Deal focus: 51CTO’s prescient training pivot

Having started life as an online media platform for the IT industry, 51CTO changed tack a few years ago and focused on the provision of B2B technology training. This transition has seen the Chinese company move from survival mode to ambitious expansion mode – and it is largely thanks to the intervention of an unnamed existing investor.

“There were two things quite impressive about 51CTO,” the investor explains. “First, it had accumulated a vast network of technology talent. Second, the management team had proved themselves tenacious operators. IT is the most promising area for training, while media is getting ever more challenging. So I suggested they focus on training and we led the Series B. It was actually risky, funding a round for business transformation.”

Gaocheng Capital recently led a $20 million Series C round for 51CTO, but the company operated without external funding for nearly a decade before that. DW Group, TrustBridge Partners, and CDIB Capital all invested from 2014 onwards. “Most of the large IT firms were our customers – IBM, Intel, Huawei, HP, you name it. They posted ads and recruitments notices, but the business couldn’t scale,” explains Ping Xiong, 51CTO’s founder.

In 2015, the company delved into its network to match up experienced IT professionals as teachers with prospective students. Today, there are around six million students, as well as 1,000 enterprise customers – such as China Unicom and China Merchants Bank – that sign up for group lessons. A core group of 3,000 teachers offer 15,000 courses on topics such as artificial intelligence, cloud computing, and cybersecurity.

“We are an open platform. Individuals and training institutions are welcome to set up their courses on our platform as long as they pass quality controls,” says Xiong.

Out of every $10 paid by students, nearly $4 goes to the teacher. Individual customers account for 70% of revenue, which amounted to RMB200 million ($28 million) last year. However, the enterprise contribution is expected to rise to 50% in the long term.

Xiong claims that 51CTO differs from its rivals by virtue of an outcomes-focused learning model. Whereas the teaching platform of Tencent Holdings provides digital tools so teachers can develop courses by themselves, 51CTO has a team of 60 that actively engages with teachers on course design. “We have a three-level system that allows teachers to grow on our platform,” he adds. “We don't say that it is the teacher’s job to teach well. We guarantee quality.”

These guarantees are crystallized through a combination of human and machine follow-ups. Students must sit a test before signing up for a course and another on completion. For enterprise customers, this process involves the individual and their head of department.

51CTO’s latest funding round was completed in January, before the coronavirus outbreak went critical in China. User engagement in February was twice the peak of last year.

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• Topics
• Greater China
• Technology
• Media
• Expansion
• China
• TMT
• Education
• Gaocheng Capital