Some sources could be partially or fully in Chinese.
On the heels of Apsara 2019, the Alibaba Cloud showcase conference, we come back to the companies shaping the EdTech landscape of China and the rest of the world.
Not a learning or education company per se, Alibaba Cloud provides infrastructure to a growing number of influential companies. Notably, they became the cloud solution for eCreators, the largest Moodle Partner in Asia Pacific. The spin-off of Jack Ma’s e-commerce behemoth beat last quarter’s estimates after reporting 40% increase in revenues, year-to-year; and increased is market share in the decisive industry, which is about to shake-up courtesy of 5G.
VIPKid gets a push (not sure if a good one)
In the last 6 years and an equal number of capital raising series, the company has accrued near a billion USD. The latest capital injection, by Tencent sets the value of the company at $4.5 billion USD. Despite a tremendous track of success, the latest round is the kind that worries private investors, who don’t look kindly whenever it is smaller than the previous one and reduces its —still theoretical— valuation.
Possible reasons behind the “slump” is increased competition, with 51Talk worth mentioning as the most visible threat. The contender’s killer weapon? Filipinos! Not only they are more cost effective compared to an American teacher’s wages, they consistently rank high on hospitality and customer service scorecards. Broadly generalizing, Filipino people are renowned for their friendliness and acquaintance with a variety of cultures. Chinese have played a fundamental role in the history of the Philippines for hundreds if not thousands of years, which also help matters for 51Talk’s key market.
Another promising, yet stumbling initiative involved a partnership with search giant Weibo to provide free English tutoring for children. After the announcement, the project, named “Weibo English” halted temporarily. Resuming later on, it currently caters a reported 120 students. Weibo English existed before VIPKid came on board, in fact the closure of a 21-year old office in Beijing was met with surprise.
BJNews reports 712,000 students and 90 thousand American teachers for VIPKid as of last September.
Other competitors in the fierce online tutoring to Chinese students segment are listed below. If you’re looking to teach English online, bookmark them!
NetEase’s Youdao sets up IPO in New York
The education arm of the tech giant raised $200 million USD, defying expectations but falling 19% on its first day of trading. As of writing, the stock has more or less recovered to its initial $15-18 per share target, amounting to a $1.67 billion USD valuation.
Companies such as VIPKid, 100Tal and New Oriental already guarantee the Chinese domination in the EdTech public valuation list. But Youdao's diverse portfolio claims the largest volume of monthly active users, north of 100 million. Youdao provides “interactive learning apps” that students can access through all-powerful WeChat, “online knowledge tools” including Youdao Dictionary and Youdao Translator; “online courses” for MOOCs and NetEase Cloud Classroom; and even “smart devices” such as a “Smart Pen” and a pocket translator.
NetEase’s Founder and CEO, Ding Lei, is an education activist, particularly vocal about the “stodgy” system in the country. He personally spent $1.6 million in translating over 8,000 videos of lessons taught at American colleges.
Xiaoyang Education enters the chat
Meet Founder Zhou Lin, a Blackboard student (as in, he followed the company’s adventures in China early on) and a “very logical person who needs data to drive his decisions.” 16 years of data and experience on the Chinese market lead him to believe on “smart campus,” advanced, algorithmic “shift and course scheduling.”
Silly dance your way to the Indian student’s heart? ByteDance, TikTok owner, launches bite-sized video-based learning services
ByteDance, The largest startup in the world and TikTok's parent company, is venturing into India, a place on which many would have bet as a more prolific EdTech ground a few years ago.
TikTok’s Sales and Partnerships Director claimed: “Educational videos are some of the most popular and engaging videos on the platform globally.” Also, that educational content is more attractive to advertisers. 10 million educational videos have garnered some 48 billion views, the company reports.
TikTok will partner with local educational content creators and social enterprises alike, including:
About that blacklist thing
The U.S. Commerce Department released an “Entity List” of Chinese companies with limited access to American companies. Perhaps most notably is SenseTime, the “world’s largest AI startup” by some accounts, and one of the most prolific AI and Machine Learning research entities, academia included. While SenseTime offers education services, it also provides software solutions for pretty much all the other companies included in this roundup. The Hong Kong HQ’d company has a special advantage in “Machine Vision” or “Computer Vision,” essential for face scanning. It's IP is on hundreds of millions of cams, including your phone, real-time classroom monitoring and ethnic surveillance, among others.
Needless to say, AI plays an already prominent role in the plans of the major EdTech companies in the country.
To the U.S. and public pressure, including the Hong Kong standoff, challenging legislation from the national government adds yet another layer of complexity into the landscape of all the Chinese EdTech companies. It is unclear how impactful this will be in EdTech hubs such as Beijing and Hong Kong, consistently atop rankings of capital allocation, talent pools, public-private partnerships among others.
Recesion-fearless investment favors STEM, Competencies
According to 黑板洞察 (Heiban Dongcha) Edu Insight, reported by GETChina, a near billion USD were raised by China's EdTech. As the psychology of venture capitalism predicts, first rounds get a more optimistic share. Angel-stage seed is the main destination followed by "Pre-A, A or A+" rounds.
In terms of segments, STEAM education leads the charge in number of deals, followed by K-12, Early Childhood and Vocational Training. The last one seem to be picking up steam as the others start showing signs of saturation. The report offers confusing data, especially when it comes to investment in Competency Based Education companies (no deals, yet 33% of the funds in a chart that does not show STEAM share.
Interesting details include:
- Two of the 5 largest deals relate to "mathematical thinking" companies, AI-based Huohua ($85 million USD in D round, the largest ever in the category) and VIP Think (3-8 year olds, undiclosed amount).
- Beijing, Shanghai, and Shenzhen concentrate the funds. (No figures are reported here.)
- A category with government support that might lead to notable deals in the near future is Calligraphy & Handrwiting. The Ministry of Education has stated that calligraphy should be at least as important as language and math, if not more.
More Resources & References
- China Pulse
- GET2019 Conference, Beijing, November 25-26
- Deloitte China's Revitalizing Education: Opportunities in dynamics report helps dimension the national education system and market.
- 教育行业营销白皮书 (Education Industry Research Report, 2018) Online education has been booming since 2009.
- Also check out a review of Edu TECH 2019's White Papers of Marketing in the Education industry by Blue Whale Education.
- More China EdTech news at 中国企业家 (jingmeiti.com)