Six months after a record breaking USD 140 million injection for the 2B educational firm, led by Warburg Pincus (华平资本), which catapulted it to become a unicorn, Gaosi Education Group (高思教育) secured another Series D+ financing round, this time led by Internet giant Tencent. The funding amount in this round is undisclosed.
The company is considered very attractive and is estimated to have accumulated over USD 300 million across five financing rounds from renowned investors such as China Renaissance (华兴资本).
Established in 2009, the company is a well-known domestic extracurricular tutorial institution that is committed to providing a technology-driven education empowerment platform for kindergarten to year-12 (K12) students.
Gaosi’s CEO Xu Yicheng (须佶成) also announced the strategic rebranding of the company to Ai Xue Xi Education Group (爱学习集团), during a conference held in Beijing. The new name believed to be more suited to the company’s vision.
Ai Xue Xi is adhering to a S2B2C strategy, for which 2B centers around cooperating with local institutions to share its high-quality education resources, while 2C refers to dealing with students directly. However, Ai Xue Xi is focusing more on 2B businesses that it deems more valuable, in which effort it relies on technology to fully attain the highest quality of educational resources to support more K12 schools and Institutions.
It is reported that 2B revenues increased significantly from 2017 to 2018, accounting for 30% to 40% respectively. Ai Xue Xi expects revenue from the 2B side to surpass 2C this year.
Through the ‘AI study’ (AI好课) program, Ai Xue Xi is seeking to transform the education industry by applying AI, big data and cloud processing technology to create an immersive audio-visual experience for students. Other technical means such as images, speech and semantic recognitions are also being deployed simultaneously to help teachers better deliver lessons tailored to students’ ability, and help parents understand children’s dynamics.
The Beijing-based institution is currently present in 31 provinces, covering more than 1,600 counties, with more than 10,000 centers, and is serving at least 16 million students across China, with a renewal rate of 89.5%.
TAL Education Group (好未来), one of Ai Xue Xi’s biggest rivals, is also shifting from B2C to B2B training. Schools in lower-tier cities have poorer access to education resources, hence the 2B model would be a perfect fit in these cities. With more new rivals entering into the 2B market, Ai Xue Xi is expected to experience a tighter competition.
According to QianZhan, China’s K12 education industry has been showing a positive outlook, with a market size exceeding CNY 500 billion (equivalent to USD 71 billion) in 2018. The market grew at a Compounded Annual Growth Rate (CAGR) of 13.2% during the 2012-2018 period.