Luckin’s Early-stage Investor Pours USD 100 Million into E-learning SaaS Company
The rising trend of the corporate training industry is aiding in the growth of Yunxuetang, which is taking advantage of SaaS and the full-stack service delivery model.
Centurium Capital has led a USD 100 million Series D round of funding into a corporate training SaaS vendor Yunxuetang (YXT.com, 云学堂), betting on a tenth of the trillion-yuan enterprise training market.
Centurium Capital is an early-stage investor of Luckin Coffee (LK:NASDAQ), a Chinese challenger to Starbucks. Yunxuetang’s existing investors YF Captial and SIG followed in the deal, leading its Series B and Series C round, respectively. Edging closer to a top player, Yunxuetang is going to improve its professional service quality and build a content-driven ecosystem using this round of investment.
Founded in 2011, Yunxuetang positions itself as a corporate training solution full-stack provider. It provides online education courses for enterprises in 11 different industries. The company has observed a rising trend in cloud technology and thus replaced its old model of selling off-the-shelf software (COTS) to Software-as-a-Service (SaaS) between 2013 and 2014. In 2017, the company reached 1,000 paying customers among 300,000 customers overall, as mentioned in the China Industry Internet Report 2019 by EqualOcean.
The E-learning market is expected to grow to USD 200 billion in 2023, according to Global Market Insights and a major contributing factor will the high growth of flexible education solutions in the corporate and the academic sector.
China’s corporate training market was valued at around CNY 290 billion (USD 40.6 billion) in 2018, according to a research conducted by Training Magazine (the link is in Chinese). While the global E-learning market has an array of large players including Edmodo, Skillsoft, Oracle and Coursera, China’s corporate training industry is characterized as a segmented market with a large number of small players and not a single industry leader.
As enterprises grow their businesses, the need for training will grow naturally. For large enterprises, applying training courses for employees is a must. Research from Centurium Capital shows that the training budget of small and medium businesses (SMBs) accounts for 0.1% of employee compensation expenditure, the number grows to 2% for large enterprises.
Building businesses in such a market through the SaaS model brings advantages for companies like Yunxuetang and Shanghai-based Taoke (淘课). SaaS gains traction as it allows users to have access to courses on their devices easily and, more important, the online platform is available at any time, at low subscription costs.
However, operating in China’s market and serving enterprises in different industries asks more from E-learning software providers. First, designing specific programs for employees in different levels and operation departments; second, follow-up implementation strategies, for example, the Cloud Services from Yunxuetang.
Yunxuetang’s delivery team helps its clients in every aspect, from program design, project landing, operating, data analysis, system maintenance and some other outsourcing services. This whole set of services enables enterprises to build their own digital training systems, adding more value than simply selling software offerings.
Yunxuetang's next step of development goes with two strategies. The content of training courses is always the core of this business. Yunxuetang's B2B platform displays courses provided by third-party providers, serving as a marketplace; now, it plans to bolster good-quality training materials with rewards.
Expanding the targeted customer base, on the other hand, is another story. While the courses are all available online, the sales team still needs to penetrate into local markets. The company has two headquarters in Beijing and Suzhou, and branches in 20 major Chinese cities.