Marko Kyyrönen is the CEO of Sparkmind.vc, the first Nordic venture capital company to focus on the learning sector. He sees Finland as a superpower in education and believes the country should capitalise on its good reputation. What sort of EdTech companies does he think will succeed internationally?
One recent trend in the venture capital industry is the creation of funds that specialise to an even higher degree than before. Marko Kyyrönen’s and his partners’ fund, Sparkmind.vc, is a good example of a Finnish VC company focused on a specific sector. Sparkmind’s first fund, Sparkmind Fund, last year raised some €40 million in commitments to invest in EdTech companies. The maximum size of the fund is €60 million. What is Sparkmind’s goal?
“We aim to grow scalable early-phase EdTech companies into international success stories. By helping the fund’s portfolio companies to succeed, we also develop the whole education sector on a wider scale. If all goes well, the examples set by our portfolio companies will encourage other companies to pursue growth and look for scalable business models,” replies Kyyrönen.
Kyyrönen hopes the education sector will duplicate the resounding success of the gaming sector, producing a broader ecosystem in its wake. Companies grow new talent for the sector and develop products and services as yet unimagined. The learning sector has more space for new companies and innovations than many disciples of the Finnish education system would think:
“Measured by global consumption, the education sector is nearly the size of the healthcare sector. It covers a wide spectrum, ranging from early childhood education and supporting school kids’ learning needs right through to vocational training, meeting companies’ training requirements, and lifelong learning,” Kyyrönen points out.
When technology meets education
Sparkmind has set its sights on EdTech companies that create value by, for instance, developing new digital learning platforms and tools. EdTech refers to a megatrend in digitalisation that over the last five years has also revolutionised the education sector. The COVID-19 pandemic has brought digital learning into people’s homes, both in Finland and internationally.
“Growth companies have become a more prominent feature of the sector in recent years. EdTech unicorns – privately held startup companies valued at over $1 billion – have sprouted, particularly in China and the USA. That’s made EdTech a term well known to a broader spectrum of investors,” explains Kyyrönen.
The EdTech-focused venture capital fund gives institutional investors, like Tesi and pension companies, an opportunity to indirectly participate in developing the sector and to benefit from its projected success. Sparkmind has made its first four investments in Finnish growth companies but regards the whole of Europe as its domestic market.
“We are rather well acquainted with growth companies in Finland and the Nordic countries, in particular, but our radar is rapidly expanding. We are specifically on the lookout for companies whose solutions are scalable for international markets,” Kyyrönen says.
Finland is an education superpower
It is not by chance that the Nordic countries’ first EdTech fund was raised in Finland. Finnish children’s success in international ranking comparisons is still freshly in mind throughout the world. Kyyrönen sees Finland as a superpower in education, if not in Europe, at least among the Nordics. There are many reasons for this.
“Finnish teachers have strong pedagogical training, which promotes the development of effective learning solutions, not only in growth companies but also more widely in Finnish society. Municipalities, schools, colleges, and universities have supported the sector by opening their doors to developers. Teaching methods can be better developed and more rigorously tested in cooperation between teachers and students.”
“We also possess strong technological expertise. Gamification is an increasingly prominent theme in education because it can boost students’ interest and commitment to learning a new subject. In Finland, also, we’ve learned how to deploy AI, robotics and XR technology. All these can be advantageously utilised in teaching. We already have international talent – now the best early-phase companies just need to find viable growth strategies, the right financing partners and the courage to pursue growth,” says Kyyrönen.
Photos: Kide Science
Sparkmind’s first four picks
Sparkmind’s first four portfolio companies are Kide Science, Schoolday, Playvation and Fuzu – all of which are familiar to Sparkmind’s team from earlier years and in other ways.
1. Kide Science is based on pedagogical research at the University of Helsinki into how scientific thinking is learned. Children 3-9 years of age carry out hands-on empirical research in science clubs and learn through play and stories the fundamentals of science and art subjects. Lesson materials are available for early childhood education units as well as for home schooling.
Kide science clubs are active not only in Finland but also in China and Southeast Asia, where Finnish education methods are held in high regard. The idea behind Kide Science is that if children assimilate the principles of scientific thinking early on, it will improve their learning outcomes also later in life.
2. Schoolday is a digital service designed to measure and analyse wellbeing and social emotional learning in K12 education. The AI-based service provides a school with information about pupils’ wellbeing. This forms a basis for decision-making and is particularly useful in distance learning. The result of extensive research, Schoolday already has customers in the Nordic countries, the USA and Australia. Now it plans to grow specially in the US market.
3. Playvation is known for its language learning solution for kindergartens and pre-schools. Its iconic Moomin Language School app teaches children English by combining Finnish education principles with Moominvalley tales. Used already in over 27 countries, Playvation plans to strengthen its position in the Asian market. In Finland, Moomin Language School is utilised in Touhula and Nordlandia daycare centres.
Website: Moomin Language School
4. Fuzu is a lifelong learning and employment exchange platform. Its main market area is East Africa. Young job seekers learn work-related skills and acquire the qualifications improving their career prospects along the lines they themselves choose. Fuzu is also an employment exchange in which jobseekers can find a job of their dreams, and an employer can find the most suitable candidate from thousands of applicants. The service now has over a million users. Although Fuzu’s business operations and most of its personnel are located in Africa, the company is based in Finland.
What it is: Sparkmind.vc is the first Nordic venture capital company focused on the learning sector.
Partners: Marko Kyyrönen, Kai Talas, Vesa Laakso and Antti Korhonen.
Fund: Sparkmind Fund had its first closing in December 2019 after raising some €40 million in investment commitments. The goal is to raise the total commitments to €60 million by the end of 2020.
Investors: Tesi, KRR III fund, OP Financial Group, Elo Mutual Pension Insurance Company, the University of Jyväskylä and the City of Espoo, among others.
Investments: The fund invests in companies from seed stage to B Series rounds, with single investments of up to €7 million.
Portfolio companies in August 2020: Playvation, Kide Science, Fuzu, Schoolday.
Who he is: CEO of the Sparkmind.vc venture capital company.
Education: MSc (Econ), University of Vaasa.
Experience: Marko has worked in the investment industry since 2002, establishing several sector-focused private capital funds and serving as a CEO of a fund management company.
Why Sparkmind in particular? “Learning new skills and knowledge always produces a spark!”