Chinese Online Education Entrepreneurs Flock to K-12 Market

For a long time, the categories Chinese online educational services cover are English/language-learning, test preparation or professional development. There were after-school classes ran by school teachers (many are conducted in teachers’ homes) or private schools to help K-12 students get higher scores in exams, but few was Internet-based.

Since last year, a flock of online services for K-12 education have appeared on China’s Web. Some are developed by people from the tech industry and some by the existing private educational services. Investors have invested tons of money into China’s online/mobile education services. Now they seem to have been convinced by the big number of the newly emerged that online K-12 is the unexplored and the next big market for private education.

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Gong Haiyan, founder of US-listed dating service Jiayuan decided in late 2012 that online education could be promising enough to be her next endeavour, has shifted focus from English training to K-12 not long after 91Waijiao, a live English tutoring service, was launched.

The first for K-12 is Tizi.com, a site for students to study or teachers to work on, or interact with each other or with parents. Another one, Nahao.com that is launched earlier this month, is for online live classes.

91Waijiao was making some RMB1 million in monthly revenue when Nahao was launched, according to Ms. Gong, but the business had been spun off then. She said it wasn’t that she gave it up as the tutors on 91Waijiao could teach K-12 students on the other two sites later.

Ms. Gong’s online education business is funded by Xu Xiaoping, co-founder of New Oriental Tech & Education Group (one of the most successful private education companies specializing in English training in China) and seed fund ZhenFund, and NetEase, an early mover in online education and Coursera’s partner in China.

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17zuoye (Doing homework together) is similar to Ms. Gong’s Tizi.com. The company was initially founded in 2007. It drew much attention when Wang Qiang, co-founder of New Oriental Tech & Education Group and also co-founder of the aforementioned ZhenFund, joined it as chairman in 2011. ZhenFund would invest several million yuan (around US$1 million) into it and invited a former New Oriental high-level exec to join it as CEO in the same year.

As of June 2014, 17zuoye claimed it had had 7 million primary school students sign up. The company announced US$20 million funding in Series C last month (July 2014), at a valuation of US$100 million, that brought the total to more than US$35 million as of today.

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Yuantiku, which started as a social learning platform built in 2012, has pivoted to online question& problem database and practice tests for all kinds of exams in China. It launched in September 2013 a version for China’s national college entrance exam, which every Chinese high school student who wants to have college education is supposed to take, and decided to offer it for free later the year. In June 2014 the company would announce 1.5 million users preparing for college entrance exam on the service.

The one for grade one and two of high school students was launched in May this year. Another one for high school entrance exams is under development.

Yuantiku announced US$7 million in Series B funding in August 2013, and would announce US$15 million in Series C last month (July 2014) at a valuation of US$125 million.