Chinese online education platform Yuanfudao announced on Thursday that it has raised $2.2 billion from two funding rounds, which have almost doubled the unicorn’s valuation in less than seven months.
Beijing-based Yuanfudao is now valued at $15.5 billion, compared with $7.8 billion in March when it had pocketed $1 billion in a Series G round led by Hillhouse Capital. Yuanfudao also claims to be the world’s most valuable edtech unicorn.
The new rounds include a Series G1 round led by Chinese social media and gaming giant Tencent, with participation from Hillhouse Capital, China-focused PE firm Boyu Capital, and Beijing-based investment firm IDG Capital, the firm said in a statement. A Reuters report in September had cited sources who said that Yuanfudao had raised $1.2 billion in the Series G1 round.
The other round is a Series G2 round led by global Internet investment firm DST Global. Other investors are CPE, the investment arm of Chinese brokerage CITIC Securities; Singapore’s sovereign wealth fund GIC and state investor Temasek; PE firm Trustbridge Partners; DCP Capital; and Greenwoods Asset Management, which invests in listed firms in, and related to, China.
Yunfudao, founded in 2012, has developed a series of online education products for K-12 students. Its major products include a flagship namesake app, which mainly targets primary and secondary school students; and Banma AI Ke (meaning “zebra AI course” in Chinese) that offers educational content to kids aged 2-8 years.
Apart from its headquarters in Beijing, the firm also has research centres and branches across Chinese cities like Wuhan, Xi’an, Chengdu, Nanjing, Changsha, Chongqing, and Tianjin. It currently has over 30,000 employees and 400 million users in China.
After the new rounds, Yuanfudao will continue to explore technological innovations in the education space, research & develop new courses and products, and expand its online education services, said the firm in a statement.
Yuanfudao had closed $300 million in a Series F round led by Tencent in January 2019, which had valued the firm at over $3 billion. It had also completed a Series E round at $120 million led by Warburg Pincus in May 2017.
“The firm [Yuanfudao] always pays great attention to innovation through the launch of new products like Banma AI Ke. This is the foundation for the brand and its offerings to maintain a market-leading position for years,” said Li Xiaojun, partner of IDG Capital, in a separate statement.
IDG Capital is Yuanfudao’s earliest investor that had first poured $2 million into its Series A round in August 2012.
China’s attractive edtech sector
Yuanfudao’s landmark deals come as China’s edtech space has seen new vitality since the COVID-19 outbreak.
China’s online education industry is projected to reach almost 453.8 billion yuan ($68.1 billion) with a user base of 309 million in 2020, up 12.3 per cent from 2019, according to Chinese market research firm iiMedia Research.
While Yuanfudao rose to become investors’ most sought-after edtech firm, an array of its domestic counterparts also completed big-ticket transactions this year.
Its arch-rival Zuoyebang, which was created by Chinese internet search giant Baidu in 2014, raised $750 million in a Series E round jointly led by Tiger Global Management and Chinese PE firm FountainVest Partners this June. The firm had reportedly started a new round of fundraising efforts at a valuation of $10 billion, said sources cited in a Reuters report in late September.
Smaller players including Huohua Siwei, Dami Wangxiao, and iTutorGroup had also raised new investments in 2020.
ByteDance, the owner of the video-sharing app TikTok, disclosed in July its plans to invest “a huge amount” of capital into the edtech unit. It operates one-on-one English tutoring app GoGoKid and online course livestreaming app Qingbei.
