Ed tech startup Labster whose software platform enables virtual simulations of laboratories for teaching life science to students, has closed a $10 million Series A round of funding led by early stage European VC firm Balderton Capital. Stockholm-based Northzone is also joining the round, as is Unity Technologies founder David Helgason -- clearly spying strategic potential in a platform that makes use of 3D gaming environments for an educational purpose.
Labster launched its lab simulation software back in 2013, after founding the business in 2011 and initially working on the concept in stealth. It has created around 65 simulations thus far, covering life science study topics -- from a basic introduction to acids and bases where students perform a simulation of handling corrosive chemicals and get to see the consequences of not following good lab safety protocol, to a simulation of using a confocal microscope (a piece of lab kit that can run to multiple thousands of dollars in its physical form).
All the 3D simulations include games and challenges designed to keep students engaged and learning -- such as murder mystery puzzles and multiple choice quiz questions, with text theory also available for students' reference. The 3D environments are designed much like point and click adventure games, meaning lab equipment can be interacted with and environments navigated by clicking around.
The startup's grand vision is to replace the role of textbooks for science education up to graduate level with a more interactive learning experience enabled by virtual simulations of lab equipment and experiments -- so a scalable and accessible gamification of the learning experience, which does not require an institution to shell out on expensive, real-world lab equipment in order for its students to learn.
Still, CEO and co-founder Mads Bonde concedes universities aren't the faster adopters of new technologies, so he describes the learning "status quo" -- i.e. textbooks and lectures -- as Labster's main competitor at this point.
"We know the way that the education space is moving it's not going to happen overnight, but even the university sector publishers know that that's the way that things are going -- that the next version of what is now called the text book will be much more interactive," he tells TechCrunch. "In the medium term it definitely needs to co-exist with a lot of other methods -- including books, including videos, including other areas."
Rethinking education inside a 3D simulation
When we last spoke to Labster, in 2013 for the launch of its product, it had raised $1M in grants and non-equity support at that point. Bonde tells us now it has since topped up that to a further ~$10M -- which is in addition to the now closed $10M Series A VC investment.
"We've been in dialogue with a lot of investors over the years but have chosen to focus on a combination of things, so bootstrapping but especially sales early on combined with grants from especially the government here in Europe and in Denmark," he says. "That has funded our collaborations with universities... which is kind of like the hidden way that we've gotten to where we are today."
He says the reason Labster is taking VC funding now is as a result of being approached by an undisclosed strategic investor who was keen to collaborate -- which pushed it to take a closer look at the options of either continuing to grow organically vs taking VC cash and putting their foot on the gas to accelerate product development and expansion in multiple markets.
"We ended up concluding that VC funding was the right thing for us to do at this stage because we had scaled our product and now really need to fuel sales, marketing and getting our product across globally -- so that fueled the decision there," says Bonde, confirming this particular strategic investor was not Unity's Helgason.
Labster's general calculus is that, ultimately, it will cost the same to develop 3D educational content via its platform as it costs to create content for a textbook. Although Bonde concedes there's still "a huge imbalance" in the cost. But one way it's trying to shrink that differential more quickly is via a content builder system it's created atop its simulation platform -- enabling users to build out its content proposition.
Some of Labster's Series A funding will be going towards this "lab builder" system -- which lets educators and individuals create bespoke simulator content for other students to learn.
The majority of content currently available on the platform has been developed by Labster working with educational institute customers -- including some high profile institutions, such as the Massachusetts Institute of Technology in the US and Imperial College in London -- but that presents an obvious speed bump to scaling the business so you can see why they're looking for ways to widen the content creation pipe.
"We have students who have done this as well," notes Bonde of lab builder created content. "That's also our long term vision to revolutionize the way that science is taught by anyone being able to create high class 3D simulations like games and deploy them through our platform."
"If you hit a core part of the curriculum, each simulation should last for a very long time," adds Balderton's Sam Myer, who heads up the Nordics region for the investment firm, on the content pricing point -- noting also that Labster's simulations can be reused "over and over".
"The cost actually isn't that different," he argues.
Myer says Labster's proposition stood out for the VC firm on account of it being "at the center of the education market as a whole going digital", and for the way it's "rethinking what you can do when you have digital platforms to build on". -- i.e. rather than trying to bring existing formats online; be that textbooks (to ebooks) or lectures (online streams) or indeed whole courses (MOOCs).
"Labster is really rethinking what educational content should look like when you can design it from the ground up using these new tools," he tells TechCrunch. "So it's a very different approach to ed tech that many other companies have."
Currently Labster has around 150 institutions globally using its platform, with the UK and the US as its primary markets. (Bonde also flags users in Asian markets, including in Hong Kong, Singapore, and in South America.)
It has a blended business model, where it sells b2b to universities and educational institutions as well as b2c to students who might want to make individual use of its tools to aid their learning -- and it's intended to invest to expand on both fronts with the new funding.
Expanding simulation content across more science topics is also on the roadmap for the next 12 months. Plus, it will be expanding sales and marketing efforts, especially targeting universities in the US and the UK, with Bonde noting "heavy investment" there" -- including growing the headcount of the team.
"Over the last five years we've really focused on developing this platform which can handle educational simulations but with the game engine built on top of Unity so it's possible to design learning experiences where you can learn the way that we believe humans are supposed to learn," he argues. "The way that children learn as well -- which is through interacting, through talking with different people, through experiencing the way the world is. And the you internalize that and learn from that."
And while guided simulations might at least suggest the potential for an even wider disruption of traditional teaching institutions, say by removing the need for such institutions to exist at all, Bonde says there's still a key role for universities to play -- in hosting content and ensuring quality is up to a benchmarked educational standard.
Myer agrees. "I think universities are always going to be important in terms of guiding what should be taught, and how these simulations should be designed -- and so it's always going to be important to partner with some of the universities that [Labster is] already doing work with," he says. "The leaders in this space... And then each university's main differentiation, their main brand is what they teach -- and how good their education is, and their sort of stamp of approval. So each university will want to have a say in what gets taught. So I think they'll always be important."
Virtual reality as a key ed tech -- just not yet
Another component of Labster's vision is VR and AR. Virtual reality and augmented reality are areas of special interest for the startup, although -- pragmatically and some might say realistically -- it's not built its platform to be reliant on these technologies. Rather it's taking a cross-platform approach, meaning users of laptops and tablets can make use of the platform so there's no requirement for any dedicated headset hardware. This allows it to address the current reality of the kit students and universities own, even as it contemplates transformational VR-enabled learning environments becoming a mass market future reality.
Bonde is certainly convinced that immersive VR simulations will play a leading role in the future of education, noting for example that the technology is developing to support feedback via additional peripherals such as tactile gloves. He also believes augmented reality will play a key bridging role -- helping students who have cut their undergraduate teeth learning in entirely virtual 3D labs to transition to using real-world lab equipment for post-grad learning (where purely 3D simulations would not suffice).
But his conviction is tempered with patience that such changes will only come over the longer term. "We believe that in the long term virtual reality and AR as well will be one of the main ways to learn. But it's not going to happen overnight," he suggests. "So what we've done is to create a platform where it's possible to use it on a computer and on VR with the same code-base and the same simulation basically. So the students can choose which device. And they can even switch between devices -- both VR and non-VR."
"Right now VR is not crucial for our proposition," he adds. "With laptops etc we get the big leap forward... The way that you interact in a game-like environment -- that's really where you get the major benefit."
Balderton's Myer is also cool on VR in the near to medium term. "VR, down the line, I think will be the best way to display what they can do," he says of Labster's lab simulations. "Labster's really about learning by doing. And they have these very strong 3D simulations. Right now the [VR] hardware -- the actual devices -- aren't available to most universities or companies or schools that want to be using it. And so it's important to be able to do these 3D simulations on your mobile phone, or on your laptop or whatever you might be using.
"But they're building it to have this very rich 3D environment that can be translated to VR. So I think VR is going to change the way that education happens in a pretty big way... There's a lot of research around simulations and how they really improve learning outcomes. And then VR is a really good format for these simulations."
Asked how bullish he is about VR generally, Myer suggests the tech still has a long road ahead of it to achieve mainstream adoption -- though he sees nearer term applications for education use-cases vs gaming. "I think it's going to take a while before we see the mass market. Especially when we talk about things like casual gaming -- it's going to take a while," he argues.
"I've spent quite a lot of time looking at gaming as well, where VR is seen as one of the platform they're trying to build for. And actually the use-case for education at the moment is much stronger than gaming. If you think of what you do when you're trying to learn in general is you pick up a textbook or whatever and you try to submerge yourself into this body of content for a long period of time. And so VR, given that it's a very submersive experience, is actually very challenging to do for gaming where you're sort of dipping in and out... It's actually very difficult to build a game that works well for VR at this stage."
In developing its learning platform, Bonde says Labster has worked with psychologists to try identify educational advantages that can be enabled by technology, such as tracking users' emotions and blood pressure and analyzing brain scans during use of the platform -- and based on what it's seen from this research he claims VR advances the learning experience because users are "totally immersed".
But he simultaneously emphasizes Labster's tech agnosticism, adding: "It's important for us not to be reliant on virtual reality propagation for our success."