China language learning app Liulishuo files for US IPO

IDG Capital and Trustbridge Partners are the largest external shareholders in the company, each owning 13.4%. GGV Capital and CMC Capital Partners have 11.7% and 6.9%, respectively, according to a prospectus. The size and pricing of the offering – which will likely see these shareholdings diluted by the issuance of new shares – have yet to be decided.

While most Chinese platforms focus on K-12 education, Liulishuo targets adults. The company’s teaching methodology also differs from other operators, which tend to base lessons on either hard-to-digest academic courses or fragments from English language movies and songs. Liulishuo creates interactive courses using online games and social activities, enabling users to win points as they move through the levels and communicate with fellow students.

In 2016, the company introduced Dong Ni Ying Yu, which provides personalized study plans. The app uses voice recognition and AI technologies to compare sentences spoken by native speakers and the Chinese learners. It evaluates an individual student’s capabilities and adapts accordingly.

“In the early days, the technology wasn’t as smart as it is now, but the company has always been working on that vision. When AI and machine learning started to become more mature and reliable between 2014 and 2015, the company began adopting those technologies very quickly,” Matt Cheng, a managing partner at Cherubic Ventures, told AVCJ last year.

Cherubic provided seed funding to Liulishuo alongside GGV and IDG in 2013. The same investors returned for a Series A in 2014 and were joined by Hearst Ventures. A year later, the start-up raised a $42 million Series B at a valuation of $200 million, led by TrustBridge. This was followed by a $100 million Series C, led by CMC and Beijing-based family office Wu Capital, in August 2017.

Liulishuo operates on a freemium model, attracting students with free services and converting them into paying users. As of June 2018, Liulishuo had 7.2 million monthly active users and just over one million paying users. Enterprise learning services were launched in early 2017 and now there are more than 100 corporate customers.

Revenue came to RMB165.6 million ($25.4 million) in 2017, up from RMB12.3 million a year earlier. Over the same period, the company’s net loss widened from RMB89.2 million to RMB242.8 million.

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• Topics
• Greater China
• Technology
• Consumer
• IPO
• China
• Education
• GGV Capital
• Cherubic Ventures
• IDG Capital Partners
• Trustbridge
• China Media Capital