iHuman online education company files for IPO in New York

COVID-19 has accelerated a global boom in educational technology and remote learning, and China is no exception. Established companies and startups are targeting everyone from toddlers to university students.

Just this month:

• China Online Education Group, a New York–listed company, reported earnings of 493 million yuan ($72.14 million), above expectations.
• Online education platform Yuanfudao said it would raise $1.2 billion ($175.5 million) in a new funding round, which will value the company at about $13 billion.
• A startup called Zuoyebang, which claims to be “China’s largest online education startup providing tutoring to primary and secondary students,” says it enjoyed a “390% surge in paid users this summer.” This came after the company raised $750 million in a fundraising round in June.

This week, a startup called iHuman (洪恩教育 hóng ēn jiàoyù), which was founded in 2016 and makes educational apps and games — “edutainment” in their jargon — filed for an IPO on the New York Stock Exchange, hoping to raise around $100 million.

• The company’s intended customers are parents as well as educational institutions. Products offered so far are targeted at young children, focusing on Chinese and English languages, and math.
• In their prospectus, the company says revenues nearly doubled from 131.9 million yuan (19.3 million) in 2018 to 218.7 million yuan ($32 million) in 2019, from 1.4 million paying users.

Takeaways

There’s no doubt that this is a growing sector, especially in China where many parents are willing to sacrifice almost anything to give their children a better education.

But caveat emptor: the space is perhaps becoming a little too frothy. One sign that this is already happening: the U.S. Securities and Exchange Commission is probing GSX Techedu, which offers online after-school classes for K-12 students after short sellers accused the New York-listed tutoring company of inflating its sales numbers.

Another thing to note: Despite U.S-China tensions, Chinese companies’ appetites for raising money in America markets seem undiminished.