Japan’s SoftBank Vision Fund is reportedly in talks with Chinese online education startup Zuoyebang, seeking to invest about US$500 million in the firm in a bid to gain a foothold in the country’s rapidly expanding internet education market.
The fund and Zuoyebang are still finalizing the terms of the deal, Bloomberg reported, citing people familiar with the matter.
Beijing-based Zuoyebang was established by Chinese internet giant Baidu in 2014. It started operating as an independent firm a year later.
Targeting primary and secondary school students in China, the company created a mobile application that allows students to upload homework questions and search for answers.
Users can take a picture of their questions and search for answers via the platform, which also offers personalized mentoring.
Zuoyebang has launched other services including Zuoyebang Yike, a live-streaming tutoring platform which has more than five million paid users from 23 provinces across the country.
According to a company statement published in April, Zuoyebang has accumulated 300 million registered users, “meaning that two in three primary and middle school students online is using the company’s products”.
Bloomberg cited a report by Deloitte that China’s education market is expected to grow to 2.9 trillion yuan (US$422 billion) by 2020, Bloomberg said, citing a report by Deloitte.
In an interview with China Daily in April, Zuoyebang founder and CEO Hou Jianbin said “online education is the best way of promoting high-quality resources to cities across the country including third- and fourth-tier cities”.
He said the online education platform can tackle the shortage of teachers and high-quality education resources in small and remote cities.
Moreover, its live classes cost much less than other live streaming courses in the market, Huo said.
Zuoyebang has already raised over US$500 million from investors since its founding. In 2015, the firm received market capital from its Series A round of financing led by Sequoia and Legend Capital, the venture capital arm of China’s Legend Holdings. In mid-2016, it closed its Series B round led by GGV Capital.
The company completed a US$150 million Series C financing round in 2017, led by H Capital with the participation of Tiger Global Management LLC., Sequoia Capital, GGV, Xiang He Capital, and Legend Capital.
In July, Zuoyebang announced that the technology-focused hedge fund Coatue Management. Goldman Sachs, Sequoia Capital China, and venture capital vehicles such as GGV Capital and Primavera Capital, also participated in the round.
The full article appeared in the Hong Kong Economic Journal on Oct 3
Translation by Ben Ng with additional reporting
[Chinese version 中文版]
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