Wednesday, 2024 May 22

Online education startups Yuanfudao and Zuoyebang raise billions

China’s online education sector is keeping its momentum. Edtech upstart Yuanfudao has raised USD 1 billion in its Series G2 round led by DST Global, at a post-round valuation of USD 15.5 billion, while its rival Zuoyebang is close to a USD 700 million to USD 800 million round, valuing the latter at USD 11 billion, financial news outlet LatePost reported on Tuesday.

Yuanfudao has raked in around USD 3.2 billion this year alone through three rounds of financing. It closed a USD 1 billion G round in March and another USD 1.2 billion last month, with the participation of investors including Tencent, Hillhouse Capital, Boyu Capital, and IDG Capital. Zuoyebang counts Fangyuan Capital, Softbank, Sequoia Capital China, and Tiger Global among its backers. Earlier in June, it completed a Series E round raising USD 750 million.

Yuanfudao, founded in 2012, has built a string of education apps, covering K12 all-subject tutoring on its titular app Yuanfudao, English learning app Zebra AI Class (“Banma AI Ke” in Mandarin), and Chinese civil service exam app Chalk (“Fenbi Gongkao” in Mandarin). The company’s cash income is predicted to surpass RMB 18 billion (USD 2.71 billion). The K12 sector will contribute RMB 15 billion, with the rest stemming from Fenbi, according to tech media outlet 36Kr. Yuanfudao reached 1.6 million paying users this summer and 2.1 million in the fall, and it is on track to achieve its goals, according to the same LatePost report, citing a source.

Zuoyebang started in 2014 providing a service for students that are looking for answers and instructions to coursework questions by uploading photos. The company says it had 50 million daily active users (MAUs) and 170 million monthly active users (MAUs) in April. In the spring quarter, revenues from online lessons were up 550% YoY.

Tech startups targeting education have been the darling of investors as of late. The sector raised RMB 14.3 billion in the first half of 2020, indicating a yearly increase of 48.3%, and surpassing 2019’s total, according to data provider Wangjingshe. The online education market is projected to reach a volume of RMB 423 billion, up 21.97% from last year’s level. More than 331 million people are using its services, an increase of 23.04% year-on-year.

Meanwhile, the solid stock market performance of two US-listed Chinese education companies—TAL Education (NYSE: TAL) and GSX Techedu (NYSE: GSX)—underpins investor confidence. TAL and GSX now have a market capitalization of USD 32.09 billion and USD 24.53 billion, respectively. Although GSX has been hit by a slew of negative reports, its current stock price is almost five times the USD 22 per share from the beginning of this year.

Wency Chen
Wency Chen
Wency Chen is a reporter KrASIA based in Beijing, covering tech innovations in&beyond the Greater China Area. Previously, she studied at Columbia Journalism School and reported on art exhibits, New York public school systems, LGBTQ+ rights, and Asian immigrants. She is also an enthusiastic reader, a diehard fan of indie rock and spicy hot pot, as well as a to-be filmmaker (Let’s see).
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