Yuanfudao Valuation: Chinese Tutoring App Reaches $15.5 Billion

Established in 2012, Yuanfudao, a platform providing homework assistance, has secured $2.2 billion in funding from investors, now exceeding Byju’s to become the world’s most highly valued edtech firm. The company, headquartered in Beijing, is currently valued at $15.5 billion, representing nearly a doubling of its valuation from March.

The organization considers this new influx of capital as extensions to its previous funding round in March, specifically a $1 billion Series G financing. The G1 portion of this round was spearheaded by Tencent, with contributions from Hillhouse Capital, Boyu Capital, and IDG Capital. The G2 financing was led by DST Global, and also included participation from CITICPE, GIC, Temasek, TBP, DCP, Ocean Link, Greenwoods, and Danhe Capital.

These funds will be allocated to the development of educational materials and the expansion of Yuanfudao’s online learning services, coinciding with a significant increase in remote education. In 2018, the company informed TechCrunch that the majority of its income originated from the sale of live courses. At that time, its objective was to invest in and integrate more artificial intelligence into its offerings, as well as enhance the user experience.

Over the past two years, Yuanfudao has seen its user base grow to 400 million students throughout China. The recent funding indicates a continued emphasis on live, online courses and the further development of its comprehensive learning ecosystem.

Currently, Yuanfudao provides a diverse range of services, including live tutoring sessions, an online question-and-answer platform, and a tool for checking math problems.

Yuanfudao’s extensive physical presence, encompassing 30,000 employees in teaching centers across China, is expected to support its online service delivery. In 2014, the company established an AI Research Institute and a technology laboratory in collaboration with leading academic institutions, such as Tsinghua University, Peking University, the Chinese Academy of Sciences, and Microsoft. The intention is to directly apply the insights gained from this institute to the app’s functionality. The company believes AI can help identify student areas of difficulty, enabling improvements to both teacher curriculum and product design.

Across Asia, the education sector demonstrates strength due to consumer expenditure and a cultural emphasis on educational achievement. Consequently, the transition to digital learning has further stimulated an already thriving education market. One analysis suggests that the education market in China alone could reach a value of $81 billion within the next two years.

As noted by colleague Rita Liao, Yuanfudao is not the sole competitor in the pursuit of dominance in the tutoring market. Other companies with substantial funding include Zuoyebang, a Beijing-based startup concentrating on online learning that recently raised $750 million in June; and Yiqizuoye, which counts Singapore’s sovereign fund Temasek among its investors.