Chinese online education unicorn Yuanfudao has raised a $1 billion Series G at a valuation of $7.8 billion, making it one of the most valuable ed-tech companies in China.
Why it matters: The massive deal highlights renewed investor attention to the online education sector, which surged during the Covid-19 outbreak as millions remained sequestered at home.
- Yuanfudao, focused on the K-12 age group, competes with rivals like Vipkid, Zybang, and 17zuoye. The sector is already crowded in China where parents are more than willing to spend heavily on their children’s education.
- The financing is a rare deal during the epidemic which has all but frozen venture capital investments, leaving startups struggling for funds. Meanwhile, a G round of financing is also relatively unusual.
Details: Company CEO Li Yong announced the financing in an internal letter made public on Monday. The company did not respond to requests for further comments.
- Private equity firm Hillhouse Capital led the round with participation from existing investors Tencent and IDG Capital, as well as Boyu Capital.
- The deal would raise the company’s total funds received to nearly $1.8 billion.
- Li said the firm’s K-12 online training course has registered more than 1 million long-term users who paid full price for their services. Zebra AI, its English-learning app for kids 2 through 8 years old, claims 500,000 students.
Read more: Tencent leads E-round funding in Chinese online educator Vipkid
Context: Founded in 2012 by former Netease employees, Yuanfudao now says it has more than 400 million users.
- The company operates various programs including question database Yuantiku, question search Xiaoyuansouti, and English learning app Zebra AI.
- The programs are conducted in various forms including livestreaming and video replay.
- Tech giant Tencent has stacked its chips in the sector though building home-grown ed-tech services and via external investments. Tencent has also invested in Vipkid.
- Yuanfudao has earned support from other big-name investors including Warburg Pincus, Matrix China, New Horizon Capital, and CMC Capital Group.
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