The dream is to get thanked by a Nobel Laureate

Danish startup Labster, founded in 2011, recently received an investment in the hundreds of millions aimed at helping them reach a million students with their virtual laboratories. But their dreams don’t stop there.

There is a dark-haired girl wearing shorts alone in an empty office. It’s 9pm in Bali and she’s absorbed in her computer screen.

At Labster’s HQ on Danneskiold-Samsøes Allé at the naval base Holmen in Copenhagen, there’s a small fridge, untouched fruit in a large bowl and about ten employees with their eyes fixated on their screens. It’s 2PM in Copenhagen and I can see the girl with the shorts on a large screen right in front of me, and a webcam light reveals that she can also see me.

Right before I pondered how they are streaming live to an office in Bali, Michael Bodekær, founder and director of Labster, interrupts. This is how we create a kind of cohesion between our two offices that lie 11,500 km apart, he says.

I have written to him because their Danish Business registration reveals that his business recently received a huge investment from a very interesting player.

200 million – 200 customers

This recent investment totals US$20-21 million, Michael Bodekær notes. That’s over 132 million DKK.

“Yes, sorry, I think everything in dollars now. It’s just the US, the US, the US for us,” he says, revealing that even though Labster has an office in Bali, his focus is currently alternating between Copenhagen and Boston.

Before our meeting Bodekær wrote that he attempts to finish all of his meetings within 30 minutes, but unfortunately, he was running 15 minutes late. Bodekær ends up being more generous with his time than he first indicated, however, and seems more flexible than advertised.

He is smiling and accommodating, and extremely ambitious. He has started six companies, and several of them still exist. He started Labster together with Mads Tvillinggaard Bonde in 2011, and since 2014 the company has received over 200 million DKK in funding to create virtual laboratories and innovative education technology.

Today Labster has over 200 customers, primarily universities, and Bodekær highlights Arizona State University (ASU) in the United States. Here Labster has – along with Google – designed a digital Bachelor’s degree in Biology. ASU’s goal was for 200 students to complete their education the first year, and so far they have exceeded their expectations, with 1,000 currently enrolled in the program.

The long cool VR feature

Now there are a total of 15 organizations who, in addition to ASU, are running online courses in collaboration with Labster, and are also selling software for individual subjects or as complements to classical teaching.

In June a new venture in chemistry is scheduled to launch. As chemistry laboratories tend to come with a hefty price tag and potential danger, demand for Labster’s new chemistry program is high.

Labster is partly a virtual reality startup, and as a segment VR is likely past its hype phase. At the very least it is experiencing stagnating interest, certainly VR has received fewer VC investments in 2018 than the year previous. However, there’s never been as much interest in EdTech as there is now.

Although Labster has become widely known for creating advanced VR simulations for its programs, Labster is also far from being a VR startup, says Michael Bodekær.

“VR is still a small part of our revenue. The majority lies in the browser version. You just turn on your computer, log in, and then you can run the simulations,” he says.

Labster is not in charge of hardware for its VR solutions, they leave that up to their partner Lenovo. This allows Labster to focus on the software subscription solutions for educational intuitions. Labster is a Software-as-a-Service company.

Labster has seen an increase in the broad adoption of VR, but it is not in and of itself crucial for the company’s expansion, which happens with or without VR.

Global dreams

Labster has offices in Copenhagen, Ukraine, Zurich, Boston and Bali. The Copenhagen office is where they started, and the Bali location offers a different way to be tech startup and is useful for attracting young developers who would like to experience something different.

Boston is, however, on its way to becoming the most important office.

“We had 0 employees in Boston last year, and now we have 20. I wouldn’t be surprised if we were to hire 20 more this year,” says Michael Bodekær.

The new investment will be mostly used for an American expansion as there are many potential customers in the US, both universities and high schools. In the US, as in Denmark, technology is already an integrated part of the education system, Bodekær says.

The rest of Europe is well behind, and although Michael believes that Europe will catch up, the wisest bet is the US market. The new investors from Northzone, Balderdon, and David Helgason from Nordic Makers are all on board with the plan, and will play a central role in the American venture.

EdTech investors

Leading the investment of 132 million DKK is US-based Owl Ventures, one of Silicon Valley’s largest VC funds with a sole focus on EdTech. In addition, Labster’s Swiss office in Zurich has aided in securing investment from the largest telecom operator in Switzerland, Swisscom.

Another two EdTech funds, French Educapital and the American Entangled Group, are part of a follow-up round to the 132 million DKK, however the follow up round will be smaller.

“It is important that we get this deep-rooted EdTech experience from people who have been in so many EdTech companies before and understand what works and what does not work. It’s extremely valuable to us,” says Michael Bodekær.

While capital investments allow Labster to grow, they also give Labster access to the best network in the world and what they ultimately need to achieve scale: the education sector. Bodekær notes that in addition to Owl Venture’s investment, they have already been able to make partnerships with other companies within Owl Venture’s portfolio.

“The synergies are obvious.”

Government investment made a big difference

While Labster suffered a loss of 28 million DKK in 2016 and 2017, they had a total gross turnover of 500,000 DKK. According to Bodekær, Labster’s development phase was limited to those two fiscal years, meaning the investments from the Danish innovation fund and growth fund were extremely crucial.

“The development of our product took many years to reach a point where we could really commercialize it, and the Danish grant system has worked insanely well,” he says.

By 2018, a large part of Labster’s products were ready for sale and they could go to market. Their product and its innovation lead Labster to its first 200 customers, all educational institutions. Bodekær believes that it is important for Labster to broaden its reach, and has hired a handful of salespeople, marketers, and customer service and training employees.

Dreaming of Nobel

By 2018, Labster’s revenue had grown by 200-300 percent compared to 2017. Bodekær notes however, that this increase in revenue must be viewed in the context of the relatively low turnover from the previous two financial years. With new investments in place, their revenue will naturally increase in 2019, Bodekær adds.

“Mads (Tvillinggaard Bonde, ed.) and I are driven to make the company a success, and this will happen by creating an impact. In order to get the greatest possible impact, we must make the largest possible business. Then we can reach more students. And to do that we have to raise money,” he says, and thus we return to the beginning of this article.

Namely, that some investors have pledged investments in the hundreds of millions due to their belief in what Labster does and what they can achieve. How big are the founders’ dreams for Labster’s technology for the education sector? During Bodekær’s speech to Labster’s subsidiaries, Bodekær reaffirms his commitment to Labster’s goals. He isn’t considering an exit, or a champagne-popping stock market listing.

“We believe that with our approach, Labster can have such an impact on global education that we can become a unicorn, that is the driving force behind us. First, we want to reach a million students, and then we will look further,” he says, pointing out that the market for technology is much larger than high schools and universities.

As I asked about the goal of when Labster will be worth US$1 billion, the cautious spreadsheet type re-emerges in Michael Bodekær.

“Yes, I can count on that. So, within five years, this might be possible,” he says.

The unicorn status is a means of getting an impact, not an end in and of itself according to Michael Bodekær. Labster is dreaming big.

“Labster is going to help solve many of the world’s major problems such as global warming, new innovative ways to produce food, and so on. I have a dream that a Nobel laureate is going on stage in ten years and has cured a disease or solved the problem of global warming, and then they say as part of their speech that they would like to thank Labster for inspiring them to solve the problem and give them the tools needed. That’s the motivation that drives me. ”