Originally published in 2020, this is the founding statement of our Human Capital Development thesis – about the set of markets that help people learn, navigate careers and do productive work. By this time, we had spent five years as an angel syndicate, backing breakout companies unlocking human potential through learning, career navigation and tools that augment productivity at work. In 2019, Emerge launched our first institutional VC fund. This manifesto is where we first set that thinking down as a thesis.
Picture a learning and work ecosystem fit for the modern era – one that could double its capacity in just ten years, align swiftly with employers to provide training for newly invented skills, and help people continuously re-train and re-skill for multiple careers throughout their lives.
This is what’s being demanded, with increasing pressure, by the people and industries that are shaping the world of today and tomorrow.
But the systems we built to meet that demand were not designed for it, and they are buckling. What follows is where they fail, and the kind of company that can rebuild them.
Read on for:
- Why the way the world builds skills has stopped keeping pace with the way the world works
- Three failures that leave skills in short supply: scale, flexibility and alignment to industry
- The kind of company Emerge backs to close that gap, and the first companies we funded to prove it
* * *
I’m Jan, founder and GP at Emerge, and I’m a child of immigrants. As such, I took the traditional route out of poverty.
My parents left the Soviet Union in 1979, arriving in Germany with nothing but a strong sense that education was the answer — whatever the question! So my formative years were spent in a household focused on hard work, learning and, to be honest, not much fun. But that commitment to learning was a privilege and, as a result, I gained access to opportunities, scholarships and, ultimately, a place at Oxford University, where my world view – and even more opportunities – really opened up.
Emerge founder and GP Jan, with his family.
My partner Nic Newman joined Emerge in 2016, after co-founding and exiting 300-person tech company TigerSpike.
It’s a familiar enough tale and one that’s created many entrepreneurs through the ages. But we believe that now, as a path out of poverty, it’s just not working so well any more.
We have entered the Age of Intelligence
Globalisation, automation, skills becoming redundant in a time of rapid transformation and growing demand for different skills – these are the hallmarks of the automation revolution, of Industry 4.0.
By 2030, a global shortage of skilled talent is projected to result in an $8.5 trillion loss in foregone annual revenues. At the same time, more than 50% of the one billion global knowledge workers are projected to need upskilling or retraining to avoid being pushed into under- or unemployment.
The demand for new skills and training is huge, growing and ever-evolving, and the current education and training system can’t cope. The old, structured ways that worked for a small and relatively homogenous group of people are failing a much larger, more diverse audience. What has been normal for education is no longer so.
So what needs to change?
There are three core barriers to provide the skills the world needs: scale, flexibility and alignment to industry.
Scale: Our current systems of learning are not scalable enough. It’s taken 200 years to build the number of universities and the number of university places the world presently has … and yet we’re now looking to double the number of university enrolments in just ten years. No-one expects to meet that demand simply by doubling the number of university buildings – but even if investment in infrastructure goes up, creating this many new universities following the traditional model, and in such a short time, just isn’t feasible. Today’s system is not scalable to anywhere near what’s needed.
Flexibility: The system is not flexible enough. The global learner population has vastly heterogeneous needs and it’s important for our systems of learning to offer more flexible pathways to meet the needs of these students, including giving them the option of completing their studies more efficiently, in small, stackable chunks, online, with more flexible, less risky financing options.
Skills: The system is not aligned to industry needs. It’s education-centric rather than employer-centric; courses are designed with educational objectives in mind, rather than employer needs, and then have an attached career service to help people consider what their career should be and where they might apply. And once they’re out there, they’re on their own.
The end result is, on the one hand, people who are struggling to find meaningful work and, on the other, companies struggling to find the necessary high-skilled talent.
What does the future look like?
At Emerge, we invest in engines of opportunity.
Engines of opportunity are emergent companies that use innovation and technology to bridge the divide between the people who need access to opportunities to acquire skills and industry that needs access to skilled workers.
These engines of opportunity are democratising access to higher skills and meaningful employment by making learning more scalable, flexible and industry-aligned.
Together, we believe we can create a world that truly unlocks human potential.
How will we get there?
We’ve identified six engines of opportunity. These six themes sit across two categories:
- Disruptors build standalone solutions that compete with incumbents.
- Enablers work with incumbents and existing institutions to help them become more scalable, flexible and industry-aligned.
Disruptors
- Challenger universities (Learn): new digital-first universities that challenge the status quo through innovative curricula, teaching and operating models
- Developing pathways into jobs (Navigate): core, online, free/close to free and live teaching of skills that allow people to access new careers
Read our market deep dive, in partnership with Coursera and Ufi
- Personalised, scalable workforce training (Work): programmes to help organisations upskill and reskill their staff at scale in the flow of work
Read our market deep dive, in partnership with FutureLearn
Read our focus on frontline workers, in partnership with Coursera
Enablers
- Employer-university collaboration (Navigate): platforms that enable industry to co-design and co-deliver courses with universities, at scale
Read our market deep dive, in partnership with Jisc
- Operating systems for teaching at scale (Learn): the technology needed to make learning more flexible and scalable
Read our market deep dive, in partnership with Jisc
Read more about employability, in partnership with Jisc
Read more about assessment, in partnership with Jisc
- Helping universities enter new markets (Learn): supporting universities – the most important existing providers of skills – to scale and adjust their offerings to meet the needs of learners and employers alike
Read our market deep dive, in partnership with Jisc
To do all this on an even greater scale, we’ve launched a new fund. It’s backed by a dream team of top global investors, including Dan Sommer, founder of Trilogy Education (acquired by 2u for $750m); Rob Cohen, first FTE at The Princeton Review, founding CFO of 2U and early-stage advisor/investor in Trilogy; Cambridge University Press; Cambridge Assessment; the higher and further education technology body Jisc; Nesta; and Brazilian higher education group Grupo Tiradentes.
So despite the challenges I’ve outlined above, I’m optimistic about the future. Join us on our journey.
