Chinese online education unicorn Yuanfudao has raised a $1 billion Series G at a valuation of $7.8 billion, making it one of the most valuable ed-tech companies in China.

Why it matters: The massive deal highlights renewed investor attention to the online education sector, which surged during the Covid-19 outbreak as millions remained sequestered at home.

  • Yuanfudao, focused on the K-12 age group, competes with rivals like Vipkid, Zybang, and 17zuoye. The sector is already crowded in China where parents are more than willing to spend heavily on their children’s education.
  • The financing is a rare deal during the epidemic which has all but frozen venture capital investments, leaving startups struggling for funds. Meanwhile, a G round of financing is also relatively unusual.

Details: Company CEO Li Yong announced the financing in an internal letter made public on Monday. The company did not respond to requests for further comments.

  • Private equity firm Hillhouse Capital led the round with participation from existing investors Tencent and IDG Capital, as well as Boyu Capital.
  • The deal would raise the company’s total funds received to nearly $1.8 billion.
  • Li said the firm’s K-12 online training course has registered more than 1 million long-term users who paid full price for their services. Zebra AI, its English-learning app for kids 2 through 8 years old, claims 500,000 students.

Read more: Tencent leads E-round funding in Chinese online educator Vipkid

Context: Founded in 2012 by former Netease employees, Yuanfudao now says it has more than 400 million users.

  •  The company operates various programs including question database Yuantiku, question search Xiaoyuansouti, and English learning app Zebra AI.
  • The programs are conducted in various forms including livestreaming and video replay.
  • Tech giant Tencent has stacked its chips in the sector though building home-grown ed-tech services and via external investments. Tencent has also invested in Vipkid.
  • Yuanfudao has earned support from other big-name investors including Warburg Pincus, Matrix China, New Horizon Capital, and CMC Capital Group.

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.