China children's English education platform raises $120m

The capital was provided in two tranches, which were separately led by Zhang and FutureX. Existing investors SIG and Whales Capital re-upped.

Founded in 2017, Palfish specializes in one-on-one online English tuition up to age 14. Products include a core class taught by European or American teachers, an intensive reading class that uses both live and artificial intelligence (AI) teachers, and Banyu Picture Books for younger readers.

The company uses a number of payment models aimed at prolonging user life cycles, facilitating cross-purchasing, and reducing customer acquisition costs. It claims that customer acquisition costs for its core product are close to zero.

Palfish is said to have received a boost from the ongoing pandemic. I has grown its customer base from 500,000 paying users at the end of last year to 40 million registered users and 1.6 million paying using currently. It has a staff of about 2,000. He Huang, founder of the business, was previously a partner at ByteDance.

“He has had a very different perspective from the so-called leading online education companies from day one. The digitalization of China’s education is still in its infancy, and Palfish is a highly digitalized internet education company,” said Ting Gong, a managing director of SIG.

Previous investors in the company include Jafco Asia, Starling Ventures, and Toutoushidao Capital, which was launched by financial writer Xiaobo Wu and Guoxiong Cao, a former managing partner at Matrix Partners China.

Competitors in this space include VIPKid, which also focuses on one-on-one lessons and has raised a $200 million Series D from Sequoia Capital China and Tencent Holdings. VIPKid received an $80 million Series A funding round for its sub-brand Dami Online School in January led by Tencent Investment, Sequoia China and Hammer Capital. Dami offers live-streaming courses in English and mathematics to primary school and higher grade students.

Chinese start-up Yuanfudao saw its valuation grow to $7.8 billion after closing a $1 billion funding round led by Hillhouse Capital. Part of the proceeds have gone to the expansion of an online English platform Banma AI, which is similar to Banyu’s AI class.

Another significant deals in this space include a $750 million Series E for Zuoyebang, a K-12 education platform that spun out from domestic search giant Baidu. Investors include Fountainvest Partners and Tiger Global Management.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Expansion
• Consumer
• China
• Education
• SIG
• Meituan-Dianping