Beijing-based online education company Yuanfudao has closed its Series G round, collecting USD 1 billion from investors led by Hillhouse Capital, marking the largest-ever fundraising deal in China’s online education sector, 36Kr reported on Tuesday.
Following this round, which included Tencent, Boyu Capital, and IDG Capital, the startup is now valued at USD 7.8 billion, making it the most valuable education startup in China.
Yuanfudao did not disclose how the funds will be used.
The firm, founded in 2012, owns six education apps, including its flagship namesake Yuanfudao, which offers all-subject online tutoring for K12 students, and Banma AI Ke, an artificial intelligence-enabled English and logical thinking app. Yuanfudao has garnered over 400 million users by January 15 on its app’s ecosystem, including more than 1 million full-service paid members for Yuanfudao and 500,000 for Banma AI Ke, according to 36Kr, citing founder Li Yong’s remarks in an internal email.
The company booked revenues between RMB 3 billion (USD 423 million) and RMB 4 billion (USD 560 million) in 2019, a source told 36Kr, adding that Yuanfudao had a target of RMB 10 billion in revenue for 2020.
Investors have been increasingly pouring cash into edtech companies, including English-teaching firm VIPKid, math-teaching platform VIPThink, and Chinese teaching platform Hexiaoxiang, KrASIAreported. However, profitability has been a challenge for many players.
Shanghai-based LAIX (NYSE: LAIX), whose products include AI-enabled English teaching app Liulishuo, booked RMB 205.6 million (USD 29.5 million) in net losses in the fourth quarter of 2019, compared with RMB 163.4 million for the same quarter last year.
Another English-teaching company, China Online Education Group (NYSE: COE), also known as 51Talk, just recently broke even. The company reported RMB 1.5 million (USD 211,461) in net income in the fourth quarter of 2019, compared with RMB 140 million (USD 19 million) in net losses for the fourth quarter of 2018.
Yuanfudao’s investment round comes at a time when online education platforms experienced an unexpected boost from the coronavirus outbreak, which has forced schools to temporarily close across China and students to learn online. Many, including VIPKid and TAL Education, have offered free and discounted classes in response to the health crisis.
36Kr is KrASIA’s parent company