(Bloomberg) — Chinese online education startup Zuoyebang raised $1.6 billion in a funding round that attracted Chinese e-commerce giant Alibaba Group Holding Ltd. as its latest investor, underscoring how the Covid-19 pandemic has turned distance learning into a red-hot business.
Existing backers Tiger Global Management LLC, Softbank Vision Fund, Sequoia Capital China and FountainVest Partners also participated in the funding, Zuoyebang said in a statement. The latest round comes months after Zuoyebang, which also counts Goldman Sachs and GGV Capital among its investors, raised $750 million in June.
Investors have poured into the sector this year as more students embraced e-learning, a trend that has been accelerated by school closures amid the pandemic. China’s online learning market is expected to reach 315 billion yuan ($48 billion) in 2020, almost tripled from five years ago, according to global market data tracker Statista.
Loosely translated as “homework assistant,” Zuoyebang is a spinoff of China’s search engine titan Baidu Inc. Founded by former Baidu executive Hou Jianbin, the five-year-old startup offers live-steaming classes as well as other remote study services to more than 170 million monthly active users across the country. On any given day, at least 50 million students — the equivalent of the entire population of Spain — are using its platform, the company has claimed.
The fresh funding will help Zuoyebang level the playing field with major rival Yuanfudao. The online tutoring startup backed by Tencent Holdings Ltd. and Hillhouse Capital said in October it’s hit a $15.5 billion valuation after closing two funding rounds worth $2.2 billion.
Nationwide, Chinese education startups have attracted at least 47.6 billion yuan in investment in the year till Dec. 18, according to market research firm Zero2IPO Group.