The NEN Interview: Antti Korhonen, CEO xEdu
A couple weeks ago, Nordic EdTech News had the chance to talk to Antti Korhonen, CEO of xEdu, arguably Europe’s leading business accelerator for EdTech startups. The startups who have been through their programme have raised more than €15,000,000
of risk capital.
It was a fascinating conversation that touched on ecosystems, scalability, VC investment and unicorns. The transcript (edited to bring you all of the very best bits) follows below.
This is the first in what I hope will be a regular series of interviews with the key players across Nordic EdTech. As always, I’d really value your feedback, please email hello@10digits.org or comment below.
Jonathan Viner (JV): Just in case people don’t know, can you explain what xEdu is and does?
Antti Korhonen (AK): xEdu is a business accelerator that helps startup businesses to grow, get funding and become international. This is important because if you are a growth company in the Nordics, you need to go global from Day 1 because growth potential is somewhat limited here. We only focus on businesses in education and we look broadly across the education and learning sectors.
Most importantly, we’re looking at growth companies. It’s most important that someone, an individual or an institution, is willing to pay for the improvements in competence and knowledge that a product delivers. This does mean that there are wonderful companies that we cannot fit in because the scalability is not there. It can sometimes be heartbreaking because we can’t take some great companies into our programme.
JV: When you look back on your time at xEdu, what do you identify as your greatest success?
AK: We always try to be humble when thinking about our part. We have the catalyst role but, in the final stages, it is always up to the entrepreneurs and their teams. We have been lucky enough to work with companies that have done great social impact work such as Psyon Games or Mightifier; with companies that have great scaleable platforms for learning, like 3DBear or Seppo; with those who have great products like Roybi or those like Elias Robot who use the physical product as their platform.
We are proud that we have been able to work with 70+ great teams. All of which have their own strengths and weaknesses and it’s been great working with them.
JV: How important is social impact when assessing the companies that you work with?
AK: Education is one of those domains where the social impact, the focus and the success of the company are closely aligned. So I would say that all of our companies are also social enterprises because they help their users become more knowledgeable or more employable and more appropriate for the job market.
JV: We’ve talked about success, but what are the challenges of running the xEdu accelerator programme?
AK: It is difficult to find a sustainable business model for a business accelerator. So the biggest challenge is finding the right partners and identifying the right services that we can sell to bring in short-term cash flow. Certainly xEdu would not have happened without the support from Samsung since day one. Their support for startups and education has enabled us to accelerate every business and every cohort, so we’re very grateful to them.
In the long run, as a result of the small stake we take in each business, if they become a unicorn, then we won’t have any problems! But all unicorns are still in the making when they start, and even the fastest unicorns in education take at least a decade. It’s also easier for a startup than xEdu to get Business Finland funding. So we understand what it’s like to be a startup with cash constraints also.
JV: That must give you some understanding of what your startups are going through and huge amounts of empathy with their challenges.
AK: Yes, of course.
JV: I’ve noticed that you have businesses from Peru and Hong Kong in your Fall 2019 intake and there’s an increasingly global footprint about xEdu. Was that deliberate? How has that come about?
AK: Of course, the international brand of Finland has helped. We’ve harnessed the high quality of Finnish education and the great startup spirit that has been boosted here with Slush and following the demise of Nokia.
JV: On the subject of a global footprint, can you tell me more about the partnership between xEdu and EduSpaze?
AK Well there is an increasing global demand for focused EdTech accelerators. This will be a first-ever accelerator in South-East Asia. Niko Lindholm will be running the space in Singapore and we obviously have a close relationship since his earlier time as a Director of xEdu. He was crucial to making xEdu happen and was our first salaried employee, even before me! He’ll help our accelerated companies to enter the South-East Asia market and we’ll support their companies come to Europe. We are also working with some of the other leading accelerators across in the world, including the University of Southern California. So #strongertogether!
JV: What can the Nordic and Baltic EdTech ecosystems learn from xEdu’s success in exporting its methodologies etc?
AK: This fall, we have started working with Startup Estonia to embed the same methodologies in product development and school engagement. In the future, having the same standards and ways of working will help create a more coherent Nordic market, where it’s easier for a company from one country to enter the market of another country. The deployment of the best solutions will then be in a common market - this will help us get to market faster and from a global perspective, we’ll be closer to the big markets like the US or Latin America / Spanish speaking markets.
JV: There’s been lots said about the Nordic EdTech ecosystem. How successful has that ecosystem been in achieving this market transformation?
AK: I would say that we have had a good start but we’re still in the early stages. We still have EdTech businesses in the biggest countries focusing on their own national markets. There is a big requirement to look at what elements need to combine to get the EdTech companies in Finland and Sweden to work together, particularly when it comes to government, legislation and organisation. It’s good that we are now more organised but yes, there is still a lot of work to be done.
JV: What are the next steps that need to be taken?
AK: Good question. I do feel that there is a need to start working on the mechanisms to make market entry into other countries even easier. For example, it’s about standardising the rules of doing business and understanding who the key system integrators are. So it’s really about developing the whole business system.
JV: How do you think the European Edtech Alliance will help Nordic EdTech businesses?
AK: Obviously I am not running an EdTech business myself, I am an advisor at the early, early stage. Those companies know best what to do. At the European level, I would say that the faster that we can get from the European Economic Area to a European Education Area the better! This will enable companies to scale across Europe, whereas currently most of the scaling in Europe happens in a single country.
When the industry comes together, it will also start to have a voice, for example dealing with governments or at the regional and EU level. I believe that the European Edtech Alliance can bring the European Education Area closer together, but we need to work at the Directorate General level to pull things together. They deliver implementation and policy change at the EU level. If there’s no ongoing dialogue there, we’ll end up continuing with these fragmented systems.
JV: Does that explain why Europe has not been able to produce the EdTech unicorn you mentioned earlier?
AK: Of course that all starts from history. Governments have wanted to keep education close, so in Germany, for example, the government and the three main publishers have worked closely together. Education has often been used by governments to direct learning in the direction they wanted. Europe has obviously also been fragmented into many countries, so its education systems are fragmented also.
Now we’re in the digital age, large-scale digital platforms are coming forward. Such platforms like Facebook and Twitter do not respect national borders, and neither do education businesses like Kahoot. The question now is, if we don’t have digital platforms from Europe, they will come from US and China. I think that for Europe and European values, it’s important to make sure that the leading platforms support those values.
JV: Only about 8% of global VC spend is invested in Europe. Does what you have just said explain that or are there other factors at play?
AK: Yes, that is certainly one of the reasons. It’s been more difficult to scale up in the European market, even if you compare with the US where the K12 systems are so fragmented. US businesses like Lynda were able to scale locally because of the size of its national corporate and HE markets. Because of the many different languages and the different national agendas that support local companies, it’s much more difficult to build scaleups in Europe.
Another core reason why investment through venture capital has been lower is because education in Europe is more of a public service. The percentage of education delivered as a public service is higher in Europe, so for education companies that presents extra challenges. If the public sector is your customer, that involves extra red tape and it has a different approach and speed to procurement.
JV: You are also work as a VC with EduImpact?
AK: Europe has been lacking VC funding for a long time. After angel investment, many of our companies have needed VC money to scale up and that’s why we’ve built xEdu’s linkages to GSV and Learn Capital. It also means that CEOs are spending lots of time and money to find the right VCs and there is a scarcity of those locally. So there’s certainly a need for education focused VC funds in Northern Europe.
The starting point for our VC fund came when our companies were presenting at a Sitra Conference. The European Investment Fund were so impressed by the social impact that our companies were delivering that they urged us to find and pull together VC funding to further their growth and impact. We’re now close to having that fund up and running.
JV: When will it launch?
AK: You never know, but we have high hopes and ambitions. If you think that for a normal investment round in a startup you need to have 2 or 3 investors, but for a VC fund you will need 20 or 30 investors.
JV: How do you balance the different roles?
AK: It’s a challenge. There are only 24 hours in a day but I have people around me who are smarter than I am so that helps me do both roles.
JV: What do you see are the future trends for 2020 for Nordic and Baltic EdTech?
AK: I believe that if you compare the pedagogy and technology of our newest products with those being developed in the US, China or the Middle East, we are on a par or even better. However that’s not yet showing in the valuations of our companies. With access to more VC money and a more coherent EU market, our EdTech companies could more easily scale up. That would make the life of every EdTech entrepreneur much easier.
JV: What does the next 5 years have in store for xEdu?
AK: We want to keep scaling up and growing.
JV: XcitED is coming up soon. What should people look out for?
AK: It’s the best place for the EdTech community to come together. That week there will be thousands of people in Helsinki for Slush and it’s easy to get lost in other events, but this is where all EdTech businesses, education-focused VCs and others from across the ecosystem come together in one place. The amount of conversations, networking and serendipity that is happening at one place is extraordinary. XcitED is the place of concentration for those people who want to make sure that education in the 21st century is about innovation, growth, scaleability and making this world a better place. There’s no better place to invest in the future of mankind than through education.
JV: What a positive uplifting way to end the interview. Thanks very very much for your time Antti! It’s been a fascinating conversation and a pleasure to talk to you.