Fund II Manifesto: Human Capital Development in the Age of AI

Originally published in November 2024, this is the manifesto for Emerge’s second institutional fund. We had by now been Europe’s first dedicated human capital development investor for a decade, with 90+ investments valued at more than $3bn and impacting more than 69M people worldwide. Our community had also grown, to 100+ Venture Partners who are among the world’s most successful HCD operators. Their hands-on experience covers every HCD skill, business model and customer type. When we invest in founders, we welcome you into that community, connecting you with those who have “been there and done it” to set you up for success.

Why we are here

What we offer founders

Our mission is to be the best first cheque for founders

We have designed a three-pronged value proposition for pre-seed founders: we write big cheques, early; we match you with world-class operators to enable you to move faster; and we’re in your corner during future fundraises.

1. We write big cheques, early: The most important thing early on is to act fast and make bold moves, but you can only do so if you don’t have to worry about fundraising. Unlike most pre-seed investors, we are unafraid to write significant cheques ($500k – $2.5m) into pre-revenue, often pre-product companies – to enable you to focus on building.

“Emerge’s process was fast and they took a high conviction bet on us very early on. With our first institutional round, that was exactly what we were looking for. Together with the incredible support of their VPs, we knew Emerge was the perfect fit for us.”

Richard Weiqi Zhang, co-founder at Solvely Labs, which builds AI agents for learning

2. We match you with world-class operators: You will learn from those who have been in your shoes and built 50 of the top 100 human capital development companies in the world. We match you with mentors, advisors and even independent board members from our community of 100+ Venture Partners to accelerate your path to product-market fit and Series A. Every company we invest in directly benefits from this community and our resulting portfolio NPS is a stunning 90.

Our VP community includes current and former leaders from Docebo, Andela, Degreed, Busuu, Trilogy, Udemy, Age of Learning, Chegg, Guild, SNHU, Emeritus, and many more. 

“Being able to rely on some of the world’s leading entrepreneurs in our industry for detailed advice on topics such as product expansion, positioning and pricing has massively accelerated our learning. Getting Emerge as a pre-seed investor was like getting a one year headstart on our competitors.”

Dominik Mate Kovacs, founder and CEO of Colossyan, the global AI video company

3. We’re in your corner during subsequent fundraises: When the time is right, we move mountains to raise your next round. As of today, an incredible 80% of our fund investments have gone on to raise up-rounds following our initial investment, raising from the likes of Index, Maveron, Lakestar, Partech, Iconiq, Earlybird, Localglobe, First Round and Founder Collective.

“Emerge were our first investor at pre-seed and have introduced us to the lead investor of every subsequent round, inclusive of our Series B. They have been so crucial to our success.”

Ben Drury, co-founder and CEO of Yoto, the global early years consumer brand

In short, we are the market experts you need to help you go from startup to IPO.

What are we looking for? 

When we say early, we mean early. While traction is always helpful, we primarily look for founders who we believe can change the world, pursuing big ideas in market categories we believe in. 

• Founders who will change the world: We look for founding teams with the propensity to think big, the ability to move fast and the skills to create value. Throughout our investment process, we build a detailed picture of your founding team – how you think and execute, and how you have challenged the status quo.
• Big ideas in market categories we believe in: We are a thesis-driven investor. As market experts, we think as deeply about the market opportunities founders are pursuing as they do. We deeply understand every area we invest in, with strong confidence that our specialist knowledge can add value.

If we are convinced these two factors are in place, we are ready to partner with you, no matter how early you are on product or traction.

Our investment process, from the founders’ perspective 

• Get in touch: The easiest way to get in touch is to send us your deck via this link.
• Exploration: If we see a fit, we will arrange a first call with one of our investment team, often followed by a demo walk-through.
• Monday Meeting: The next stage is to present to all three Partners at a Monday Meeting, after which we give you a strong indication of how likely we are to make an offer and you will start meeting some of our Venture Partners as potential matches. This can be within one week after our first call.
• Investment Committee: The final stage is our investment committee meeting, in advance of which we will work collaboratively with you to build a deeper analysis of the opportunity.
• Term sheet: you receive a term sheet from us and get matched with the best Venture Partners for your journey.

Our investment thesis

A new world 

Will robots steal our jobs? The short answer is: yes, they might, but if we can adapt, we’ll get a better one.

AI is changing everything – it’s a general purpose technology, so it affects every aspect of how we live, learn and work. Some parts of our jobs will be automated, some augmented and the rest will be performed by people who can work most effectively alongside AI. These changes are bigger than anything we’ve seen since the Industrial Revolution. 

In addition, AI will add more to global GDP by 2030 than the current output of the United Kingdom. That growth will create plenty of good jobs (up to 50 million), many of which will be in new types of occupations that haven’t even existed before. 

In a nutshell: the world of work is transforming, fast. It’s a fact that if you don’t adapt to this new world, you will be left behind – and what worries us is that people don’t have access to the tools, skills and confidence they need to do so. 

That’s why we’re investing in companies that empower people to Learn, Navigate and Work. 

1. Learn 

To be adaptable, you need to start with strong interdisciplinary knowledge and be able to learn new things constantly and fast. 

That’s simply not what’s available to most people on the planet. Why? Access to education varies widely across all dimensions – relevance, cost and quality. 

Using the power of AI, companies in our “Learn” segment catalyse huge improvements in education at all levels by making personalised learning accessible to every learner at near-zero marginal cost. 

2. Navigate 

Given AI’s disruptive nature, our jobs and roles will change much more frequently in the future. Already, we are experiencing twice the pace of occupational transitions as before the Covid-19 pandemic. Workers need to improve their knowledge of when to switch jobs or careers, where to go next, and how to get there. 

In parallel, organisations will need to constantly reinvent themselves to keep pace with changes in technology and society, creating a massive talent management challenge: who to hire, who to develop and how. 

Companies in our “Navigate” segment work with both employers and candidates, using AI to improve the efficiency and quality of some of life’s most important decisions: who we work with. 

3. Work 

The future is defined by an increasing social divide between those who can use AI to increase their productivity and those who try to compete against it. Today, most of AI’s benefits accrue to technology companies and the few people working for them. Making AI’s power accessible to everyone is one of the biggest opportunities of our time. 

As AI takes over more and more complex tasks in knowledge and services industries, our roles will shift to become broader, to expect us to do more with less and to focus on high-value tasks like innovation, decision-making and managing risk. Doing well in these roles will require us to build expertise in multiple domains and be literate in using AI to automate high-value tasks that relate to our roles. 

Companies in our “Work” segment empower individuals by building easy-to-use tools that enable people in all professions to collaborate with AI and to do more with less – and they empower organisations to fuse work and learning to enable constant transformation and upskilling. 

The opportunity of a lifetime 

These Learn, Navigate and Work segments represent disruptive innovations in markets such as supplementary education, edtech software, talent development, hiring and recruitment, and business productivity, totalling $1.5 trillion in today’s spending. 

The stakes are massive and the opportunities to create great value are real – and we’ve never been more excited to invest in founders in this space. 

With that in mind, we invite you to read on for our Requests For Startups below, where we detail specific investment concepts that we are particularly excited by. 

1. Request For Startups – Learn 

Using the power of AI, companies in our “Learn” segment catalyse huge improvements in education at all levels by making personalised learning accessible to every learner at near-zero marginal cost, across the following market categories for young and adult learners: 

• Tech for young families – Intersection of the $57B educational toys market and the $250B global early years education market.
• Higher education/K12 B2C supplemental – $14B study tools market and $10B online tutoring market.
• Educator tools and co-pilots – $6B teacher professional development market in the US alone, while the teacher training market is expected to reach almost $33B by 2028, as the world needs to add more than 7M teachers a year on average.
• Self-improvement – $44B personal development market and $3.2B online life coaching market.
• Language learning – $21B global digital language learning market. 

To support our portfolio companies in these categories, our Venture Partners include entrepreneurs and executives who have built some of the most successful consumer learning products worldwide.

Let’s go deeper into each segment and explore the kinds of companies we intend to back in each one. 

Tech for young families 

Parenting is life’s toughest gig. Funding for early years settings is insufficient (only 6% of public education spending), mental health problems in kids are on the rise, and support from immediate family is ever decreasing because of urbanisation and the increasing mean age of first-time parents. Solutions are needed to support young families with school readiness, language and skill development, play, sleep, nutrition and building healthy home and digital environments. 

“AI-driven solutions are poised to catalyze growth in early learning spending, as they provide new opportunities to tailor learning to each child and support parents’ capabilities as their children’s first teachers. Moreover, public investment in educational technology solutions for young children will increase as governments globally recognize the opportunity to improve outcomes for all young children, especially those from underserved communities.”

Sunil Gunderia, CIO at Age of Learning and Venture Partner at Emerge.

Request for startups:

• Physical/digital for early years development: Services that combine physical and digital experiences to engage the child/family and build lasting habits. Examples: Yoto, Edurino.
• Interactive, personalised edutainment: Interactive and personalised learning experiences, from literacy to numeracy to edutainment.
• AI parenting assistants and tools: Personalised and affordable assistance for parents that builds confidence and reduces stress at home.
• Safe social networks: Alternative digital environments for kids that allow safe interaction with content and friends.

HE/K12 B2C supplemental 

All students face exam pressure, but the learning support they receive differs widely, both in school and at home. As a result, parents and young learners are increasingly looking for solutions outside the formal education system, creating both a huge commercial opportunity and a design imperative to build solutions which actively foster educational equality. Accessible supplemental learning support is required to level the playing field. 

“Students were the first to adopt AI en masse. They are hungry for the independence AI tools provide, and in particular AI-powered features that don’t just provide quick answers but meaningfully support learning. I believe these kinds of tools will provide all students with the support they need to excel.”

Stephen Jull, ex-CEO at Epic! and Venture Partner at Emerge. 

Request for startups:
 

• AI authoring tools for learning materials: Tools that give learners content creation superpowers, enabling them to transform textbooks, lectures and notes into personalised and interactive learning materials such as mind maps, flash cards, presentations, and more. Example: Algor.
• AI study buddies: Tools that increase access to personalised study help by mimicking the actions of a good tutor, distributed either directly to consumers or via schools and publishers. Examples: Solvely, Foondamate.
• Twitch for education: Live interactive lessons from big brand teachers/schools. Example: MyEdSpace.
• Group-based online extracurriculars: Democratising access to extracurriculars through group-based online delivery.

Educator tools and co-pilots 

In an environment of restricting budgets and increasing expectations, educators must do more with less. We have seen an impressive pull from this demographic for workflow solutions that meaningfully save time and cost or improve learning materials’ interactivity and relevancy. 

“Education institutions are embracing AI to reduce the burden on educators and reduce cost. AI will soon become part of every major work flow in formal education settings.”

Mary Curnock Cook, former CEO UCAS and Venture Partner at Emerge.

Request for startups:
 

• AI-automated academic assessment: Tools that automate the evaluation of academic assessments, saving institutions significant time and money. Example: Cadmus.
• Chat-to-institution: AI chatbots that allow students to speak to their university’s HRIS, LMS and customer/student support function 24/7. Example: Learnwise.
• AI-enabled authoring tools for educators: Tools that radically speed up the process of creating high quality learning and classroom materials for educators. Example: Algor.
• AI co-pilots for academic tutors: Infrastructure tools for tutors and/or tutoring agencies that help them scale high quality tutoring delivery.

Self-improvement 

If ever there was a category of learning solutions that truly applies to the mass market, this is it. Yet most self-improvement spend goes toward non-technical products and services such as books and 1:1 sessions with therapists and coaches. AI is creating the opportunity to scale preventative interventions that address the same pain points but are significantly more cost-effective. 

“AI is disrupting the self-improvement market by creating highly personalized solutions that produce step-function better outcomes, can reach mass adoption, and at a much lower cost!”

Ajay Varia, founding engineer MasterClass, former COO @ Emeritus, and Venture Partner at Emerge

Request for startups:
 

• AI life coaches: AI-powered tools that dramatically reduce the cost of delivering high-quality life/career/relationship coaching.
• Spiritual education: Hyper-personalised learning and coaching experiences that help people connect with their spiritual selves and find meaning. Example: Niyyah.
• Relationships education: Hyper-personalised learning and coaching experiences that help us build and maintain strong romantic relationships and friendships. Example: Kuddl.
• Adulting and financial education: Tools that enable users to learn about and better manage their finances.
• Mental health/health education: Tools that create healthy habits and skills to improve mental and physical health (e.g. socio-emotional, sleep, nutrition) before these issues become bigger problems.

Language learning 

An estimated 1.5B people are learning a second language, globally. Digital language learning has seen two major iterations over the past 25 years: version 1 was pre-recorded content (Rosetta Stone) and version 2 was gamification (Duolingo). AI has ushered in the third major iteration: avatar-based language learning. 

“AI has enormous potential to make digital language learning solutions even stronger and unlock the next wave of adoption.”

Bernhard Niesner, Founder and former CEO Busuu, and Venture Partner at Emerge.

Request for startups:
 

• AI-powered pronunciation and language learning: Solutions that enable language learners to practise speaking – by far the most desirable language-related skill – with an AI avatar at near zero marginal cost.

2. Request For Startups – Navigate 

Companies in our “Navigate” segment work with both employers and candidates, using AI to improve the efficiency and quality of some of life’s most important decisions: who we work with. We see disruptive potential across the following market categories: 

• Career navigation/pathways – $14.5B career counselling market, augmented by a $1.7B outplacement services market.
• Talent sourcing – $141B talent acquisition and staffing technology and services market.
• Talent assessment and selection – $22B talent assessment market. 

To support our portfolio companies in these categories, our Venture Partners include entrepreneurs who know how to build for and distribute to employers, and enterprise and mid-market CHROs and CLOs who have bought such services throughout their careers. 

Let’s go deeper into each segment and explore the kinds of companies we intend to back in each one. 

Career navigation/pathways 

Choosing a career has never been more exhilarating – or more intimidating. A person’s first job greatly influences their future earning potential and overall career trajectory. However, most young individuals lack access to quality advice on this subject. What’s more, not all entry-level jobs offer the same level of support and development opportunities. For example, by 2027, an ‘alternative workforce’ of freelancers, temporary contract workers and crowd workers is expected to become the majority of the US workforce but contingent workers are often unable to develop skills that will get them further in their careers. Considering the significance of first jobs for career and life trajectories, it’s crucial to find solutions that can equalise opportunities in this area. 

“It’s said that talent is everywhere, but opportunity is not. With the added reality that careers are no longer linear and work is increasingly borderless, giving individuals equitable access to tools for career discovery, counsel, preparation and navigation becomes more essential. These exciting technologies do just that, and in a way that cultivates curiosity, self-awareness, and increased confidence.”

Natasha Davidson, former CMO EMEA Coursera and Venture Partner at Emerge

Request for startups: 

• AI-enabled career navigation tools: Tools that accurately match end users with career paths and roles, based on a deep understanding of skills, personality and macro factors. Example: FutureFit.
• AI career coach: Tools that level the playing field and allow candidates to represent themselves best during the hiring process.
• Entrepreneurial upskilling: Resources, communities and guidance focused on a massively underserved segment: small business owners and creators. Example: Prentice.

Talent sourcing 

Accessing talent has never been harder. Hit by an $8.5 trillion global skills gap, an ageing working population and competing for talent against global competition, many industries need a full overhaul of their talent pipeline to increase the net supply of talent. 

“Bridging the skills gap requires millions of people to commit to build new skills and potentially enter new career paths. That is difficult to achieve. I’m excited about products and services that are creating the infrastructure for that massive shift to happen.”

Christina Sass, Founder of Andela and Venture Partner at Emerge

Request for startups: 

• AI talent sourcing: Tools that save recruiters time by automating the search for and connection with potential talent, and managing the employer brand.
• EmployerEd: Generating candidate pipeline through some form of job simulation, e.g. Employer-tech-stack-linked bootcamps; Digital mini-internships; Employer-branded talent academies. Example: Academy.
• Verticalised job boards: Nextgen job boards that are sector-specific and own more of the value chain, including vetting candidates and supporting better matches.
• Producers of skilled manual labour: Bootcamps, migration solutions, and staffing providers that increase the net supply of manual skilled labour and connect it with high-value jobs. Example: Varm.

Talent assessment and selection 

There is no one formula for calculating the cost of a wrong hire or the cost of making the wrong promotion, but no matter how you look at it: it’s huge. Yet today’s methods for evaluating potential and performance are either subjective (interviews, 360s) or unscalable (expensive talent agencies). Meanwhile, the introduction of AI into the hiring process (on both sides) has made it more difficult to evaluate candidates authentically and free from bias. 

“Leaders have long struggled to match talent with roles, and traditional, costly methods like psych-driven assessments or interviews have barely evolved in 50 years. Now, SaaS tools, skills analytics, and AI are revolutionizing hiring by offering a scalable, cost-effective way to find the best talent for any role, from entry-level to C-suite. Once this approach is refined and scaled, it will transform hiring, save organisations money, and create immense value for those who deliver it.”

Mike Priddis, Founder and former CEO of Faethm, and Emerge Venture Partner

Request for startups:
 

• AI talent management and selection: Tools that enable recruiters to interact with talent at scale and make more accurate hiring decisions, including chatbots, automated interviews, interview co-pilots and automatic candidate assessment. Example: Popp.
• Job simulation assessment: Assessing candidates based on customised work sample tests, graded fairly by AI, to enable hiring based on a person’s true skills and potential, not their CV. Example: Skillstrust.
• Company-specific models for skill assessment: Connecting all of a company’s performance, goal management, and career development data to build a company-specific model that can power other use cases like hiring, performance coaching/feedback and career progression.
• AI governance solutions: Tools that enable HR to monitor the use of AI models throughout the HR function to prevent biased decision-making.

3. Request For Startups – Work 

The future is defined by an increasing social divide between those who can use AI to increase their productivity and those who try to compete against it. Companies in our “Work” segment empower individuals by building easy-to-use tools that enable people in all professions to collaborate with AI and to do more with less – and empower organisations to fuse work and learning to allow for constant transformation and upskilling. This will eliminate repetitive, dull work and free people to spend time on high-value tasks like innovation, decision-making and managing risk. 

We see enormous disruptive potential for technology companies across several market categories: 

• Workforce development – $396B corporate training market and $46B online degrees and micro-credentials market.
• Workforce augmentation and Knowledge management – $558B knowledge management market. 

To support our portfolio companies in these categories, our Venture Partners include entrepreneurs who know how to build for and distribute to employers, and enterprise and mid-market CHROs and CLOs who have bought such services throughout their careers.

Let’s go deeper into each segment and explore the kinds of companies we intend to back in each one. 

Workforce development 

Workplace upskilling and reskilling – especially when focused on enabling people to use AI at work – are mission-critical capabilities for all organisations that want to stay innovative and retain talent. But high-quality development opportunities like coaching and skills development are expensive and, therefore, have historically been accessible only to the top echelon of professionals; the rest of the workforce is stuck with unengaging MOOCs and mandatory compliance training. As a result, only 30% of employees at risk of job displacement from AI and technological changes received training in recent years. 

“To develop the workforce, we need to move beyond static L&D content libraries toward a technology ecosystem that provides workers with insights, guidelines and coaching in the moment, while collaborating with others. We’re in a Cambrian moment of L&D – the space will be unrecognisable five years from now.”

Claudio Erba, founder and former CEO of Docebo, and Venture Partner at Emerge.

Request for startups:
 

• Digital empowerment: Tools to upskill and enable professionals to use AI, no-code and RPA, and to get the most out of sophisticated software. Example: Mendo.
• Flight simulator for interpersonal skills: Interactive learning experiences that create safe environments in which to train for high-stakes situations or complex interpersonal skills, such as sales, leadership and negotiation – from voice to avatars to XR. Example: Replicate.
• Business communication co-pilots: AI that improves business communication skills through feedback and automation, including both written and verbal work outputs, from emails to business calls to proposals.
• Authoring tools for L&D and learning designers: Innovative authoring tools that turn boring L&D content into interactive avatars, AI tutors or even facilitator-less group activities. Examples: Sparkwise, Engageli, Colossyan.
• Low-cost performance coaching/mentoring: Platforms that radically decrease the cost of delivering coaching/mentoring to employees at all levels of the corporate pyramid, such as using trainee coaches, p2p coaches or AI.
• Frontline worker management tools: Shopfloor-level management systems that are used by frontline workers 24/7 to track tasks, competencies, development, safety compliance and more, leading to greater productivity, transparency and development opportunities.

Workforce augmentation and Knowledge management 

Companies always seek ways to increase productivity in an increasingly competitive global market. AI tools that streamline workflows and improve the flow of information promise to do just that. 

“The workforce is continuing to adapt to new ways of working and learning. It’s a critical time for companies to leverage collective intelligence for competitive advantage.”

Tamar Elkeles, former CLO Qualcomm and Venture Partner at Emerge.

Request for startups: 

• AI-powered knowledge management: The average knowledge worker uses 40–60 different apps. Knowledge management tools designed for the enterprise allow users to query disparate information silos through a single interface. Examples include both horizontal and verticalised solutions (e.g. Causaly).
• Improving access to academic knowledge: Processes and tools that make academic research more accessible and approachable.
• AI-powered second brain: End-user focused tools for frictionless capture and categorisation of ideas, actions and new information, allowing for just-in-time retrieval.
• AI co-pilots: Vertically specialised AI systems that augment skilled human labour to streamline repetitive workflows.
• AI-powered digital workers: Automated digital workers trained on your company’s data that execute repetitive tasks, e.g. in SDR or recruiting roles.
• AI-powered expert marketplaces: The next generation of expert marketplaces, using AI to improve the speed/quality of matches as well as the acquisition and evaluation of experts.