Homework Help $750 Million Financing Behind: Three Or Four Line Cities To Hold Online Education Unicorns

In June 29th, the online education platform announced the completion of the E round of $750 million financing.

Hou Jianbin, founder and CEO, said in the company's full letter: "this financing and all previous financing is like passing through a gas station. After that, we will have a chance to run farther, more steadily and faster. "

In twenty-first Century, the economic report reporter learned that one of the reasons for this large investment in people's investment is that the core data of monthly activities, conversion rates, renewals rates and so on have been far ahead of the growth forecasts made in 2018.

According to the data disclosed by the operation team, the total daily life of the company's users exceeds 50 million, and the monthly live users exceed 170 million, and the total number of users is over 800 million.

The current round of financing is funded by Fangyuan capital, Tiger Global, Qatar Investment Authority, Sequoia Capital China fund, Softbank vision fund phase 1, Tian chart investment, Xianghe capital and other new and old shareholders.

"Online education requires a long and patient track, and we have more fellow travellers. And how to move forward is not the same as before, and there is no shortcut. Hou Jianbin said that China's online education industry is accelerating, but the quality of products and services has always been the core.

The related person in charge told the twenty-first Century economic news reporter that more than 70% of the users were distributed in three lines and beyond. From the proportion of paid users, the second tier cities are also the fastest growing areas of live broadcasting business.

The epidemic does not hinder huge financing.

After the two quarter, the impact of the new crown pneumonia epidemic on social economy and work life continued. K12 online education company started its intensive communication with the investment policy for the new round of financing.

This is the last two years from Hou Jianbin's extensive communication with investment institutions. During the past two years, the growth of the company's business has brightened up the capital giants. Soon, there was contact with Fang Yuan capital sent a team to enter the tune, QIA commissioned by the team as quickly as possible.

Combing operations to help round the financing of the leading Party information, including Sequoia Capital, Jun Lian capital, GGV Ji Yuan capital, Xianghe capital, H Capital, Coatue, Fangyuan capital, tiger Global Fund (Tiger Global).

Among these investors, Sequoia Capital, Jun Lian capital, GGV Ji Yuan capital, tiger global fund name often appear in the primary market and educational investment field. In addition, Coatue is a world-renowned TMT hedge fund and H Capital was founded by Chen Xiaohong, a former tiger Global Fund partner and general manager of China. The founder of Xianghe capital is Tang and song, vice president of strategic investment and acquisition of Baidu Inc.

According to the information from the financing side, Fang Yuan capital has always been low-key in the PE industry in China. Tang Kui, chairman and chief executive officer, served as the senior managing director of Temasek Holdings in charge of Global Investment Affairs, and is responsible for Temasek's investment in China. In twenty-first Century, economic report reporters combed open data and found that this is the first time that Fangyuan capital has launched the K12 online education field in China.

Another leading QIA is Qatar's sovereign wealth fund, which is one of its few investments in the Chinese market. It is worth mentioning that QIA has already been concerned about the field of education and technology. In 2019, it invested in the India educational technology Unicorn Byju's.

"The live class business of homework help is already positive cash flow, and this year it can make profits. Therefore, the demand for funds is not urgent. The initial financing target of this round is only 300 million US dollars, mainly hoping to add more excellent shareholder resources and go forward with like-minded friends. Zhang Lu, an exclusive financial advisor and director of Thailand capital, told the twenty-first Century business reporter.

Six years after its establishment, the working group has grown from its initial photo search application to the K12 online education integrated platform. It has independently developed many kinds of learning products and family education products, including homework help APP, homework help live broadcast class APP, homework help APP, etc.

Through the above products and services, the job development has been developed into an integrated learning platform covering exercises search, live teacher training, real-time question answering, question bank exercises and learning communication. The business scope covers teaching, learning, testing, training and assessment, and covers various student learning scenarios including subject education, quality education, education informatization and family education.

Hou Jianbin said that after the current round of financing, it will continue to invest in curriculum services and product research and development, creating continuous learning value for users and exploring new models and new businesses.

Barriers to passenger costs

K12 after-school tutoring is one of the fastest growing and most potential areas of online education in China. This is the industry consensus and the precondition for investment institutions to constantly refocus on the K12 industry.

Market analysts believe that, benefiting from the promotion of per capita disposable income and the trend of online education, the industry growth rate in the next five years is expected to remain at two digits. The overall market size is more than 1 trillion yuan, and the main growth will come from the Internet.

180 million, the size of the user and 1 trillion expected market is huge, but there are many players in the huge market. Where is the fundamental reason for the operation to win the capital giants?

It is the two big sword for the operation team to win the favor of the capital in the fierce market competition.

K12 education market is big enough to usher in a new turning point under the impetus of the epidemic. But investors will not pay for burning blindly. They not only require enterprises to have a healthy economic model, but also prefer the subject with cost structure.

Focusing on the K12 online education market, a number of educational company founders have pointed out that the average cost of the industry has reached 2000-3000 yuan, which can be seen from the earnings report of education listed companies.

The outbreak of the new crown pneumonia outbreak earlier this year has pushed down the fast forward key of the online education industry, but has also increased competition among the track companies.

When analyzing the online education market in the first half of the year, US dollar investors pointed out: "many people feel that online education is one of the few benefiting sectors of the epidemic, but this is not the case. In the one or two quarter, the difficulty of getting passengers was much higher, and the conversion rate of payment was also bad.

In such a market environment, whether the online education companies have differentiated or structured enrollment capabilities has become one of the key points for investors to assess.

Zhang Lu analysis said: "combined, the cost of getting help is the lowest in the industry. At a time of rapid growth and large scale customer acquisition, it can also maintain a lower cost of acquiring passengers, which is a very good point for investors.

In twenty-first Century, the economic report reporter learned that 60% of the students who worked in the summer live broadcast course in 2019 were transferred from internal traffic, and the remaining ones were converted from outside. Therefore, students of the same scale could be recruited at half or even less.

70% users are sinking in the market.

The number that is worth noting is that 70% of the 180 million primary and secondary school students in China live in cities of three lines and below. This means that if we want to become an absolute leader in the K12 online education industry, it is necessary to win over this half of the country.

The new crown pneumonia epidemic has accelerated the habit of online education users, and the penetration rate of online education market has further improved.

The education investor told reporters: "the first two quarters of this year, the online education market is equivalent to two years of maturity. The epidemic has made online education complete the transition from emerging markets to more mature markets. Today, the fastest rate of penetration is not in the mature second line market, but in the 345 line area that has just been ripened by the epidemic.

"Our traffic structure is highly consistent with this level, with more than 70% of users in three lines and beyond. It shows that our free product sinking is in place from the user geographical distribution structure. The related person in charge told the twenty-first Century business reporter that even in the light of the proportion of paid users, the second tier cities are also the fastest growing areas of live broadcasting business.

In 2019, the statistics of per capita usage time of platform users accounted for the top 10 of Yunnan, Ningxia, Qinghai, Jiangxi, Shandong, Gansu, Anhui, Xinjiang, Hainan and Shanxi users.

Thailand capital education team once conducted a survey. The top 10 education and training institutions in China accounted for only 14% of the total number of teaching outlets in three and below cities. This means that more than 100 million of primary and secondary school students are unable to access quality education and training services easily.

The imbalance between supply and demand of high-quality educational resources is the biggest pain point in the education industry. Online live broadcast is a great choice to break the barrier of uneven resources, so that children in cities and regions outside the three line and beyond can hear the teaching of good teachers in the first tier cities.

Based on this, the ability of users to reach the market in a large scale has attracted the attention of investors. According to Zhang Lu analysis, compared with the external cost and conversion rate of external delivery such as jitter, headlines, friends circle and so on, the market share and transformation ability of the three or four party line in operation are another core competitiveness of the company.

"Location is the 1-5 line city users, many users are in the three line and below the market, is also the industry's first launch of synchronous curriculum system company." Zhang Lu added that the pressure of users in the three and beyond cities and regions was small, and that the synchronous curriculum system was more popular in these markets. Compared with the content of Pei, synchronous courses do not teach in advance or superclass.

In view of this, the first change that the homework gang has not changed over the past six years is to provide users with better quality and more inclusive educational services through the integration of technology and education.

"The greatest value of online education lies in Pratt & Whitney." Hou Jianbin also said that with more partners, homework help is more sure for the future and more leisurely for the moment.

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