Baidu-backed Chinese online tutor Zuoyebang raises US$750 million from Tiger Global and Fountainvest

Children hoping that school closures meant a break from homework were sadly disappointed as teachers took to online education during coronavirus-induced lockdowns.Next week, 10.71 million Chinese students will sit the gaokao, a notoriously gruelling university-entrance exam that can play a decisive role in shaping their future. Many of these pupils have been preparing online.Investors have been quick to catch on to the wave of digitisation in education. They have flocked to back start-ups that promise to upgrade the conventional schoolroom using artificial intelligence and the internet.One such start-up is Chinese online tutor Zuoyebang, which has raised US$750 million in a Series E fundraising from investors including New York-based Tiger Global and Chinese private equity fund Fountainvest Partners, it said on Monday on its social media WeChat page.Beijing-headquartered Zuoyebang is one of the largest of the 131 fundraisings across the Chinese education sector so far this year, which have raised a total of US$1.11 billion. This value is on par with the same period a year earlier despite the difficulties of bringing investors and start-ups together during lockdowns, according to data collected by alternative assets tracker Preqin.Also known as zhibo.zuoyebang.com, which means “homework help” in Chinese, the start-up offers teaching resources to students from kindergarten to grade 12 by leveraging technology and the internet. Online education sector could be among biggest beneficiaries of Covid-19The start-up claims to have monthly active users of over 170 million and the number of paying students has gone up by more than 10 times in the past two years.Other investors in Zuoyebang’s latest fundraising included sovereign wealth fund Qatar Investment Authority, venture capital investor Sequoia Capital China, SoftBank’s Vision Fund 1 as well as Chinese investment firms Tiantu Capital and Xiang He Capital.Competition is heating up in the sector. New Oriental Education & Technology and TAL Education Group have already listed in the US and are mulling a secondary listing in Hong Kong, according to people familiar with the matter.Founded by Hou Jianbin in 2014, Zuoyebang was spun out of Baidu a year later and is already a unicorn, a private company valued at over US$1 billion. A spokeswoman confirmed that Baidu is still a shareholder in the company.Zuoyebang started as a platform where students could upload their homework onto the platform and search for answers. It has since developed live-streaming courses.Zuoyebang’s last fundraising was in 2018 when it corralled US$350 million, and it raised US$150 million in a Series C round in 2017.China’s Taihecap gave financial advice on the transaction.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.