167 financing events in the education industry took place in the first half of 2019. Other then 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.
EDU Insight has collected the investment and financing data that the education industry has disclosed in the first half of 2019, trying to analyze the new winds of financing in the education industry in 2019.
In the first half of 2019, STEAM education accounted for 33% of the total amount, ranking first in the subdivision.
The state has been vigorously promoting quality education, as well as the family education concepts are changing and the structure of the consumption is upgrading, which has enabled quality education to usher in the spring of capital; and children's programming education gradually getting popular has also injected new vitality into the capital market. In the past six months, the number of financing in STEAM education has continued to rise and it may have a peak in investment and financing as shown by the level of capital favor.
In addition, vocational education is also welcoming new developments under favorable policies. Affected by the “National Vocational Education Reform Implementation Plan” issued by the state in February, the number of vocational education financing increased in March. In the first half of 2019, the total financing amounted to 23, ranking third in the division.
Although STEAM has not lost its limelight in the first half of 2019, K12 still ranks first in terms of its ability to attract huge amounts of financing.
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.
Comparison with the first half of 2018
The amount and number of financing in the first half of 2019 is relatively low as compared to the first half of 2018.
A round accounted for 24% and became the most popular round in the first half of 2019.
In terms of Round of financings, the capital is mainly concentrated on early investments, i.e., seed to A round, with a total of 117, accounting for 70% of the total investment rounds.
Among them, the A round accounted for 24% with the total amount of 41, which became the most concerned round in the first half of 2019. Followed by the angel round, accounting for 21% with the amount of 39. Compared with the same period of 2018, the investment rounds are basically the same, the A round has the highest proportion with an active Angel round funding.
Investors have great potential in the eyes of the 41 institutions that have followed Round B and above, the vast majority of which are in the K12 field
Majority of the companies which have raised investments above Pre-B round are from the K12 sector and investors seem to have a lot of confidence in these startups.
Geographical distribution of financing events
In the geographical distribution of financing events, the financing area in the first half of 2019 showed three areas accounting for 79% of the most concerned areas. Among them, Beijing with a leading number of 72, followed by Shanghai and Guangdong.
The amount of financing in the first half
Compared with the same period of 2018 in the first half of 2019, the trend of financing volume is basically the same. Companies with tens of millions of dollars in financing accounted for the largest proportion, reaching 44%. Corporate finance of more than CNY 100 million accounted for the least, with 19 companies accounting for 11%.
The amount of financing in 2019 has expanded, and a large amount of financing above 100 million has a growing trend.
In the first half of 2019, a total of 173 moves were made by the capital, with a further six individual investors.
Among the 167 investments, we have counted 8 investment institutions invested 3 times, including New Oriental, TAL, YONGHUA Investment, HILLHOUSE Capital, Amoeba Capital, Gene Capital, QF Capital, and MINDFULNESS Capital.
New Oriental has been the most active investor amongst these eight, carrying out six rounds of investment, including two B round investment, two strategic investments, and one Pre-B round and A+ round investment each.
Regardless of the decrease in financing, we believe that these four sectors: Vocational education, Quality education, Family education, and Companies using AI as their core have a potential future.
According to the research done by EO Company and data available online, by 2020, China's vocational education market will reach CNY 1.2 trillion, accounting for 37% of the whole education market.
In the field of quality education, the number of outdoor education finances has grown and is set to become a new hot sector of the industry. At the same time, children’s programming education is still on top of the list for capitals, in which Codemao (编程猫), XiaoMa.Wang (小码王) and Hetao (核桃编程) received a large amount of financing of over CNY 100 million.
Companies have already started to emerge in the family education sector such as Qinbaobao (亲宝宝) which raised USD 28.8 million last year from TAL, Dingdangpai (叮当派), Xiaobu (小步在家早教), Nicomama (年糕妈妈) and so on.
In addition, some companies that focus on other education sectors are starting to have layouts in family education, Makeblock being one of those companies. China’s leading programming hardware firm for children recently released its product “programming box” targeting family education.
Although the concept of AI has passed, the application of AI in the field of education has been paid attention to and favored by many people.