China e-learning firms see new trend in investment

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Pursuing long-term profits.

"Education firms' funding rounds have become fewer this year, but the average amount of money raised in a single funding round has grown larger than expected," said Chai Mingyi, associate vice-president of New Oriental Education and Technology Group.

Last year, there were 580 cases of financing to the tune of 16 billion yuan . The number of financing rounds shrunk to 305 this year, but 50 billion yuan has been invested so far, he said.Despite the general economic growth downturn due to the Covid-19 pandemic, online education has been one of the few growth areas in the country. Yuanfudao, a Beijing-based online education startup, raised a whopping US$2.2 billion from two funding rounds in October.

For Warburg Pincus, investments in the education field"cannot blindly chase the speed", as such an approach may create unhealthy conditions and potential risks. Instead, patience is a virtue. After the epidemic, investor sentiment has shifted from optimism to doubts, mainly because the cost of acquiring customers is too high, said Liu Yaokun, head of education industry research at UBS Securities.

 

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