The online language school market is continuing to heat up, and a startup that connects English teachers with an audience of students spanning China and 35 other countries for live language tutorials, is helping fan those flames. VIPKID, based out of Beijing, today announced that it has raised $500 million in funding — a Series D+ round that values the startup at over $3 billion.
That valuation was originally mentioned in reports in April when VIPKID was still raising the money, and we have now confirmed it with sources close to the company.
(We’ve reached out to the company to see if we can get more detail on that front.)
This latest growth round was led by a group of investors that include both strategic and financial players: Coatue Management, Tencent, Sequoia Capital and Yunfeng Capital — Alibaba chief Jack Ma’s investment company — were all co-leads on the deal.
For some context on that valuation and how it has soared in the last year, it was in August 2017 that VIPKID raised $200 million on a $1.5 billion valuation. It has now raised some $850 million in financing since being founded in 2013.
The company’s size has soared in that time, too. Last year VIPKID said that it had 20,000 teachers and 200,000 paying students from 32 countries. Now those numbers are at over 40,000 teachers and 300,000 students across 35 markets.
With the bulk of the latter group still coming from China — as we have written before, it’s targeting a very large group of upwardly-mobile parents in the country who are looking to improve their children’s English skills — it looks like VIPKID might be looking to ramp up targeting more markets.
But as with many other two-sided marketplaces, VIPKID also faces a lot of competition on the supply front: as we reported in April, it’s competing against the likes of other Chinese companies like VIPABC, 51Talk, and others to hire English speakers to fuel their live tutoring programs.
VIPKID’s core product is likely attractive to investors because of how it has successfully tapped into more than one growth area in the tech world, namely online education, live video streaming services and e-commerce. Going forward, the company plans to use the funding in three areas, according to founder and CEO Cindy Mi (pictured above), that will help advance all three of these.
“The first is to enhance the student learning experience by adding more leading educational curriculum content and products such as online textbooks, and creating a seamless user experience by enhancing engineering, technology and product,” she said in a statement. “The second is to provide additional tools and assistance to teachers and continued growth of the teacher community to support the increase in product offerings. The third is to leverage the latest advances in machine learning to explore and pioneer the future of learning.”
It’s interesting to note that VIPKID does not seem to be focused right now on moving outside of its core focus of teaching English, and a smaller business called Lingo Bus focused on teaching Mandarin to kids globally. However, you could imagine how the same tools and framework could be used for other language vectors — for example, teaching Spanish to an Indian audience. In other words, VIPKID might just be at the tip of the iceberg in terms of its potential.
Online education is getting fuelled by a massive wave of capital at the moment. VIPKID notes that in the first half of 2018, Chinese K-12 education startups picked no less than $1.5 billion in financing. Further afield, Memrise earlier this month raised $15.5 million; and Blinkist — which condenses non-fiction books in aid of encouraging “life-long learning” — yesterday announced $18.8 million in funding. And Coursera may also be due for a financing injection soon, too.
Within the bigger category, there are some clear leaders emerging, and that is where the bulk of money is going, it seems.
“We believe that VIPKID is transforming the shape of traditional education on a global scale and is providing an excellent new model for future education,” said Philippe Laffont, Founder of Coatue Management, in a statement. “Coatue is excited about VIPKID’s opportunity to integrate outstanding educational resources globally and boost its internationalization process.”
Notably, WeChat owner and Internet giant Tencent works with another online education startup, Age of Learning, meaning there is potential for helping VIPKID also grow using its network effect. “Tencent attaches great importance to investment in online education,” said Lin Haifeng, managing partner at Tencent Investment, in a statement. “We hope to have close cooperation with our most important partners like VIPKID and to help the Chinese education industry explore the global market and the boundaries and possibilities of education.”
Other investors have included Kobe Bryant, Innovation Works, Learn Capital, Sequoia Capital, Matrix Partners and Northern Light Venture.
See more from Cindy Mi speaking to us at Disrupt last September here.