Capitalizing on the emerging trend of online education in China, Yuanfudao, a startup that provides live courses and tutoring through a digital platform, has raised US$300 million in a funding round led by existing investor Tencent, the Chinese social media and gaming giant.
The latest funding round takes the valuation of the six-year-old startup to over US$3 billion, up from approximately US$1 billion valuation at its previous US$120 million round in 2017.
Other participants in the new funding round include Warburg Pincus, Matrix Partners China and IDG Capital.
In an announcement made on its official WeChat account, Yuanfudao, which means “ape tutor” in Mandarin, said it will use the fresh capital to invest further in developing ‘smart learning’ technologies, among other areas, with an aim to accelerate and improve the online learning experience received by its users.
Riding on the wave where Chinese parents are investing more on their children’s education, Yuanfudao offers live tutoring to over 160 million primary and secondary students that use its mobile apps.
About 1 million of them are paying users, according to the company.
Its flagship products also include a database of exam problems, as well as a popular homework help app. Yuanfudao claims it has a research institute for artificial intelligence, in order to train its homework app to be smarter.
The Information reported in November the talks between Tencent and Yuanfudao for a potential deal. Yuanfudao is said to have generated 700 million yuan (US$101 million) in revenue last year. The revenue doubled to 1.5 billion yuan (US$217 million) in 2018, according to data obtained by Chinese tech media 36kr.
In an interview with TechCrunch, Yuanfudao said its major revenue stream comes from selling live courses via its online platform. As per information on its website, prices of Yuanfudao’s live courses vary depending on the course structure, ranging from 3 yuan (US$0.44) for a one-time lecture, to 999 yuan (US$145) for a 15-week tutoring course for Junior Secondary Mathematics.
China’s education sector has seen a rise of startups aiming to cash in on a booming market with mobile-based education platforms. The players include Baidu-backed Zuoyebang, which was said to be in talks with SoftBank Vision Fund for a potential investment. In July, popular Chinese news app Toutiao reportedly invested in online education platform Xuebajun.
Yuanfudao’s domestic rivals also include Yiqizuoye, which completed a US$250 million round in March led by Singapore state investment firm Temasek.