eLearning platforms gain momentum in China amidst global pandemic
Today, the online education sector is increasingly attracting the attention of investors in China. The online learning platforms are thriving and breaking records by the number of users amid the current global coronavirus pandemic. Within the beginning of April alone, Chinese online education platform Yuanfudao has raised US$1 billion from investors. Notably, this is the largest ever fund-raising deal in the history of the Chinese education sector. Following this deal, the Yuanfudao startup is now valued at nearly US$ 8 billion. The Beijing-based online education company Yuanfudao offers virtual classes for school and university students, as well as online testing and other homework support.
“The confidence in the reliability of online education platforms is the main reason for investing in this sector. Investors believe that the educational technology startups are the financially stable companies for the long-term partnership,” said partner at the Oliver Wyman consulting company Claudia Wang, who focuses on education and private equity practices.
In February, the funding in the edtech sector increased four times compared to the last year and reached US$312 million. In March, nearly eight Chinese eLearning platforms attracted more than US$14 million investment each. The education platform that offers online English lessons for children is among them.
“There is a fierce competition for the segments of kindergartens and schools in the market. Many platforms, which offer preparatory courses for entrance exams and study abroad are currently increasing their user base, although they still earn relatively little while the level of expenses is high. We pay more attention to the platforms that train professionals for developing areas. The vocational training platforms also have great potential,” said Zhuang Lee, a partner at the eLearning company.
To date, over 100 companies promote eLearning programs in China. In 2019, the Chinese online education sector was estimated at US$56 billion, and the number of active users exceeded a quarter of a billion students. Experts say that this year the eLearning market can exceed 300 million users, and its value will grow to US$63 billion.