English-learning Service 51Talk Raises $12 Million Series B Financing from Funds backed by Xiaomi’s CEO

51Talk is an English-learning service which provides one-to-one course on oral English. It recently secured $12 million of Series B funding from Shunwei Venture Capital, a fund backed by Xiaomi’s CEO and co-founder Lei Jun. The company previously raised angel investment from ZhenFund in 2011 and several million dollars in Series A from DCM at the end of 2012.

Founded in 2011, 51Talk offers e-learning courses at more affordable prices (around 40 yuan per hour), around one fifth of the prices of its offline peers. The company currently has more than 1,000 foreign teachers, mainly from Philippine, and more than 200 operation staff.

The capital raised this time will be injected to product R&D, marketing and branding. Additionally, the company planned to develop homegrown communication tool to replace currently adopted ones like Skype and QQ.

Online education sector attracted the eyes of venture capitalists since the first half of this year and recorded strings of fundraising cases. But the craze ebbed while the competition in the sector tensed up. English-learning division alone reportedly recorded more than 100 startups, including 91Waijiao and Kingsoft’s Haowj, which are backed by big Internet companies, as well as Talk915, which is developed by telecom equipment supplier ZTE.

English-learning industry is facing a major reshuffle as a lot of companies plan to draw back from the over-crowed market, just like the case in group-buying business, said Huang Jiajia, founder of the company.

Gong Haiyan, founder of the US-listed dating site Jiayuan and English-leaning site 91Waijiao, recently shifted focus to K-12 e-learning by releasing Tizi (ladder in Chinese), a full-round platform for K-12 education besides school hours.