By Ashley Galina Dudarenok China was one of the first countries to contain the COVID-19 epidemic with relative success, and the economy is better for it. The National Statistics Bureau reported 4.9% growth in China’s Q3 GDP year-on-year, showing improvement against both its 3.2% growth in Q2, and [...]
With rounds ranging from $100 million to $1 billion, here’s a snapshot of 2020’s most well-funded APAC edtech companies
This year has been massive for edtech platforms, accelerating a much-needed transformation in the way education is planned and delivered.
The edtech market was already expected to grow to US$252 billion by 2020, and continue to increase to $350 billion by 2025. Further, global venture capital investments in edtech reached $7 billion in 2019, reflecting a growth of 14x since 2010.
This growth can largely be attributed to the fact that while global education is a colossal industry, it has been slow to catch up with digitalization and technological intervention. COVID-19, however, changed this significantly.
The global pandemic caused schools in over 190 countries to close at its peak in April. Subsequently, this year has seen substantial amounts of money flowing into edtech startups, especially in its fastest growing regional market, Asia Pacific.
APAC edtech companies raised a total of over $1.2 billion in the first half of 2020. In the three months following, they raised an addition $1 billion, cashing in on $2.2 billion in disclosed funding so far, according to data on Crunchbase.
From this pool, nearly $2 billion was raised by six APAC edtech companies alone. Here are the biggest winners that have emerged triumphant from 2020’s edtech funding spree.
Edtech companies Eruditus, Vedantu and Wanxue Education raise big tickets
Unlike its popular K-12 counterparts, Singapore-headquartered education startup Eruditus focuses on professional education programs and online certifications. The company raised $113 million in September this year, in a Series D round led by Leeds Illuminate and Prosus Ventures.
Some of the world’s most elite educational institutions count as its partners, including MIT, Columbia, Harvard, Cambridge, INSEAD, Wharton, UC Berkeley, IIT, IIM, NUS and HKUST. The company’s Series D round reportedly valued the company at $700 million.
In another Series D round, a similarly valued edtech startup from India raised a similar amount this year. With a valuation of $600 million, Vedantu is India’s second-most valued startup after Byju’s.
The edtech startup raised $100 million in Series D funding in July this year, led by U.S. tech investor Coatue. The funding came on the heels of $30 million that the company raised across two Series C tranches this year.
Interestingly, Vedantu counts Tiger Global, an investor in Byju’s, as one of its backers. Tiger Global even led the company’s Series A round in 2015 and a Series C round in 2019.
Another edtech platform to have raised $100 million this year is China’s Wanxue Education. A 2006-founded education company based in Beijing, Wanxue Education raised the funding from Hong Kong-based private equity investor ADV Partners and Beijing-based Index Capita.
The Baidu-backed company caters to students at or above the university level, offering postgraduate training, entrance exam tutorship, and admission consulting services.
Huohua Siwei nears unicorn status
2017-founded Huohua Siwei, a Chinese edtech startup based in Beijing, raised $150 million in a Series E1 funding round led by investment top dog KKR in August this year.
The round also saw participation from notable institutional investors GGV, GSR Ventures, Longfor Capital, Sequoia China, and IDG Capital, and grew the company’s funding pool to a total of $340 million.
All of the company’s Series E1 investors, including lead investor KKR, are returning backers of the company. In fact, this is the second time KKR is leading a funding round for the company. Both KKR and GGV Capital had led the first tranche of Huohua Siwei’s Series D round in 2019 for $85 million.
The company was reported to be nearing the close of its Series E2 round, which would take its valuation up to $1 billion, making it one of China’s latest unicorns.
In addition to the fundraise, the edtech startup also announced the launch of its English tutoring solution, a learning course for children aged 3-5 years.
Huohua Siwei offers AI-enabled math education and critical thinking courses for children between the ages of 3 and 12. The company focuses on three core areas in this sphere–spatial thinking and graphics, computing power, and logical reasoning.
The company rakes in $29 million monthly revenues with over 250,000 paying students, according to its CEO and Founder Luo Jian.
Earlier in the year, Huohua Siwei had raised $30 million from Chinese video-based social media app Kuaishou as part of an ongoing Series D round.
Byju’s makes headlines with a series of announcements
Byju’s is the world’s biggest edtech unicorn, and has become to edtech what WeWork once was to co-working. The company smashed through multiple major milestones in 2020, including a series of funding rounds and the acquisition of WhiteHat Jr for an all-cash deal.
The company was founded in 2011, although the app launched only a few years later in 2015. The India-based company kickstarted 2020 with fresh funding to the tune of $200 million from General Atlantic in February as part of an ongoing round.
At this stage, the edtech company was valued at nearly $8.2 billion with a total capital haul of around $1.3 billion.
The company had 3 million paying subscribers at the time and expected 2020 revenues to cross $400 million, twice its revenues in the previous year. Interestingly, the company had only spent about $300 billion from its capital pool as of March, saving the larger part of it for exploring markets outside India.
By April, Byju’s founder Byju Raveendran had become India’s youngest billionaire. The company’s user base grew 3x during India’s lockdown and the company eventually became one of the world’s top 10 most downloaded edtech apps according to an April report, mostly on account of free app access due to the pandemic.
In Mid-2020, Byju’s raised a further round of funding from global tech investment firm Bond. Although the funding amount was not disclosed, the deal valued the edtech platform at $10.5 billion, unlocking decacorn status for Byju’s and making it the second most valued startup in India.
Just two months later, it raised a further $122 million at the same valuation from DST Global. The company’s total capital raise for the year stood at $550 million at this point.
Byju’s funding bout continued well into September, when it announced that it had received even more funding, this time from Silver Lake. While the company did not disclose the amount of funding, reports suggest that the company had raised $500 million in the Series F round.
Further, the company’s user base also grew by a million new joiners within the year, taking its annual paying subscribers to 4.2 million.
Yuanfudao’s $1 billion funding cheque
Yuanfudao’s valuation jumped up to $7.8 billion this year after it raised what was one of the biggest funding rounds this year so far.
The 2012 founded company is an online education platform whose offerings focus on K-12 education. Yuanfudao facilitates live online tutoring from teachers across China, and the startup claims to have over a million paying users on its platform.
Overall, the company is noted to have over 400 million users and 11 teaching and curriculum development centers across China, and between January and mid-March, ranked first in-app purchases in China’s education category.
Announced in the far end of March, Yuanfudao’s $1 billion Series G funding round put Yuanfudao at the center of a very small group of companies that have raised such substantial amounts this year.
This includes Qingju’s $1 billion venture round, GO-JEK’s $1.2 billion Series F, Epic Games’ $1.5 billion venture round, WM Motor’s $1.5 billion Series D, and funding rounds of over $2 billion by Waymo and Ke.com.
Hong Kong-based Hillhouse Capital and Yuanfudao’s existing investor Tencent led the company’s funding round, with participation from Boyu Capital, IDG Capital, and Matrix Partners’ China wing Matrix Partners China.
The Chinese edtech platform’s Series G round is its largest fundraise yet, with earlier rounds bringing in amounts of anywhere between $7 million to $300 million, according to data on Crunchbase.
Three of the six biggest APAC edtech funding rounds noted in this article came from companies in China, an apt representation of the country’s lead within edtech.
Of the world’s 19 edtech unicorns, over half are based in China. Moreover, in the first half of 2020, U.S. edtech companies raised over $800 million in funding, a figure beaten single-handedly by Chinese edtech unicorn Yuanfudao’s $1 billion funding round.
Its neighbor India, too, is catching up. The subcontinent recorded four times the investment inflows in its edtech sector this year, as compared to 2019, raising a total of $1.5 billion so far.
Subsequently, APAC edtech companies are well poised to maintain their lead when it comes to the burgeoning edtech market, spearheaded by developments in these two giant economies, and supported by efforts from Southeast Asia.
Header image by awesomecontent on Freepik