VIPKid Raises Further Financing from Tencent, Despite Reports of Setbacks
China’s online English teaching unicorn officially announced that it has completed E round of financing with Tencent leading the investment.
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.