HONG KONG -- Chinese online education startup Zuoyebang has raised $1.6 billion in a new funding round that included e-commerce company Alibaba Group Holding for the first time in a sign of high investor appetite for the "edtech" sector amid the COVID-19 pandemic.
Existing backers, including SoftBank Vision Fund, Sequoia Capital's China arm, Tiger Global Management and FountainVest Partners, also participated in the latest round, Zuoyebang said Monday. The inflow comes just six months after the startup brought in $750 million in its fifth fundraising and brings total funding to date to more than $3.4 billion.
Earlier backers of Zuoyebang include Baidu, Goldman Sachs and GGV Capital.
Zuoyebang, Chinese for "homework helper," allows students to search for help with problems by uploading images of their assignment. This free artificial intelligence-powered service is used to attract students and parents to the company's fee-based online and livestream lessons.
Riding on the online learning trend accelerated by pandemic-driven school closures, Zuoyebang has amassed more than 170 million monthly active users -- including 50 million over the past year -- and over 12 million paid subscribers.
About 7.8 million students took Zuoyebang courses last summer, five times the figure a year before. Nikkei Asia previously reported that Zuoyebang was on track to raise staffing this year by 60% to roughly 25,000.
The new funding will be used to expand product offerings and business development, said the company, which was founded by former Baidu executive Hou Jianbin in 2014.
The platform targets Chinese students, ranging between kindergarten and 12th grade, enrolled in the national compulsory education system. According to the Ministry of Education, the country had about 200 million such students as of 2019.
Beijing-based consultancy iResearch valued the K-12 online tutoring market this year at 54.2 billion yuan ($8.28 billion).
Rival Yuanfudao is now valued at $15.5 billion after raising $2.2 billion in new fundraising led by Tencent Holdings and DST Global in October. Chinese technology news site 36Kr reported last week that the company had raised another $300 million with support from Yunfeng Capital, a private equity group co-founded by former Alibaba chairman Jack Ma.
Yunfeng previously invested in VIPKid, another player in the sector.