VIPKID, China's English training Unicorn is aware of the bright future of STEAM education sector and has started to invest in related companies
Children's reading books.Photo by Annie Spratt on Unsplash
Competition between English teaching and coding companies is quite tough. Though the market of English training has been around for a while whereas the idea of STEAM education is comparatively new. The number and amount of investments in the English teaching industry have been steady and the investments in STEAM education industry are growing. VIPKID has taken a different approach to the situation. Understanding the future of STEAM education industry the English teaching Unicorn has made multiple investments in STEAM education-oriented companies.
STEAM education service provider Code Planet (代码星球) recently announced that they raised CNY 10 million in its angel round of financing, jointly invested by Sequoia Capital, VIPKID and Ameba Capital.
Until now VIPKID has invested in a total of three education companies with Code Planet being the second company related to STEAM education. Earlier this year VIPKID invested in Delta Math, math education and Training Institute serving the K12 sector.
Recently reported by EqualOcean Math Planet (迈思星球), and Onion Math (洋葱数学) announced their financings. Math Plant raised an undisclosed amount predicted to be in millions of dollars and Onion Math raised USD 45 million. The investment in Onion Math was led by Primavera Capital Group and followed by Kunlun Tech, taking the total investment value to approximately CNY 600 million (USD 90 million).
Code Planet was founded in September 2017 and was awarded the seed round financing in July 2018. Code Planet is a young children's computer education platform dedicated to 4-6 years old online small class teaching. The platform integrates technology research and development, curriculum system and teaching services. According to the official website, the code planet course is divided into four categories: children's programming, graphical programming, internet design, and computer science. It adopts two modes: double-teacher class and online live small class.
In less than two years of its existence, Code Planet has covered kindergartens and primary schools in various provinces of the country, with over 1,000 cooperation’s with kindergartens, particularly in the early childhood sector. After two years of curriculum development and polishing, after two years of curriculum development and polishing, the products have been tested and iterated on the market and now Code Planet has a well-established curriculum system for all ages, from early childhood to middle school, and is fully online.
The investments in STEAM education are increasing year by year, with favorable policies from the government and the awareness of the parents. According to estimation by Deloitte's in August 2018, China's education market will reach CNY 2.68 trillion by the end of 2018 with training organizations, K12 & STEAM education, and private kindergartens being the three biggest segments. The total scale of private education is expected to reach CNY 3.36 trillion by 2020 and close to CNY 5 trillion by 2025 with a CAGR of 10.8%.
China’s education industry has been a favorite for capital investment. Education companies having good profitable business models with stable cash flow based on prepayment, strong gross margin generated by high value-added, and new products brought by the technology make the industry attractive for the capital market.
According to iResearch Consulting Group, the revenue of China’s online education market reached CNY 251.76 billion in 2018 with a YoY growth of 25.7%, which was estimated to keep a growth rate of 16%-24% in the following 3-5 years. The growth rate may decline but will have a steady rising momentum.
China's education industry has been highly valued for its significance policies, consumers and capital and under its expansion phase in terms of industrial scale and market activity. According to estimation by Deloitte's in August 2018, China's education market will reach CNY 2.68 trillion by the end of 2018 with training organizations, K12 & STEAM education, and private kindergartens being the three biggest.