Finland is often heralded as a model for educational excellence. But for all the many ideas for services that can support learners elsewhere, its entrepreneurs often lacked the capital to bring them to life.
Last week, Sparkmind, an education technology investment firm based in Helsinki, announced the first close of its venture fund, totalling €40 million (approx. US $44.6 million). Its biggest financial backers are Tesi, an investment company owned by the Finnish government, and KRR III, a separate fund that Tesi helped establish.
Other investors in the fund include OP Banking Group, Elo Mutual Pension Insurance Company, the University of Jyväskylä and the City of Espoo.
According to Antti Korhonen, a partner at Sparkmind, this is the first Nordic-based fund focused on the education technology sector. “First and foremost we are a European fund,” he says, which will focus its investment activity in northern Europe and the Baltic regions. But up to 25 percent of its capital can be invested in companies based outside of Europe, he adds. “We will not count out great companies from another region if they come along.”
Sparkmind has a broad investment thesis, with an interest in products and services that span early-childhood education to K-12 and higher education, and all the way through corporate learning. The firm will prioritize companies that can demonstrate improved learning outcomes, increase access to educational opportunities in developing countries, and make non-teaching, administrative tasks more efficient.
Over the past decade, Korhonen adds, “the European market for online education has developed as the digitization of schools has accelerated.” He also noted that marketing and distribution channels for scaling European-based products and services to U.S. and Asia have improved.
The firm will support companies raising seed capital through Series B rounds, and participate in deals with other investors that total anywhere from €1 million to €20 million. The biggest check that it will write is €5 million. Its “sweet spot,” says Korhonen, will be co-leading or leading Series A deals.
It has already made its first investment in Fuzu, a Helsinki-based startup that provides career-focused online training programs for adult learners in East Africa. Sparkmind led its €3.4 million Series A round.
Sparkmind is still fundraising, Korhonen adds, and the fund’s total could be as much as €60 million (approx. US $66.8 million).
Sparkmind traces its roots to an xEdu, an Helsinki-based accelerator program that Korhonen previously ran to support early-stage education technology companies. More than 70 startups from across 15 countries have graduated from xEdu, some of which have gone on to raise follow-on capital. They include 3DBear, a developer of augmented reality learning experiences, coding education startup Bomerbot, social-emotional program provider Mightifier and Roybi, which makes educational robots for kids.
According to Korhonen, he first met investors interested in scaling xEdu’s impact in 2017, at a conference organized by the Finnish Innovation Fund where companies from the program pitched. He began fundraising for Sparkmind at the end of that year, and today he remains an active board member of xEDU.
Sparkmind is not the only European-based education investment firm with a new tranche of capital. Last week, Emerge Education, a London-based group, closed £10 million (approx. US $12.3 million) for its seed fund. The group aims to make “£250,000 investments in 20-25 pre-seed and seed companies in Europe, with the ability to increase its exposure to £1 million per company in later rounds,” according to its press release.