Online education site Codemao closes $58 million Series C, planning STAR IPO

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(Image credit: Codemao)

Codemao, a Chinese online education platform that teaches programming to children, announced on Monday the completion of a RMB 400 million ($57 million) Series C, raising the company’s total funding to more than RMB 1 billion.

Why it matters: The funding may help the company, one of the sector’s top fundraisers, compete in China’s online science, technology, engineering, and math (STEM) education segment which has been garnering attention from investors, the government, and consumers.

  • Attention to STEM is on the rise amid government efforts to bolster its pool of high-tech talent in support of China’s ambitions to achieve global leadership in core technologies.
  • K-12 and STEM education is expected to be one of the largest segments in China’s education market, which will reach RMB 2.68 trillion ($381 billion) by the end of 2018, according to Deloitte in August 2018.

Details: Along with its funding news, the firm announced that it is preparing to float shares on the Shanghai Stock Exchange’s science and technology innovation board, known as the STAR Market.

  • The Russia-China Investment Fund (RCIF) led the round with participation from a consortium consisting of Hillhouse Capital Group, SAIF Partners, Everbright New Economy Fund, Technology Financial Group, Southern Publishing, and others. Existing backers including Crystal Stream Capital, Cheetah Mobile, and Green Pine Capital Partners also joined the round.
  • The new proceeds will be used for research and development of its curriculum and technology-driven services as well as the listing.
  • The Shenzhen-based company said it has registered more than 31.47 million users and partnered with 11,500 schools.
  • In addition to the domestic market, Codecat is expanding to overseas markets including Thailand, Vietnam, Malaysia, US, and UK.

Context: Founded in 2015 by programmers Li Tianchi and Sun Yue, Codemao is a graphic programming tool platform built for kids between four and 16 years old.

  • The company’s top line surged more than ten fold in 2018, bolstered by revenue from the Nov. 11 Singles Day promotion, which brought in more than RMB 10 million, the company’s founder and CEO Li Tianchi said in January.
  • Revenue for H2 2018 neared RMB 1 billion and the company expects to break even in 2019, Li said.
  • The company joined Tsinghua University and the Beijing Institute of Technology to compile a centralized rating system which ranks coding abilities in minors.