful education businesses among our fund advisors, including founding team members of Trilogy, 2u, Interfolio, Janison and Rocketship Education.

Insights: a key feature of Emerge Education’s successful approach is the way we bring together investors, strategic partners and a network of key education and industry decision-makers.

Unlike in other funds, 50% of our team is fully focused on nurturing our network. We do this through convening a series of thought leadership forums for higher education and corporate leaders working on addressing the skills gap in their organisations and beyond.

Through this, Emerge is able to help founders gain unique customer insights and build defining business partnerships that help their companies grow faster. In return, we act as an innovation radar for our network. Over 20 of these network members have invested in our fund. We know our— and our founders’ — customers, we listen to them and we amplify their voice.

Marcelo Adler, CFO at Grupo Tiradentes, a private higher education group in Brazil, is one of the fund’s investors and members of the community. He sees the benefits:

“As a leading higher education provider in Latin America, we see digital as a core channel for growth, and Emerge is a great way for us to access cutting edge insights and partners to help us to that.”

And as Anders Krohn, founder of Aula, puts it,

“For us, Emerge Education is a gift that keeps on giving. They continue to help us win partners, customers and great advice.”

Great investment, great impact

It’s a great investment case. We’ve succeeded in finding the sectors where funders can really make excellent ROI and create a significant impact in helping people to lead more fulfilled lives.

It’s already a flourishing market. Workforce re-training providers Immersive Labs recently raised $40m to expand its cyber-skills platform, FutureLearn raised $65m last year to scale up higher education, and consumer-focused up-skilling providers, such as the Emerge‑backed London Interdisciplinary School, are looking to challenge traditional universities with new degree programmes that better match the future of work. Our own public list of investments into European education companies clearly demonstrates the excitement in this area.

Despite the challenges I’ve outlined, I’m optimistic about the future of education. There are people, there are startups and there are funders out there that share our vision. They are going to make an impact. They are going to disrupt in the way that’s needed. And, together, we can do it in a way that is financially attractive to capital, which means it will be sustainable and designed to scale.

I believe we have found the route to education’s future. Join us on our journey.

For more information, visit emerge.education or email hello@emerge.education.