LABSTER is an online teaching laboratory simulator for experimental biology and biotechnology. They tap in the growing field of online education and provide virtual experiments which aren’t possible in school surroundings. The firm won the Danish Venture Cup in 2011 in the category “people and society.” Øresunds startups asked Tobias Aabye Dam, the COO of Labster for his view on entrepreneurial topics.
What is your grand vision on developments in the online education sector?
Virtual experiments are just a small thing in the online education market. Upcoming start-ups in the US try to disrupt the conventional way students are taught any kind of subject. Within the next five to ten years both primary, high school and higher education will have a major part of their curriculum taught on the computer. Teaching will increasingly be more online, and not a person standing in front of a blackboard. The online education does not just consist of online readings, surveys etc, there are more possibilities to explore and we can actually move the real world online and simulate it. By having those virtual experiments online we make things accessible. Many universities give the opportunity to practice lab experiments to students only late in their studies. This causes students to drop out. Virtual experiments will make experiments accessible at a lower cost in an online setting in an earlier stage of the study programme.
Can you tell me about any failures you had in your company, and how you have learned from them?
I rather not speak of any failures, because what I define as a failure is something you evaluate badly afterward, which we haven’t done. There have been situations we’ve learned from though. For example, in the beginning of 2012 we approached the American market by cold calling universities in the US and asking them if they wanted to buy our product. We didn’t have a connection and therefore we didn’t get the results we wanted. So, when we realized that this didn’t work we actually went to the US and visited the universities, showed the product and built up the relationship with the customer. This was a much more effective strategy. By starting up a company there is lots of discovering involved and you should ask yourself what kind of sector you’re in, what product are you selling?
So presumably you got the first round of financing because you won the Venture Cup, but how did you receive that important second round of financing?
Yes, the first round of financing we got from the Venture Cup. With that money we were working on developing a prototype for the project, we didn’t pay salaries to ourselves. Later on we raised another 400.000 from Novo Nordisk, we got that as a grant. I think we got this money because we could show that we were able to get 8000 users from the beginning with little financing. 25% of the Danish High Schools implemented our product. Because we achieved this with a previous round of financing, we had a track record which showed that we were able to do it. Due to this strategy we ended up raising 4.2 million DKK. without giving out any equity.
The best way to raise capital is to start out with a small amount, show that you’re good at it, and then increase that amount with 300%. Do that over and over again, minimize your risk and communicate your vision.
You seem to be growing quickly, what challenges did this growth bring along?
We have lots of partnerships with universities but so far only a few paying customers. We have to make the transition from having partnerships to actually selling the product. It is important for us to speak with potential customers and to ask them questions. Will you pay? What kind of problems do you have? How would they be able to pay?
“Not always go to a meeting and think: I want to sell this product. Go into a meeting and think what the customer and you can learn from each other and what the customer needs. That is much easier and more beneficial for both. Try to have fun with meeting your customers.”
Do you have any advice for other entrepreneurs?
There is one danger you should be aware of: some people keep participating in competitions. Once you get a round of financing you have to get started and do the real thing. As soon as possible you should start developing your product and ask yourself if you have the passion to do this.