Tencent-backed edtech unicorn bags $300m from Jack Ma’s investment firm

The high-flying online education company Yuanfudao has secured US$300 million from Jack Ma’s Yunfeng Capital, bringing the overall funding of the company in 2020 to US$3.5 billion, local tech media outlet 36Kr reported on Thursday.

Photo credit: Yuanfudao

It’s Yuanfudao’s third funding round this year. Previously in March, the edtech firm raised US$1 billion in its series G round led by Hillhouse Capital. In October, it announced the closing of an additional US$2.2 billion from series G1 and G2 rounds.

The G1 round was led by Tencent, with participation from Hillhouse Capital, Boyu Capital, and IDG Capital. The G2 financing, meanwhile, was led by DST Global, with participation from CITIC Private Equity Management, Singapore’s GIC, Temasek, Trustbridge Partners, DCP Investments, Ocean Link, Greenwoods, and Danhe Capital.

The two rounds in October brought Yuanfudao’s valuation to US$15.5 billion, almost double its valuation in March.

Founded in 2012, the online tutoring company offers a range of remote learning products, including live tutoring platform Yuanfudao, Zebra AI Class, online question bank Yuantiku, question searching app Xiaoyuan Souti, and arithmetic problem checking app Xiaoyuan Kousuan.

This year, the company generated total revenues of 10 billion yuan (US$1.53 billion), becoming the highest-grossing player in the competitive online education sector, according to the 36Kr report. Yuanfudao said on December 21 that approximately 4 million students are using its regular-priced courses. It has more than 30,000 employees in teaching centers across China.

With the Covid-19 pandemic, vast swathes of China’s economy and most of its education system had to quickly adopt digital solutions. New users and investors alike flocked to the education technology sector. As per statistics from local research firm iiMedia, the industry will attract over 37.6 million users in China in 2020, while the capitalization of the online education market will reach 485.8 billion yuan (US$74.39 billion).

This report was first published on KrAsia.