Chinese online education start-up Yuanfudao raises $300m
Tencent Holdings has led a $300 million round of funding for Chinese online education start-up Yuanfudao, propelling the company to a valuation in excess of $3 billion.
Warburg Pincus, Matrix Partners China, and IDG Capital also participated, according to a statement. All three are existing investors. Warburg Pincus and Tencent both featured in a $120 million round for Yuanfudao in 2017. It was said at the time to be the largest-ever PE investment in a Chinese online education start-up and made Yuanfudao the first unicorn in the K-12 space with a valuation above $1 billion.
The company was founded in 2012 by former NetEase executive Yong Li. It offers academic curricula from primary to secondary school level. There are databases of test exams and customized practice papers for self-study, a mobile app that allows students to search for relevant materials by taking snapshots of textbooks, and live online tutoring sessions. Parents can also use the platform to track their children’s progress.
Yuanfudao claims to be online education business in China to establish an artificial intelligence (AI) research institute. The proceeds from the latest round will go towards investment in smart learning and other technology R&D with a view to improving user experience.
AVCJ Research's records show that Yuanfudao received a Series A round from IDG in 2012, and a $7 million Series B led by Matrix the following year. In July 2014, Matrix and IDG returned with a $15 million Series C, 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.
According to iResearch Consulting, China’s K-12 online education market will be worth RMB150 billion by 2022, up from an estimated RMB44 billion by the end of this year. A lot of private capital has been drawn to the space, with the likes of Baidu spin-out Zuoyebang, 17zuoye, and Zhangmen also raising sizeable rounds in the last 12 months. Warburg Pincus is also an investor in Zhangmen.
Other education start-ups have gained traction in different market segments. For example, VIPKid and Dada ABC are primarily platforms for English language courses, Kaochong – which raised a $55 million round in September from Hillhouse Capital, Tencent and Matrix China – focuses on university students, while recently listed Liulishuo targets English language learning for adults.
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