VIPKID 

The Number of Students at VIPKID's Dami Network School Increases More than 500% in Three Month

VIPKID's Eice network school, with $80 million in independent financing, is the first to launch a parental pricing system

VIPKID announced the appointment of senior executives and the promotion of Liu huan to group COO

VIPKID cooperated with Huawei launching online education intelligent solution, realizing 0 katton in the classroom

Central video and VIPKID push free north American foreign teachers live classes

Tencent and Sequoia Pour USD 80 Million into VIPKid's Subsidiary

Cindy Mi, Founder and CEO of the unicorn company announced this week that Dami Online School has raised USD 80 million in a Series A funding. Investors include Tencent, Sequoia Capital China and Hommer Capital, marking the first major domestic financing event of 2020. Having started as an incubated project nearly two years ago, the brand is designed to provide a more cost-effective education by enabling bigger class sizes, with students signing up for online sessions in addition to private instruction. Founded in 2013, VIPKid is a global education technology company that connects children with teachers for online English classes. It has become China’s leading online education startup, attracting investment from investors like Tencent, Coatue Management, Sequoia Capital, Sinovation Ventures, Yunfeng Capital, Matrix Partners, Learn Capital, Northern Light VC and Bryant Stibel. The VIPKid platform currently connects over 700,000 paying students with over 90,000 teachers in the US and Canada. China has taken a lead in online education, with firms using some of the latest technologies – such as artificial intelligence and virtual reality – to improve education quality and efficiency. According to iResearch, the country’s online education market is expected to reach CNY 380.7 billion this year, from CNY 251.7 billion in 2018.  With the evident expected increase in the market size, VIPKid has a lot of competition, with the world’s most valued startup ByteDance’s subsidiary Gogokid bringing English-speaking teachers into virtual classrooms in China. Speaking of the marketing war for the summer class in 2019, Cindy Mi said at the press conference that Dami Online School will never join the marketing war. She said education must return to the original intention which is educating pupils and spending money on teachers, teaching research and product experience.  Lynn Yang, Managing Director of Sequoia Capital China, said: “VIPKid has two major advantages when entering the large class track: firstly, VIPKid has been deeply involved in the industry for six years, has a deep understanding in the field of online education and understands users' online behavior. With these advantages, it can quickly gain user trust and Support. Secondly, it has a strong and professional management team. I believe that, under the leadership of the management team, Dami online school can take the user as the center of the experience, solve their pain points and create a closed-loop of learning that combines quality with test-oriented education, and lead the development of the K12 online education.” Yu Haiyang, managing director of Tencent Investment, expects Dami to be in a strong position to meet increased demand from Chinese parents for online education, according to the statement. Last October VIPKid raised an undisclosed amount for its Series E round of financing, led by Tencent, with China Renaissance (华兴资本) playing the role of financial advisor. VIPKid said that the two sides will continue to deepen cooperation in the fields of Internet education, artificial intelligence, cloud services and public welfare.

From VIPKID being rumored to lay off employees, look at the development of online education with the dilemma

Depth: VIPKID financing suspension accident and story

VIPKid Raises Further Financing from Tencent, Despite Reports of Setbacks

The news was published on the official Wechat account of VIPKid on October 8. This round was led by Tencent with China Renaissance (华兴资本) playing the role of financial advisor. VIPKid said that the two sides will continue to deepen cooperation in the fields of Internet education, artificial intelligence, cloud services, and public welfare. According to the company as of August 2019, the number of students on the VIPKid platform exceeded 700,000 and the number of foreign teachers in North America exceeded 90,000. The firm revealed that after obtaining new financing, it will continue to increase investment in quality content, talents and technology, to improve the company's operational efficiency and organizational capabilities, and provide better education products and services for both students and parents. Late in August, Reuters quoted two people familiar with the matter who said Tencent had shelved a plan to invest about USD 150 million in VIPKid. The main reason mentioned was that the relevant government departments had introduced some new regulations for the online education platform the previous month, requiring teachers to hold effective teaching qualifications and the platform to publish some specific information, such as foreign teacher certificates and work experience. The same people also said that VIPKid initially hoped to raise USD 500 million, but had later lowered its target to around USD 150 million. Now that this round is undisclosed there is a chance that the amount might be lower than USD 150 million.  Founded in 2013 VIPKid has caught the eyes of some huge investors, with at least one investment per year. On June 21, 2018, VIPKid completed its Series D+ round of funding worth USD 500 million, led by Coatue, Tencent Holdings, Sequoia Capital China and YF Capital (云锋基金). To date, the children's English teaching firm has raised a total of USD 825.5 million over eight rounds of disclosed funding according to Itjuzi. Cindy Mi, the founder and CEO of the firm believes that online education is becoming a major trend. As a leading enterprise, VIPKid is full of confidence and takes responsibility for the development of the industry and the market.  After thanking Tencent for the investment, Mi said: "With more like-minded partners, we hope that the growth and development of each student will be taken seriously by VIPKid to make them an international talent with a Chinese spirit and a global vision." Dowson Tong (汤道生) president of Tencent Cloud and Smart Industry Group, said: "Technology is the vision and mission of Tencent for the future, and education technology is one of the best sectors. We have seen that VIPKid is continuously working hard in order to improve its products, services and management. We are willing to help VIPKid to establish a foothold in China and as well as globally and use technology to empower the future of education so that more students and parents can benefit from it." Mentioned in a recently published article by EqualOcean, the online education market for children in 2018 exceeded CNY 21 billion (USD 2.9 billion), while the number of users reached 6.25 million. It is expected that this number will exceed 10 million this year. With the increase of public awareness, the penetration rate of the online education industry is growing, and it is expected to creep over 50% by 2022. It is believed that traditional offline learning modes will be almost completely replaced by online modes. Market polarization for children's online English learning is obvious, with four enterprises - VIPKid, 51Talk, DaDa(哒哒英语)and vipJr - occupying more than 90% of the market share.

Rumors Prove False as Tencent Plans to Invest Millions in VIPKid

DoNews, part of Beijing Matador Culture Media Co., Ltd. reported this morning that Tencent will invest USD150 million in education startup VIPKid. Late in August, Reuters quoted two people familiar with the matter who said Tencent had shelved a plan to invest about USD 150 million in VIPKid. The main reason mentioned was that the relevant government departments had introduced some new regulations for the online education platform the previous month, requiring teachers to hold effective teaching qualifications and the platform to publish some specific information, such as foreign teacher certificates and work experience. The same people also said that VIPKid initially hoped to raise USD 500 million, but had later lowered its target to around USD 150 million. VIPKid, in an emailed statement to Reuters, said it has a deep partnership with Tencent as an "advisor, investor and role model." Founded in 2013, VIPKID is an online English education platform for children, featuring North American teachers and a1 to 1 teaching mode. According to the company’s website, it has now over 500,000 paid users and more than 70,000 registered North American teachers. Since then, the company has caught the eyes of some huge investors, with at least one investment per year. On June 21, 2018, VIPKID completed its Series D+ round of funding worth USD 500 million, led by Coatue, Tencent Holdings, Sequoia Capital China and YF Capital (云锋基金). To datethe children's English teaching firm has raised a total of USD 825.5 million over eight rounds of funding according to Itjuzi. VIPKid was also recently added in the list of 'The Global Unicorn Club' with a valuation of USD 3 billion, released by CB Insights, with 382 other unicorn companies from July 2010 to July 31, 2019, consisting of around 20 industries. However, online one-on-one English education is fiercely competitive. The enterprise costs and the costs of obtaining customers are high. It has been difficult for enterprises to make profits, and they are generally at the stage of relying on financing for development. In January this year, VIPKid stated that it expects the company to make profits in the 2021 fiscal year ending in March 2022, when the number of paid students will have reached 3 million. This means that before March 2022, VIPKid accounts need to have enough cash to support the development of the company. To make a profit, a company such as VIPKid has to scale up. This business model has been questioned about its low salaries, low profit margins, and high turnover rate. However, with more students, it has to recruit more teachers, which brings the company higher costs something it must do, otherwise the teaching quality will unavoidably decrease. In the past VIPKid has been criticized by parents, who claimed the teaching quality has dropped from what it used to be. The increasing popularity of the product makes it hard to maintain the same quality level as it did in the past.

The World Talks About the Era of AI+Education at WAIC 2019

The World Artificial Intelligence Conference was held in Shanghai from August 29-31. The event was organized by the Shanghai Municipal Government, the State Council, the National Development and Reform Commission, the Ministry of Science and Technology, the ministry of Industry and Information Technology, the National Internet Information Office, Chinese Academy of Sciences, Chinese Academy of Engineering and other ministries. Under the main event, the Education Technology and Artificial Intelligence forum was organized by EO Company, the sister publication of EqualOcean and Shanghai Artificial Intelligence Society. The theme of the forum was “AI leads the era and education creates the future.” The forum had two main topics: training talents with AI and cultivate the talents needed in the AI era. The guest list and the attendees of the forum added up to around 2000 which included a large number of scientists, entrepreneurs and investors focused on AI+education both foreign and domestic.  AI is changing education As a technology and industrial innovation service platform dedicated to promoting new technologies, and new ideas, we have been paying attention to the development of artificial intelligence technology in various industries. In the education industry, artificial intelligence is helping education to become personalized, and bringing about changes in the entire process of education. Facing the new trend of AI+education, a large number of influential people expressed their views at the forum: Academician of the Chinese Academy of Sciences and dean of the School of Software at East China Normal University Mr. He Jifeng (何积丰), said that artificial intelligence can play a role in three aspects of basic education. Intelligent teaching tools. Mainly relying on the combination of artificial intelligence and educational methodology, based on AI, knowledge map, speech semantic recognition, visual recognition, personalized recommendation etc.; Intelligent curriculum system. Mainly the curriculum system + teaching system, relying on AI technology are programming education, robot education, maker education; Intelligent teaching environment. The Internet of Things+ intelligent system combines teaching, research, management and campus life in an integrated environment with work and life on campus. Zhang Hao (张浩), the Director of the Engineering Center of The Ministry of Enterprise Digital Technology Education, Director of Shanghai’s Association for Artificial Intelligence and a professor and doctoral supervisor at Tongji University, believes that “Data-driven smart education focuses on several factors. On one hand, it is a personalized for the teacher. In the past, teachers were guessing, and now they can use data assistance to be more accurate and efficient. On the other hand, it personalizes studying for the students. The former students always listened. Now they can be assisted by personalized data, and they can learn accordingly, and then establish a personalized learning model. At present, big data is mainly being used to promote personalized education.” Yang Linfeng (杨临风), co-founder and CEO of Onion Mathematics also shared his views on the topic: "now artificial intelligence education is booming, but the change is currently mainly in the auxiliary stage, and it takes time to reach the core of education.” He said that if artificial intelligence is really playing a role in the core of education, the direction is that adaptive learning of AI empowerment can really help students achieve self-learning. He further added “Self-learning does not mean that teachers are not needed at all. The role of teachers should be changed. Teachers are more about guiding students through the whole process, including leading students to study more advanced cognitive thinking goals, such as evaluation, analysis, and creation. But knowing at the level of understanding, simple application, many processes can be implemented through adaptive learning.” As the first domestic adaptive learning engine based on the advanced algorithm the event was a perfect match for the Squirrel AI. Mr. Zhou Wei (周伟) the co-founder of the company shared his thoughts. He said, "technology can change education, but the essence of education must be the combination of online and offline real-life teachers and the Internet. In our learning center, the teacher is responsible for 30% of the teaching, the system is responsible for 70% of the teaching, the teacher focuses on ‘education’ In part, and the system focuses on the ‘teaching’”.  About the revolution that AI will bring to education, he said, “Let students use fewer questions because they are more efficient. If you use the adaptive learning system for a long time, all the learning records are in the system, and the evaluation system can be used in the future. Bringing important references, education will become more transparent. In addition, letting each child truly master the learning ability and methods will reduce the frustration of each child and increase the sense of learning." Jesse Hailong Shang (尚海龙), Managing Director of SenseTime Hong Kong, and also a Joint Managing Director of Education Business, mentioned that “AI education gives children the freedom to create and choose. AI education is a quality education, not only technology and tools. ” Instead of viewing AI as a technology, we must look at ideas, ways to behave, and values, he stressed. We need to change our experience and not just think of AI as a technology, In the future, no matter whether you become an algorithmist or not, he thinks everyone will use AI one way or the other in the future, which is very important. Students are put in a standardized class. They are taught the same amount of content but it might not necessarily reflect every students interest. There are about 45-50 children per class in China. A standard class in Chinese public schools is 45 minutes long, so for example if they are studying English they really have no time to use the language. Technology is solving this problem by provinding students with digital content and after school applications to do their homework.  Education has come a long way. In the past the only way one could learn things was by either you learn it from a teacher or from books. Now Studtents have a lot of ways to learn and the knowledge is not limited. Children these days have a lot more access to digital content.     The combination of AI and education is still at a very early stage. The nect step would be the development of extended tutoring systems that allow indivisualized education At the forum EO think tank released the “2019 Global Artificial Intelligence Education Industry Research Report” Recently, UNESCO officially released the "Beijing Consensus - Artificial Intelligence and Education" document. The Document Initiative supports forward-looking research on cutting-edge issues related to the impact of emerging artificial intelligence development, and promotes the exploration of effective strategies and practices for using artificial intelligence to promote educational innovation.  In this context, EO Think Tank scanned the global artificial intelligence education market, and released the "2019 Global Artificial Intelligence Education Industry Research Report" conducted by the team of Professor from the East China Normal University Examination and Evaluation Institute. The study of 204 artificial intelligence education enterprises in developed countries and regions found seven “secrets” in the industry. 1. China's artificial intelligence education company is leading the world in terms of development time, amount of financing and amount of capital investment; 2. There is a difference in the promotion of “artificial intelligence” between Chinese and foreign educational institutions. Chinese education companies are more concerned about the “artificial intelligence” label in publicity where as foreign educational companies are not; 3. The development of artificial intelligence education is affected by both the bottleneck of AI technology itself and the insufficient data available in the education industry; 4. After the subversion, artificial intelligence education will eventually return to teaching aids. The role of human teachers should not be forgotten; 5. Educational brands and technical service providers should be treated separately. Technology suppliers have natural advantages in the number of service brands, it is possible to accumulate more data to train algorithms, but the technology of brand self-research may be more adaptable to the personalization of a particular scenario;  6. It is very important to cultivate the talents in the age of artificial intelligence, whether they grow the scientific research personnel under higher education or improve the quality of population in basic education stage; 7. STEAM education for young children in China has risen in the past five years, and it has been widely concerned by consumers for nearly three years. Compared with overseas, it is still in the early stage of development, so we believe that in STEAM education development, there are many Chinese companies that can learn from overseas. Deco You (由天宇) the Vice present of EO Company and head of EO Intelligence believes there are two major problems when talking about technology and education. First, what does technology mean to education?    We have been pursuing a student-centered education model, hoping to better enable students to learn and grow. But in the thousands of years of history, we have achieved very low levels. However, the combination of artificial intelligence, Internet and big data is likely to transform the teacher-centered education model into a student-centered, personalized, and efficient education. Second, what kind of talent is needed in the era of Artificial intelligence?  New technologies are driving and influencing many fields to be fast and intelligent. How to cultivate talents suitable for this era is also a very important issue. It will definitely affect the competitiveness of a country or a region in the world.     2019 AI+Education TOP 20 enterprise award winners Under the general trend of AI to empower various industries, it is very important to select a potential and powerful innovative enterprise to establish a benchmark in the industry. At the forum, EO Company awarded the “2019 China AI+ Education Enterprise Top 20” awards. It took more than two months to select the award winners, and the results of the selection were finally produced through the application of enterprises/institutions, multi-dimensional assessment, and expert evaluation.   This selection has comprehensively considered a number of factors, including: 1. the establishment time of the company should be more than 6 months, the accumulated financing amount should exceed CNY 100 million or the company is in its B or above round of financing; 2. the enterprise AI technology and R&D investment account for the total investment. An independent technology research and development team; 3. The company's business model should be clear, with rapid development, and a growing performance; 4. The company's product or service quality should be excellent, and has a certain market and media influence. The map below shows the logos of the top 20 award winning companies Note that the order is in the alphabetic (pinyin) order. Closed Door Investment Links Capitalists and Innovative Enterprises In parallel with the forum, there was closed-door meeting held for the first EO Education Innovation Project. As a sub-section of the “2019 World Artificial Intelligence Conference-Education Technology and Artificial Intelligence Forum”, this closed-door was hosted by EO Company and co-organized by Duojing Capital (多鲸资本) and EdBeta Fund (北塔资本协办), aiming to encourage educational enterprises to innovate. We aim to educate and innovate enterprises with advanced educational concepts and innovative teaching methods, and engage with capitals to inject fresh finance into the education industry. A total of 14 educational innovation projects were selected at the closed door meeting including: Whiz Kids (小问号), Huoyouxi (猴有戏), Koala Know (考拉知道), Newline (新励成), Qiu Qiu huiben (球球绘本), Miaocode (妙小程), Heli edu (核力教育), Woobo, Xkbot (小卡机器人), Aiwei (爱维宝贝), Cedar Cove (雪松湾), VRSchool (微视酷), Xiaoyu Researcher (小鱼研究员),and 17 Career (一起求职). Under the wave of artificial intelligence-driven industry transformation, the education industry will also usher in new changes especially in personalization, scale and efficiency. “The 2019 World Artificial Intelligence Conference-Education Technology and Artificial Intelligence Forum” stands in the industry perspective and contributes to the development of the education industry and promotes the development of education innovation. Next, in the process of promoting education informationization and modernization, EO Company will continue to promote new technologies, new ideas and new policies into the education industry and serve the development of the Chinese education industry. 

Education Industry has a Bright Future Regardless the Drop in Funding

Back in the day’s education used to be simple with a blackboard, a teacher and desks in a classroom. Today, students can study various languages online, upload homework through a portal and learn chemistry through 3D immersion. Such is the rise of educational technologies.  Government support for education per capita in developed countries is far higher than in developing countries, which can be explained by both the resourcefulness of developed nations and the high and growing populations of developing nations. Technology is becoming one of the most important tools for education Education institutions are investing more in software solutions than in technology hardware. M-learning, Bring Your Own Device, “gamification” and virtual reality are gaining popularity and enabling teaching to be student-centered, while lectures are becoming project-and inquiry-based. According to Holon IQ education is a USD 6 trillion industry and will grow to USD 8 trillion by 2025. Expenditure on education and training from governments, parents, individuals and corporates continues to grow to historic levels and is expected to reach USD 10 trillion by 2030. The investments made to learning technology companies in 2018 were massive, soaring past USD 16.34 billion with 44.1% going to Chinese edtech companies. 2018 marked the first year that the US did not dominate the funding. In 2018, USD 7.22 billion went to 207 Chinese edtech companies. USD 5.23 billion (32% of all global funding) went to 248 US companies. Compared to the US, the funding amounts in China were huge. American education technology companies were dwarfed by Chinese counterparts. Chinese educational technology companies included VIPKID which raised a staggering amount of USD 500 million and Zouyebang (作业帮) managed to raise an amount of USD 350 million. The most noticing point in 2018 was the investors interest in AI-based Learning startups. Learning products with integrated Artificial Intelligence dominated the investment rounds. A combined total of USD 2.90 billion went to 197 companies developing AI-based Learning products across the planet in 2018. "AI-based Learning is the one area where the US still has a commanding lead over China," said Sam S. Adkins, Chief Researcher of Metaari. "The majority (61.5%) of all global investment in AI-based Learning companies went to 102 US-based companies that raised a combined total of USD 1.78 billion. In stark contrast, USD 299.7 million went to just twelve Chinese AI-based Learning companies, a mere 10.3% of all global investments to AI-based Learning companies. In 2018, 25 AI-based Learning companies in India obtained USD 227.7 million in investments, followed by Israel at USD 169.5 million." There was a sharp increase in investment in game-based learning companies in 2018. A total of USD 2.25 billion went to 133 game-based education companies in 2018, more than double the amount invested in the year earlier. Over USD 1.96 billion went to 74 mobile learning companies in 2018. This investment was heavily concentrated in four Chinese companies including Zuoyebang (作业帮) and 17 Zuoye (一起作业).  Education technology is becoming a global phenomenon, and as distribution and platforms scale internationally. A report by EdTechXGlobal in 2016 said that the market is projected to grow at 17.0% per annum, to USD 252 billion by 2020. The US has set the trend and pace of the EdTech market. Asia is now experiencing the world’s fastest growth in investment into the sector, and Europe has seen increases; however, this region remains a largely under-invested and fragmented market. According to Elearning Inside, in 2018, Chinese investors poured USD 3.3 billion into edtech while American investors invested USD 1.7 billion and their European counterparts spent USD 0.7 billion.  In 2014, European investors only poured USD 70 million into edtech in 87 transactions. By 2018, this amount has risen to USD 449 million across 152 transactions. A report by Brighteye Ventures emphasizes “Europe is the only region where EdTech deal volumes have grown, nearly doubling from 87 to 152 since 2014.” During the same period, transaction volume dropped by 30% in the United States. It can be seen from the data above that China is clearly leading the race in the first half of 2019 when it comes to the amount and number of investments.  USA runners-up in the race of raising funds EdSurge reported that for the first half of 2019, the industry saw USD 962 million raised across 65 deals, the highest amount of funding at the halfway mark since at least 2015. By comparison, in the first six months of 2018, companies raised USD 750 million across 62 deals. The leading deals worth more than USD 200 million were made by two US companies. The California based online learning platform provider, Coursera raised USD 103 million in a Series E round. New York-based Andela, which trains programmers in developing countries managed to raise USD 100 million in a Series D round. These two deals make up for 21% of the total amount raised by edtech companies in USA for the first half of 2019.  USA’s counterparts overseas have also attracted plenty of venture capital. Three Chinese companies landed nine-figure Series D deals. Two that offer online tutoring services, Dada (哒哒英语) and Gaosi Education (高思教育), raised USD 255 million and USD 140 million, respectively. Online homework platform Knowbox raised USD 150 million. China has led education VC investment growth over the past five years According to EDU Insight a total of 167 financing events took place in China. Other than the undisclosed amounts, a total of CNY 9.29 billion of investments were raised. As compared to 342 investments and financings in the first half of 2018, the amount has shrunk by nearly half. Although the investments have decreased, the sub-sector has changed rapidly. Art education, children's programming, and other fields have received much attention in terms of financing. As the country continues to incorporate sports, art and other disciplines and comprehensive quality evaluation into performance evaluation standards, and the gradual opening of the after-school service market, 2019 Quality education will continue to attract investments in the second half of the year, and competition will get intense.  In the first half of 2019, there were 36 investment and financing events in the K12 education field. Out of the total financing of CNY 9.291 billion, K12 contributed CNY 5.826 billion, accounting for 63% of the total amount. The top three of the investments raised also belong to the K12 companies, with Zhangmen (掌门1对1) raising a staggering amount of USD 1 billion for E round, DaDa ABC (哒哒英语) and Gaosi Education (高思教育) both raising D round financing of USD 255 million and USD 140 million respectively. However, education is starved of capital compared with other sectors. Innovation requires capital. Governments are struggling to fund education to previous levels and education is not drawing on enough private capital to fund the innovation that’s needed. Public-Private Partnerships will be critical to supporting future growth, innovation and access to education. 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.

Former TESOL Chairman Joins VIPKID as Chief Academic Officer

A former chairman of TESOL, Liu Jun (刘骏), has officially joined VIPKID as chief academic officer, as the company announced today. Liu is said to build international and authoritative academic standards as well as an elite teaching team for VIPKID. This is the first time that VIPKID has set up the CAO position. Though possessing academic consultants, nearly all online education companies don’t have an academic senior executive for now. Last month, the Beijing-based online education company had Zheng Zibin (郑子斌), former vice president of Baidu, join as its CTO. Liu Jun has a Ph.D. of Second Language Acquisition and Teaching from the Ohio State University and formerly worked as Head of the Department of English at the University of Arizona. From 2005 to 2007 he was the chairman of TESOL. He is the first Chinese chairman of the organization as well as the first one whose parent language is not English. TESOL, formerly Teachers of English to Speakers of Other Languages, is the largest professional organization for teachers of English as a second or foreign language. Founded in 1966, the organization is based in Virginia, the United States. Last year in a face-to-face conversation with Cindy Mi (Mi Wenjuan, 米雯娟), professor Liu said: “Compared to the traditional teaching method, the advantage of online education is personalization. Different children will confront different kinds of problems and online education can help them solve these problems.” He also remarked that VIPKID’s scale and form were both “satisfactory” then. Founded in 2013, VIPKID is an online English education platform for children, featuring North American teachers and 1 to 1 teaching mode. According to the company’s website, it has now over 500,000 paid users and more than 70,000 registered North American teachers. Since its foundation, the company has always been popular among investors, with at least one investment per year. On June 21, 2018, VIPKID completed its Series D+ round of funding, with an amount of USD 500 million, led by Coatue, Tencent Holdings, Sequoia Capital China and YF Capital (云锋基金). However, probably due to the “capital winter” of China, there are not any rumors about its new round of funding as of press time. From this perspective, the VIPKID’s team adjustment may be also a strategy in fundraising.

Decryption of VIPKID’s Expansion Logic

Different from the past few years, the dust nearly settles in today’s English online education for children in China. With an absolute majority of market share, VIPKID has left far behind its competitors like DaDaABC and 51Talk. On June 11, VIPKID was recognized by Forbes as one of the “most innovative enterprises in China”. What makes VIPKID stand out from other competitors? EO Intelligence, an industry and technology research institute, employs six attributes - teacher resources; course design; teaching materials; marketing; customer acquisition; price strategy - to assess the potential for companies in the industry of English online education for children. VIPKID aces especially four of these attributes. According to VIPKID, it has employed more than 70,000 English teachers from North America, who are certificated by well-known organizations like TESOL and TEFL. The number of English teachers is considered to be one of its core advantages. Speaking of the teaching method, the company mainly adopts one-to-one mode - the most effective mode in online learning. Besides, VIPKID spares no effort in advertising and promoting. Firstly, the company chose popular actress Liu Tao to be its image speaker because of her good-mother image. In family, the mother is usually the one to make consumption decisions on children’s education. Secondly, the company encourages parents to share their children’s learning achievement in WeChat by bonus courses. Word-of-mouth communication is the most efficient channel to acquire new customers. Moreover, an indispensable factor for VIPKID’s success is the support of many famous investment institutes such as MatrixPartners China (经纬中国), Sequoia (红杉资本), Sinovation Ventures (创新工场) and so on. When the other factors are similar, who holds the most capital will swallow the biggest market. Conversely, the bigger market holder will attract more investment. Besides, the company’s occupation of the market reinforces consumers’ belief in the brand, leading to a dominance. But VIPKID has not achieved the dominant place in the market as they expect. As its rough expansion mode (raising money for massive advertisement) can be duplicated, the company’s position doesn’t have enough defense capacity if huge amounts of money choose another favorite. Furthermore, VIPKID’s profitability has always been questioned. The high CAC (Customer Acquisition Cost) probably takes the company a year or more to recover. Although the company claimed it will make a profit in 2022, it still risks going bankrupt before its CAC goes down. To keep its leading place, VIPKID ought to put more attention to its biggest advantage - the teacher resources. The company had been criticized for quite a time because of its insufficient cancellation chances. For a contract of 6 months, there are only 6 cancellations. The pay raise policy is also a severe problem. A teacher can only get a raise after a year, and each class is worth USD 0.5.  After all, The number of good teachers is always limited, but one teacher can only serve on a student at the same time with one-to-one mode. Surely the pace of VIPKID will slow down someday unless it lowers the threshold of admission, yet this means the loss of competency. In the near future, VIPKID may pour more money in increasing the exposure in overseas, especially social media like YouTube. But considering the cost performance, maybe to preserve present teacher resource by all means is the utmost need of the company. Founded in 2013, VIPKID has developed with rapid growth. After its Series D+ round of funding, VIPKID surpassed all his competitors, occupying the majority of the market. As the company declared, it possesses more than 500,000 subscriptions in 63 countries at present. Actually, VIPKID isn’t one of the first players in this industry. In 2006, several brands like Likeshuo (立刻说), e2say (一线口语) have already come out. However, the English online education market didn’t prosper until 5 years later, and VIPKID entered the industry when this model was becoming mature. Now the company has begun the overseas business. Corresponding to English courses facing the domestic market, Lingobus, set up in 2017, provides courses for foreign children to learn Chinese online. It is a mirror project of VIPKID itself because the learning process, the teacher admission regulations are nearly the same. The founder Cindy Mi (Mi Wenjuan, 米雯娟) claimed: “Our ideal is to make Chinese children understand the world and the foreign children understand China.” Nevertheless, when reflecting on the nature of this overseas business, we can easily find out it is just another expanding. The Chinese market is becoming more and more saturated and the company has to turn to the outside. In fact, the company can’t stop itself anymore because the choice is either to expand either to die.

Can VIPKID take over New Oriental, Good future?