Tencent and Sequoia Pour USD 80 Million into VIPKid's Subsidiary
VIPKid's spin-off unit, which changed its name to Dami Online School, focuses on large online live tutoring for primary students, mainly in English and mathematics.
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.