According to the data from ITJUZI, as of December 20, 2019, the top three industries in the primary market for investment and financing events and amounts were corporate services, healthcare and hardware. Among them, corporate service financing events reached 761, with a staggering amount of more than CNY 130 billion; the healthcare industry’s’ investment and financing amount reached 560, with a financing amount of over CNY 100 billion. With a total of 332, financing events education industry ranked fourth with the amount of financing around CNY 20 billion. 

After 16 years of investments and finances in the education industry, 2019 clearly shows a downward trend. Compared with the previous year, the numbers dropped by almost 50%. Although this trend of decreasing financing events has been going on since 2017, the difference for last year is evident: a 21% decrease was recorded in 2018 and 10% in 2017. We can say that the tide of investment has gradually receded and the capital market has calmed down. 
How to break the deadlock has become the biggest issue in the education industry.

In contrast, in the early years of online education, the influx of the capital market, the growth rate of the number of investment and financing events in the education industry were all insanely elevated. There are two reasons behind it, first the weakness and rationality of the capital market, and second the sharp increase in the competitive pressure of the market-leading companies.

Data compiled by EDU INSIGHT shows that mainstream education financing is still concentrated in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. It is worth mentioning that companies in Beijing alone accounted for 42% of the total financings. But at the same time, the industry also realizes that, under the premise of providing quality assurance, the key to defining the size of the business is the size of the user base. As the first-tier cities gradually become saturated, the cost of customer acquisition has risen sharply. Compared with first-tier cities, non-first-tier cities are more cost-effective and the market is huge. With the rapid rise of the economy in these lower-tier cities, parents have begun to pay more attention to their children's learning, and their education expenditure has gradually increased. Parents' demand for education has begun to surpass that of first-tier cities. With the maturity of online live streaming technology and the further popularization of dual teacher classrooms, more and more education companies have migrated their business to non-first tier cities.

As regards the amount of the total 332 financings that were made in 2019, 139 of them were in tens of millions of Yuan, accounting for 42%, a decrease by 65 compared to the last year. It is worth noting that there were a total of 43 investment and financing incidents of CNY 100 million in 2019, accounting for 13%. From the data below, we can see that, although the number of investment and financing events in the overall education industry has decreased sharply, and investment and financing of different magnitudes have declined to a certain extent, the investment and financing events at the level of tens of millions of Yuan and hundreds of millions have shown an upward trend.

From this, we can say that the education industry is not as such experiencing the cold winter of capital. The investors seemed to be more optimistic about relatively mature education companies than early-stage companies.

Going into further detail, the financing events in 2019 are still led by angel rounds and A Rounds. Due to industry trends, angel rounds have decreased by 143 cases compared to last year, a drop of up to 70%; Round As has decreased by 73 cases, or a drop of 51%. Correspondingly, the number of B-round financing events only decreased by 1, a drop of 3% compared to the year before. 

Moving on to the investors, Institutions that invested more than five times in this year's education industry include New Oriental (13), TAL (8), EdBeta Fund (8), Sequoia Capital China (7), Yonghua Capital (5), Matrix Partners China (5), Gaosi Education Group (5) and CDH Investment (5).

STEAM replaces K12

Although the total number of investment and financing events in 2019 fell to 332, compared with the previous year's 629, from which an overall trend of decline is evident. However, under the premise of the downturn in the background, we have found that there are still some areas that continue to show their potential in attracting capital.

The overall financing events in 2019 were led by STEAM, with a total of 79 financing events. K12 Education followed closely, with a total of 55 investment events, while vocational education, corporate services, preschool education and language training were 39, 34, 34 and 29 respectively. K12 saw its rank decline for the first time in many years.

Compared with 2018, each track declined, but STEAM surpassed K12 and became the most popular education sector of the industry for investors. Compared with a 75% drop in K12 and a 70% drop in preschool education, STEAM is relatively stable with a 25% drop.

It can be seen that, despite the calmness of the industry, STEAM education track has been least affected by the market, and there is huge potential in the future.

Looking back at 2019, the number of investment events in the education industry did decrease in the context of the capital winter affecting other markets. From the perspective of financing rounds, the decline in financing in the early stages was the steepest, and the number of rounds of financing in the middle and late stages was less affected. STEAM received attention, while traditional K12 education saw a downtrend. Also as the country continues to promote the development of quality educational content in the field of science and art, the market for expanding content education after class is on a roll, which may continue in 2020.