Temasek-backed Chinese edtech firm looks to raise $100m in US IPO

Chinese edtech company 17 Education and Technology Group has filed a prospectus with the US Securities and Exchange Commission (SEC) to raise US$100 million in an initial public offering (IPO).

Photo credit: 17 Education and Technology Group

Founded in 2012, 17 Education and Technology provides a smart in-school classroom solution that delivers data-driven teaching, learning, and assessment products to teachers, students, and parents across over 70,000 K12 schools. It claims to have covered 56% of the primary schools, 60% of the middle schools, and 7% of the high schools in China in the first half of 2020.

It also offers online K12 after-school tutoring services.

17 Education and Technology’s online services represented 30.2%, 88.5%, and 93.0% of its total net revenues in 2018, 2019, and the nine months ended September 30, 2020, respectively.

The company claims it has serviced over 900,000 teachers, 54.3 million students, and 45.2 million parents as registered users on a cumulative basis.

Proceeds from the IPO will be used to improve its after-school tutoring services and student learning experience operations, as well as enhance the product offerings and educational content of their smart in-school classroom solution. It will also invest in technology infrastructure and its sales, marketing, and brand promotional activities, according to the filing.

The company hasn’t achieved profitability yet, with US$99.6 million, US$141.9 million, and US$143.6 million in net loss in 2018, 2019, and the nine months ended September 30, 2020, respectively.

In 2018, the company raised US$250 million in a series E round led by Temasek Holdings. It’s also backed by Tiger Global, Shunwei Capital, and DST Global, among others.

17 Education and Technology goes up against rivals such as Yuanfudao, which is valued at US$15.5 billion, and Zuoyebang, which is backed by Tiger Global, SoftBank, and Sequoia Capital China. There’s also VIPThink, which just secured US$180 million in a series C round led by SoftBank Vision Fund 2.