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Announcements Nov 13, 2018 12:00 am EqualOcean

Knowbox and SOHO China set up the first AI teaching experimental class to promote the popularization of AI + education

Analysis EO
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Analysis EO
Jan 22, 2020 02:29 pm ·

Online Education Investment Landscape in China & US

The US economy is experiencing an upswing. In 2019 the Dow Jones Industrial Average passed 28,000 points, the S&P 500 Index topped 3,000 points and the Nasdaq broke 9,000 in what some have termed one of the longest bull markets in history.  Since the beginning of 2020, Chinese education firms such as TAL, New Oriental, Genshuixue, 51Talk and Netease Youdao have all seen their stocks rise. Among them, New Oriental rose 11.96%, TAL rose 12.07% and 51Talk rose 47.76%. This article observes global online education development trends from a macro perspective to give a much more comprehensive understanding.  Vocational training track grabs attention in the US According to data published by EdSurge, a research firm centered on educational technology in the United States, in 2019 investment in educational technology companies reached above USD 1.6 billion (about CNY 14.4 billion). The run involving 105 transactions, which is the highest in five years. The amount of financing increased by 16% as compared to the previous year, even with five fewer investment events. A total of 332 financing events took place in China’s education industry with the total amount of financing reaching around CNY 20 billion. Out of the total 148 events that took place in the online education track, with a total financing amount of CNY 11.56 billion. It is not difficult to see that online education in China and the United States is very similar in terms of financing scale and quantity. Funds have been pouring into the US education technology industry during the past year, which is largely mirrored across the wider venture capital landscape. A CB Insights report puts US venture capital investments at USD 108 billion across 5,906 deals in 2019, the third-biggest year ever by value. Employers in the United States are seeking third-party agencies to help them recruit top talent or train talent among existing employees. Stimulation of uncontrollable economic factors has created a talent recruitment market where employers are looking for help.  The unemployment rate is at a low level of 3.6%, which is a rare number in the period since 1969; this low level may be caused by people giving up job applications, resulting in a lower labor force participation rate, making it difficult for employers to recruit suitable talent, reported EdSurge.  The eight most important edtech deals in 2019 involved companies that provide training services to employers and employees, often focusing on training them to ensure their qualified retention or an internal promotion. The eight companies are Guild Education, BetterUp, Coursera, Andela, Degreed, MindTickle, EdCast, and A Cloud Guru, which account for 39% of total education technology investment in 2019. Jenny Abramson, founder and CEO of Rethink Impact venture capital firm, said the employee training programs “are becoming table stakes for anyone who wants to run a company with great talent.”  Data from iResearch shows that the revenue of Chinas’ online education industry exceeded CNY 300 billion. It may be estimated that by 2022 the scale of the market will surpass CNY 540 billion, with industry insiders predicting that the track will produce a unicorn soon.  Morgan Stanley’s survey report analyzes that China’s K12 online education market will grow 23 times in the next 10 years which makes investors around the world confident about investing in the sector. The table below shows that Chinese companies that provide teaching services in K12 related fields and their combined investments exceed CNY 1 billion. However, K12 online education companies in the US do not have a broad financing record. Except for ClassClassjo, an app used by schools for communication, which received USD 35 million from GSV ventures, and Newsela, an instructional content platform that supercharges reading engagement and learning, which raised a Series C round worth USD 50 million in March 2019. We can see that, as compared to China, the K12 education market in the US is declining. Quite a few of the companies are being acquired. We should also note that K12 education has lost its position to STEAM education in terms of number of companies attracting capital.

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Analysis EO
Nov 7, 2019 04:08 pm ·

Knowbox Moves into Online Education, Powered by AI

As Artificial Intelligence becomes more common and necessary in our daily lives, it continues to revolutionize traditional industries by changing the supply-demand interaction and industry mechanisms, unleashing boundless business opportunities. Many online education platforms have begun to explore the opportunities brought by AI, while the demand for online education in China has increased drastically year by year. The rapid development of AI technology has transformed many sectors, including retail, agriculture, logistics, education, healthcare, finance and commerce. It has reshaped how production, distribution, exchange, and consumption take place.  AI has brought substantial improvements by reducing the cost for companies and increasing productivity in major industries. For instance, according to the ‘AI development report’ of 2018, reported by CISTP (China Institute for Science and Technology), AI increased the productivity in education by 82%, 71% for retail, 64% for manufacturing and 58% for finance.  Presently, AI applications in education are primarily focused on the following areas: adaptive (personalized) learning, virtual teaching, educational robots, science and technology education based on programming and robotics, and situational education based on VR/AR.  China has become the host of EdTech startups aiming to bring kids (and their parents) onto their platforms. Knowbox debut One of the best-known Chinese online education platforms, Knowbox (小盒科技), embarked on a journey into this new era of artificial intelligence in July 2014. The company, which was founded by Liu Ye (刘夜), focuses on a combination of education and technology to create a platform incorporating AI in order to build an intelligent education ecosystem.  The company changed its Chinese brand name to Xiaohe Keji (小盒科技), literally meaning ‘small box technology,’ on July 18; it was originally called Zuoye Hezi (作业盒子), which literally means ‘homework box.’ The online K12 education platform firm claims to serve over 40 million users, in nearly 400 cities and 100,000 schools, across 31 provinces in China. The Beijing-based education start-up has raised more than USD 300 million in a total of six funding rounds. The latest fundraising, a Series D worth USD 150 million, was led by the Hangzhou e-commerce giant Alibaba Group (BABA: NYSE). The fundraising will cultivate and enhance the company strategy to create a more sophisticated online education with the integration of AI.  ‘Xiaohe classroom,’ the first AR teacher Since 2017, the company has invested significant resources in developing an AI-powered education system aiming to return control over study back to the student. The system was named ‘Xiaohe classroom;’ it provides personalized, adaptive learning and tutoring services to students. Xiaohe classroom provides students with accurate diagnosis through 3 dimensional portraits and achieves personalized learning path planning based on the company’s internally developed POMH-DINA model; it has nearly 20 million question stakes and 20,000 knowledge slices to match personalized learning content for students.  Thus, the company claims that ‘Xiaohe classroom’ is the first AR teacher in the online education industry in China. The system also provides an interactive classroom experience through voice, gesture and expression interaction. The company also claims that the classroom currently has more than 10 thousand registered students. Company core products Xiaohe student (小盒学生):  a mobile app that provides daily personalized exercises, training, and a variety of teaching modes, animation teaching, video teaching, and parent-child interaction. The courses can be arranged according to their preferences.  Xiaohe teacher (小盒老师):the mobile app helps teachers to manage homework, and alleviates the pressure of piles of corrections; it can also be personalized according to users’ needs. Xiaohe family (小盒家长):allows parents to better understand their children’s learning progress by providing real-time report. It also allows parents to communicate with their kids. Xiaohe homework (怕作业): created to support teachers and parents in assisting the children with exercises.  The integration of AI in education will not only increase learning efficiency but also help preserve a high level of interest in learning.  However, people still believe that AI might one day replace teachers. This is actually a misconception of how AI works. The main objective of AI in the education system is to make teaching more effective and enjoyable for teachers and students. EdTech companies striving for more investment  Since its foundation, Knowbox have been competing with several online education platforms that provide similar online services. Companies such as Zuoyebang (作业帮), 17zuoye (一起作业) and VIPkid.  These three online education providers have raised a combined fundraising sum of over USD 1 billion.  While Zuoyebang was founded by the Chinese search giant Baidu (百度), it targets primary and secondary students by providing an app that allows the students to upload homework questions and search for answers. The company claims to have more than 300 million registered users.   17zuoye focuses on primary school English and mathematics lessons. It provides students and parents with online homework and special exam-oriented exercises. The online education-powered AI has raised more than USD 500 million in over 7 rounds from investors such as DST Global, Tiger Global Management and Singapore-based investment company Temasek, as well as Beijing-based VC Shunwei Capital. The market is expanding  According to a survey carried out by CISP, Chinese technology firms will expand their AI teams by an average of 20% annually, and this demand for AI specialists will grow further. It will likely increase to five million in the coming several years.   In 2018, the AI segment integrated into the online education industry was worth USD 12.38 billion; it’s estimated to reach USD 20.8 billion by the end of 2019, an increase of 68%. It will then push upward to reach USD 32.86 billion by the end of 2020, according to iResearch statistic. As is well known, China has one of the largest education sectors in the world. Every year, millions of Chinese students take part in the National Higher Education Entrance Examination (高考) considered the most important exam in the country. In June 2019, it was estimated that 10.31 million students took the exam.  Therefore, online education is becoming a popular choice among parents to prepare their kids for the transition from kindergarten to (eventually) university life. A total of 1740 investment events took place in the first quarter of 2019.  The most active investors have been IDG capital and Zijin venture capital, with 24 investments each. They were followed by Sequoia China (16), K2VC (15), Tencent Industry win-win fund (13), Casstar (13) and Matrix partners China (12). As Artificial Intelligence penetrates more into online education and more parents upgrade their children’s education, the country's online education revenue has increased significantly. According to iResearch, the revenue of China’s online education market reached CNY 252 billion, with a growth of 27.5%. A rate of 24.5 % growth is expected, with a market value of CNY 313 billion. Since 2013, the structure of Chinese online education has experienced significant alteration, with K12 education arousing the interest of parents to increase their kids’ education quality. Online education has turned into an extra-curriculum portfolio element that helps students improve their grades and enhance their knowledge. While in 2013 the K12 education represented only 10.1% of online education, with the development of new technology, particularly through the addition of AI, the K12 educational share has increased significantly over the years, reaching 17.6% by the end of 2018.  The integration of AI into online education is a product of rapid development in the field. Yet educational AI is still in its early stages. The increasing demand for high-quality education has opened the door for new opportunities and brought new entrepreneurs in the market.  The massive Chinese market is pushing online education to a new stage of development and enhancing the country's competitiveness in the global education market.

Analysis EO
Analysis · 2
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Analysis EO
Aug 15, 2019 10:04 pm ·

Edtech Squeezes its Way into the Unicorn Club

Education as an industry that has pinned the hopes of hundreds of millions of families around the world for a better life, social progress, and national rejuvenation, education has undoubtedly been one of the areas of greatest concern to people all over the world. EqualOcean has sorted out the list of "The Global Unicorn Club" released by CB Insights, and compiled 382 unicorn companies from July 2010 to July 31, 2019, consisting of around20 industries. In terms of industry distribution, ranking first is the Internet software and service industry with 53 unicorn companies. Major industries such as e-commerce & retail (48), fintech (46), and health (32) have begun to take shape, and 12 unicorn companies have emerged in the education field. EqualOcean has analyzed and explored various industries. This article will conduct an in-depth study of "Educational unicorns", focusing on educational brands in China and the United States, from the perspectives of valuation, establishment time, founders, countries, and time of inclusion in the unicorn list. In terms of quantity, there are only 12 unicorns in the education field, accounting for 3.1%, which is equivalent to the number of unicorn enterprises in the tourism industry. From the valuation point of view, there is no super unicorn in the education field, and most of the companies have just joined “The Global Unicorn Club”. Among the 12 companies, nine are from China, far exceeding the United States (2) and India (1). With six female founders/co-founders, education has become the industry with the highest proportion of women After compiling the information about the 382 global unicorns which has always been a male-dominated entrepreneurial battlefield, but now there are more and more women breaking into the successful entrepreneurship, even though the current field founders/co-founders is still a minority. With 10 female founders/Co-founders/Ceo’s E-commerce & retail is on top, while the education industry is behind it with a six. In terms of proportion, education industry is the industry with the highest proportion of women in all fields. Among the 12 educational enterprises selected, there are 24 founders, among which six are women, accounting for 25%. Mother is probably the most powerful title a woman could ever have. Women however are a powerful and gentle force in the education industry. EO Company has recently written an analysis article on “The Rise of Women's Power in the Education Industry.” In a competitive industry these women are shaping a new era and bringing better education to their children. Technology is the key to the rapid rise of enterprises There is a contradiction between the demand for education and the supply of high-quality resources. It seems that it may be solved by technical means. By organizing the information of these 12 educational unicorns, EqualOcean discovered that the innovation of technology and the model is the key to the rapid growth of these enterprises. Most of these unicorn companies were founded in around 2013. This year, the unprecedented combination of mobile Internet and education has promoted the historic upgrade of the education industry. The influx of Internet traffic into the education sector has brought about structural changes, and a number of online education companies have gained a chance to grow. When we look at the model, the online education model is in favor, and most of them have been transformed through technology. Whether it is the reconstruction of the K12 education stock market, or the upgrading of vocational education, quality education etc., the development of technology is indeed the key.   However, unlike other industries, the education industry is relatively difficult to get transformed by the Internet. At present, there is no change in the teaching process, enterprise income model, and operation in the field of education. In the era of artificial intelligence for the future, veteran players must transform themselves, and new players will also be poised to push competition to a new dimension. The intelligent education represented by AI has stood on the doorsteps of the education circle. On August 31, “The World Artificial Intelligence Conference-EO Company Forum” will further analyze the opportunities in the intelligent education represented by AI. BAT (Baidu, Alibaba, Tencent) actively take part in the educational industry   If we look behind these 12 educational unicorns, we can find three familiar figures: BAT’s capital players. As China's top technology companies, Baidu, Alibaba and Tencent have layouts in various industries, and the education field is one of them. Even though education companies may not bring huge income to the Big Three, BAT has been promoting the education industry through investment.  We can see that among the three Tencent invested in the most unicorn companies. It not only invested in domestic unicorn companies like VIPKID, Yuanfudao (猿辅导), and Dedao (得到), but also injected capital into the Indian education technology company BYJU'S, which is also the world’s most valuable education company. Indian education unicorn shines bright The scarcity and uneven distribution of educational resources seems to be an important problem that plagues all countries in the world. From the perspective of geographical distribution, the education unicorn is almost occupied by United States and China. There are 11 unicorns in the two countries, accounting for 90% and the remaining one is from India.  Founded in 2008 and headquartered in Bangalore, India, BYJU'S offers courses for students of grades 6-12, as well as exam preparation courses for JEE, AIPMT, CAT, IAS, GRE and GMAT. With a personalized learning experience, an emphasis on application development, and a vast amount of teaching content, Byju's has received investment support from well-known companies such as the charity foundation created by Facebook founder Mark Zuckerberg and the Chinese technology giant Tencent. Among the Indian unicorn companies, BYJU ranks fifth in valuation, just below e-commerce company Flipkart, online payment company Paytm, budget hotel brand OYO and taxi software application Ola. In education, BYJU'S is currently valued at more than USD 5 billion and is one of the highest valuation educational technology companies worldwide.  

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