TENCENT Holdings Ltd.-backed Yuanfudao is seeking fresh funding at a valuation of more than US$20 billion, Bloomberg News quoted sources familiar with the matter as saying yesterday, as the cash-burning battle in China’s online education arena shows no sign of abating.

The Beijing-based tutoring app is planning to raise at least US$1 billion and has held discussions with investors including Boyu Capital and DCP Capital, according to the report. The funding round has yet to be finalized and the size will depend on investor interest, it said.

The latest fundraising comes less than six months after a US$2.2 billion round that valued the startup at US$15.5 billion, the most among edtech companies globally, Yuanfudao said at the time. The tutoring startup is competing with top teaching providers like TAL Education Group as well as the education wings of internet giants like ByteDance Ltd. for a bigger share of China’s private education industry.

Yuanfudao — backed by investors like Hillhouse Capital and IDG — is seeking to boost its valuation ahead of a possible stock market debut in 2022, said the report.

China’s education tech firms are replenishing their war chests after splashing out hundreds of millions to grow their operations during 2020’s pandemic lockdowns. The country’s online education startups attracted a total of US$9.2 billion last year, more than quadruple the funds raised in 2019, according to research firm Zero2IPO Group. In January, close rival Zuoyebang raised US$1.6 billion from investors including Alibaba Group Holding Ltd. and SoftBank Vision Fund.

The country’s education ministry has hit out at questionable behaviors from the companies, ranging from excessive advertising to the use of unapproved teaching materials. Yuanfudao sponsored popular web series as well as China’s annual Spring Festival TV gala this year.

Founded in 2012, Yuanfudao offers a variety of online education products from livestreaming courses to test prepping, with more than 400 million users across China. The firm has also set up offline teaching facilities, with more than 30,000 employees.(SD-Agencies)