Warburg Pincus leads $120m round for China’s Yuanfudao
Warburg Pincus has led a $120 million round of funding for China’s Yuanfudao in what is said to be the largest-ever PE investment in the country's online tutoring industry.
The round - which also features existing backer Tencent Holdings - will see Yuanfudao become China’s first unicorn in online K-12 tutoring, with a valuation exceeding $1 billion.
The company was founded in 2012 by former NetEase executive Yong Li. It offers academic curricula from primary school English and mathematics to all-subject courses at secondary school level. With more than one million paid users, the start-up also works with teachers to provide live online tutoring at home for students.
The company runs two additional platforms: Xiaoyuansoti, a mobile app that allows users to search for relevant online tests by taking snapshots of their textbooks; and Yuantiku, which offers an online database of test exams as well as customized practice papers for student self-study. At present, the three mobile apps – Yuanfudao, Xiaoyuansoti and Yuantiku – have over 160 million student users.
AVCJ Research's records show that Yuanfudao received a Series A round from IDG Capital in 2012, and a $7 million Series B led by Matrix Partners China the following year. In July 2014, Matrix and IDG returned with a $15 million Series C round, while CMC Capital Partners and New Horizon Capital co-led a $60 million Series D round in 2015. Tencent committed $40 million for a minority stake in the company last year.
In addition to K-12 online tutoring, Yuanfudao has expanded into areas such as administrative aptitude tests and essay tests for civil servants. This service operates under an independent online platform known Fenbi.com.
“Education is a lasting theme in every Chinese family with significant investment, and Yuanfudao has established itself as a pioneer in China’s online education sector with a mature business model, leading scale and brand,” said Gordon Ding, a managing director at Warburg Pincus, in a statement. “Unlike the traditional tutoring model, which requires intensive offline resources, online learning is becoming a primary choice of Chinese families thanks to its easy access and high efficiency.”
Following the investment, the GP will work with the company to expand into new areas within online learning.
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