According to 36kr, children's critical thinking training startup Spark Education has received a staggering USD 30 million from ByteDance's nemesis Kuaishou.
It is reported that Kuaishou has been in contact with the firm since the end of last year. Other than this Spark Education is also in the process of raising a new round of financing, with a target of between USD 100 million and USD 150 million.
Almost a year ago, in March 2019, Spark Education announced the series C financing round of USD 40 million led by Northern Light Venture and followed by Sequoia China and other investors. Five months later, the firm announced the second round of financing of USD 85 million backed by renowned investors such as KKR and GGV. The company completed four rounds of financing in less than three years.
As an online critical thinking platform for children, Spark Education offers a one-to-many online interactive live small class, and strong interactive game links to develop students' core ability of thinking, concentration and other core skills. It is focused on the young mathematics thinking training.
According to the same source, in 2019, Spark Education’s annual revenue was CNY 550 million, and the monthly income at the end of the year was about CNY 85 million which has increased to CNY 150 million as of March 2020 amid the epidemic.
Since the company’s products and services have a good reputation in the industry, its main user growth comes from word of mouth, which results in lower customer acquisition costs. It is reported that the current referral rate of the firm is 82% with a 75% renewal rate.
Although the track is still not very mature the firm might face competitors. The online education unicorn VIPKID released its mathematical thinking education (considered a type of quality education) platform Luna Education (噜啦数学), which targets children from ages 5 to 10.
Another New Oriental, DCM China-backed platform, VIPthink (豌豆思维), which focuses on the same track recently announced that it is making profit with a user renewal rate of about 80%. Besides being the fastest growing firm in its field, the firm emphasized that the current user growth rate is fast, and the average monthly growth rate since its launch has reached 100% month-on-month.
We have mentioned before how giants from other industries are venturing into the education industry. This is actually the second time Kuaishuo has invested in an education startup. Kuaishuo’s short video app Kwai is the toughest competitor of the world-famous app TikTok. TikTok’s creator ByteDance has already shown an interest in entering the education industry by either launching its own education products or investing in startups. This move by Kuaishuo shows that it considers the situation created by the epidemic in the education industry as a window of opportunity to enter the field to widen its revenue streams and compete with its arch-rival Bytedance.