Tencent leads $100m round for China education platform

Tencent Holdings took the lead, with other commitments coming from The Carlyle Group as well as K-12 online education business Yuanfudao. It brings Huohua's total funding to $440 million.

KKR led the first tranche of the Series E - worth $150 million - in August. The private equity firm also took part in the $85 million Series D, alongside GGV Capital, a year earlier. Video-sharing giant Kuaishou then provided a $30 million Series D extension in April.

Founded in 2017, Huohua targets children aged three to 12 years. The company has gathered 85,000 daily learners across its various learning apps. There has been a spike in overall users this year, with the total rising from 150,000 in April to 250,000 today. Huohua has 6,500 employees, including more than 3,000 lecturers who lead classes and 1,200 supporting tutors. The referral rate is 85%. 

The company's math classes are small - comprising six to eight children - and tend to feature interactive games. They are live-streamed. Artificial intelligence-enabled (AI) classes began in July following a 12-month pilot project. These are pre-recorded and students can choose their own learning pace, with the AI system tracking individual learning behavior and adjusting content accordingly. There is no limit on the number of students.

Huohua wants to establish itself as a multi-disciplinary platform. Earlier this year, it expanded into English-language learning, offering classes for children aged 3-5. This followed the launch of a Chinese-language option in 2019.  

According to AVCJ Research, Lightspeed China provided the company's Series A round in 2016 and then IDG Capital and Hike Capital led the first tranche of a $35 million Series B in 2018. Sequoia Capital China led the second tranche. A Series C round of $40 million, led by Northern Light and Wu Capital, closed in March of last year.

Online education has become a popular investment theme as the COVID-19 outbreak led to school closures. Huohua's new investor Yuanfudao is one of the market leaders. The company recently saw its valuation soar to $7.8 billion on closing a $1 billion funding round led by Hillhouse Capital.

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• Topics
• Greater China
• Consumer
• Expansion
• Technology
• China
• Education
• artificial intelligence
• Tencent
• The Carlyle Group