Meishubao, an education brand owned by Beijing Yiqi Network Technology, said on Tuesday that it has completed its $40 million C1 fundraising led by Tencent.
Existing investors including Bluerun Ventures, Hony Capital, Welight Capital and BHG Long Hills Capital all joined the round.
Meishubao is an online drawing education platform, which targets children between kindergarten age up to 12 years old. Founded in 2014, the company has 6,000 online teachers. Children can post their artwork online, and receive teacher’s comments within the app.
It began its one-on-one drawing education service last year. Meishubao claims about 40,000 students at the moment and monthly sales of its education service have already reached Rmb40 million ($5.8 million), the startup said in its release.
Proceeds will be used to upgrade Meishubao’s online education system and to develop a co-managed capital pool using students’ tuition fees.
The company is aiming for annual revenues of Rmb700 million this year. It plans to release augmented reality classes and mini class training later this summer, to appeal to customers who can’t afford one-on-one classes.
Investors closely follow trends in Chinese education. Art and music are back on the radar of parents ever since Jiangsu province in eastern China said that plans to take art and music into consideration for the high school entrance examination from 2020. It is also a hint for private equity investors to pour resources into this sector and grab market share before it’s too late.
In August last year, the government released a guidance document, suggesting legislation to regulate online education businesses. Two recommendations in particular stand out: not to charge fees more than three months in advance, and that teachers who tutor exam subjects need qualifications.
If this guidance becomes legislation, it will cause headaches for online art platforms. Currently, most art teachers don’t have a state-approved qualification. And limiting tuition fees like that could reduce cashflow for all online education platforms.
Meishubao received its $4.6 million Series A funding in 2014 from Shunwei Capital and others. It completed its $32.1 million Series B fundraising in October last year.