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Alibaba Group Holding Ltd. and Tiger Global Management LLC led a $ 1.6 billion investment in Chinese online education startup Zuoyebang, underscoring how the Covid-19 pandemic has turned distance learning into a hot business.
Existing backers Softbank Vision Fund, Sequoia Capital China and FountainVest Partners also participated in the funding, Zuoyebang said in a statement. The latest round comes months after Zuoyebang, which also counts Goldman Sachs and GGV Capital among its investors, raised $ 750 million in June.
Investors have poured into the sector this year as more students embraced e-learning, a trend that has been accelerated by school closings amid the pandemic. China’s online learning market is expected to reach 315 billion yuan ($ 48 billion) by 2020, almost tripled from five years ago, according to global market data tracker Statista.
| Chronology | Fundraising | Investors |
|---|---|---|
| 2015 September | $ 25 million | Sequoia, capital of legend |
| September 2016 | $ 60 million | GGV Capital, Xianghe Capital, Sequoia, Legend Capital |
| August 2017 | $ 150 million | H Capital, Tiger Fund, Sequoia, GGV Capital, Legend Capital |
| July 2018 | $ 350 million | Coatue, Goldman Sachs, Primavera Capital, Taihe Capital |
| November 2018 | $ 500 million | Softbank |
| June 2020 | $ 750 million | FountainVest, Tiger Global, Softbank |
Source: Zuoyebang
Loosely translated as “task assistant”, Zuoyebang is a derivative of China’s search engine titan Baidu Inc. Founded by former Baidu executive Hou Jianbin, the five-year-old startup offers live classes as well as other remote study services to more than 170 million monthly active users across the country. On any given day, at least 50 million students, the equivalent of the entire population of Spain, are using its platform, the company said.
The new funding will help Zuoyebang level the playing field with its main rival, Yuanfudao. The online tutoring startup backed by Tencent Holdings Ltd. and Hillhouse Capital said in October that it hit $ 15.5 billion valuation after closing two rounds of funding worth $ 2.2 billion.
Financing boom
Venture capital and private equity funds are investing more capital in Chinese startups this year
Source: Zero2IPO Group
Nationwide, Chinese education startups have attracted at least 47.6 billion yuan in investment in the year through December 18, according to market research firm Zero2IPO Group.
(Table of updates with Softbank’s November 2018 investment. Fixed an earlier version after the company changed the date of the $ 60 million funding round.)
