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 by logging on to tutorial platform such as Zuoyebang.
Investors have been quick to catch on to the wave of digitisation in education during the coronavirus. They have flocked to back start-ups that promise to upgrade the conventional schoolroom using artificial intelligence and the internet for the 170 million K12 students in China.
Zuoyebang, one of the largest in the field, has amassed 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's fundraising is one of the largest among the 131 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.
There will be more bumper fundraisings later this year in e-learning, says Taihecap's managing partner Frank Hu, as start-ups plug the offline gap between educational resources and demand in China's sprawling provinces. About 80 per cent of Chinese live in third-tier cities and below.
"The significance of online education's boom, especially of live-streaming courses, from 2019 to 2020, is no less than ride-hailing and mobile payment opportunities in 2014 and short video in 2017. It's a rare transformational structural opportunity," said Taihecap's Hu.
Also known as zhibo.zuoyebang.com, which means "homework help" in Chinese, the start-up offers online courses to students from kindergarten to grade 12 by leveraging technology and the internet.
The coronavirus pandemic has raised awareness of e-learning, saving start-ups hundreds of millions of dollars in advertising.
The start-up claims to have monthly active users of over 170 million, an all-time high, and the number of paying students has gone up by more than 10 times in the past two years to hit a record 12 million.
The growth rate for enrolment in live-streaming courses was 400 per cent and the retention rate for students was nearly 90 per cent.
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. A spokeswoman said the company had no plans to IPO at this point in time.
China's Taihecap gave financial advice on the transaction.
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