Education unicorn VIPKID has lesson for investors

The online learning platform has enjoyed success connecting Chinese learners to English teachers in the US. It's now looking to do the reverse.
Cindy Mi, founder and CEO of VIPKID (Photo provided by interviewee)
Cindy Mi, founder and CEO of VIPKID (Photo provided by interviewee)

When VIPKID made the world’s largest single-round fundraising in pre-secondary school education this summer, it inspired investors who foresaw growing demand for online education in China – a sector worth Rmb156 billion ($23.4 billion) in 2016 and projected to reach Rmb270 billion in 2019.

Launched in 2014, online English-learning unicorn VIPKID has become China’s largest education-technology start-up, with more than 200,000 paying students and over 20,000 teachers in the US and Canada.

Among its backers are some of China’s best-known Midas-makers, Sinovation Ventures and Sequoia Capital China, for example, both of whom were early investors and have made consecutive investments in VIPKID’s later fundraising rounds. Its latest $200 million Series D round in August, led by Sequoia, saw internet giant Tencent as a strategic investor to help further VIPKID’s industry penetration.

It charges students and pays teachers on the platform. The fees vary depending on the package. “Our mission is to inspire and empower every child for the future,” founder and CEO Cindy Mi told FinanceAsia.

It is the only e-learning platform in China that has established a community of North American teachers, setting the bar for quality online learning in English. “It’s really important this high-quality service is a one-on-one immersion programme,” said Mi of VIPKID’s courses, which are designed based on the US Common Core State Standards and offer an American elementary education experience to Chinese students aged four to 12. Children in 32 other countries also use the platform.

The process follows a flipped classroom model, with a pre-class video on key learning points, an interactive one-on-one live-stream instruction that reinforces learning objectives, and post-class homework. It also records data throughout the entire learning process (100 terabytes per month), including teachers’ scoring and course contents, enabling research and development toward the next generation of personalised education.

“Data means so much to us…and enable us to understand an entire learning experience of a student,” Mi said. There are over 100,000 classes per day taught on the VIPKID platform, which was developed in house.

Besides the use of data and technologies such as live-streaming, VIPKID's successful expansion and fundraising have been riding on capital's strong interest in China's education sector. This is especially true of the online education sector, which is taking advantage of an undersupply of education resources offline. Investment into China online education has eased off after experiencing a capital inflow frenzy in 2015; still, more than Rmb50 billion has gone into Chinese online education start-ups in the first half of the year, according to internet sector research firm iResearch. 

This year, VIPKID and the Jack Ma Foundation launched an English education initiative for schools in rural China, aiming to reach 200 such schools in two years. And in August, VIPKID launched its Mandarin tutoring service, Lingo Bus, to bring China’s top Chinese language teachers to children across the globe.

VIPKIDS is the last of 10 hot startups FinanceAsia is profiling as part of a series running the rule over exciting companies that are changing the game across Asia. 

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