Fenbi Education, a Chinese provider of online-merge-offline (OMO) vocational education, has secured $390 million in its initial round of financing led by China-focused IDG Capital and growth equity firm Trustbridge Partners.
China Renaissance’s investment arm Huaxing Growth Capital, Hony Capital, a Chinese private equity (PE) firm owned by Legend Holdings, and other investors participated in the round.
The new investment, which is Fenbi’s Series A round, follows months of dealmaking frenzy in the Chinese edtech field, especially in the online K12 education segment where customer acquisition costs (CAC) are hitting the roof.
According to proprietary data compiled by DealStreetAsia Research &Analytics, there were at least 52 PE-VC transactions totaling about $7.8 billion in China’s edtech sector in 2020.
The past year saw some of the country’s biggest edtech fundraisers emerge in the K12 segment where players target students from kindergarten to high school, including Tencent-backed Yuanfudao, which raked in a total of $3.2 billion across three transactions.
Unlike many domestic counterparts who focus on the over-crowded K12 space, Beijing-based Fenbi mainly targets adult students by providing vocational education content that covers China’s civil service examination, recruitment examination for public institutions, teacher qualification certificate examination, and national postgraduate entrance examination, among others.
Founded in 2015 and formally known as Beijing Fenbilantian Technology Co Ltd, the firm claims to hold the largest market share in China’s online adult vocational education market. It claims to have accumulated over 48 million users, including 7.03 million paying users, as of January 2021.
“The segment of adult education and lifelong education is still an untapped ‘blue ocean’ market under the overall education sector. We just started to see the scale-up of technological and business model innovations,” said Hony Capital managing director Cheng Yi, in a statement.
As its online operations grow bigger, Fenbi started to focus on building its offline presence in 2020, including the construction of study centres largely located in Chinese lower-tier cities, counties, and districts. It now operates almost 400 study centres across 31 provinces, autonomous regions, and direct-administered municipalities in the country.
Among the firm’s 14,000-plus employees, more than 75% are teaching staff. It booked over 4 billion yuan ($619.5 million) in total revenue for the whole year of 2020.
The new financing will be used to expand Fenbi’s recruitment for teachers and enhance training resources for new staff, said its founder and CEO Zhang Xiaolong. Zhang plans to increase investments in technological innovations and the R&D of education content.