Should changes, stabilize expansion, and control risks, the future can be expected.

Editor’s note: This article from the micro-channel public number “Multi whale” (ID: DJEDUINNO), of: Siqi.

In the past few months, several K12 giants frantically “absorbed money” in the primary and secondary markets, occupying the largest and most active seat in the education capital market in 2020 .

“Sucking money” is not only reflected in the amount of a single financing, but also in the frequency of financing:

  • On November 9th, New Oriental listed on the Hong Kong stock market for the second time. It opened 16.05% higher on the first day and the issue price was HK$1190. It became the first one thousand shares in the history of Hong Kong stocks. The amount of financing from the issue is expected to reach 117 to 13.48 billion. Hong Kong dollar;

  • Followingly, on November 13, Good Future announced that it had received US$1.5 billion in investment. The investor is a global growth investment company;

  • On December 7, GSX issued an announcement stating that several investors had agreed to purchase newly issued shares of the company totaling approximately US$870 million;

  • On December 29, it just got a good future of US$1.5 billion, and announced a US$3.3 billion private placement agreement with Silver Lake Capital and others, including US$2.3 billion of convertible bonds and US$1 billion of newly issued Class A Ordinary shares.

The financing in the secondary market is surging, and the primary market is also not idle.

Ape tutoring and homework help, the two received 300 million US dollars and 1.6 billion US dollars in December respectively, becoming the largest single financing in the education industry at the end of the year. It is not the first time the two companies took money last year. Yuandaodao raised funds in March, August, and October of 2020. With the financing in December, four rounds of amalgamation reached 3.5 billion U.S. dollars, while Job Gang reached 2.35 billion U.S. dollars through two rounds of financing. Shocked.

For the top players of K12 education and training, such frequent large-scale financing is undoubtedly a full preparation for the next round of competition.

As a battleground for military strategists, on the one hand, the K12 cake is still getting bigger. According to Frost & Sullivan’s research, the K12 outside school tutoring market has reached 619.1 billion yuan in 2019, and by 2024,This scale will exceed one trillion, with a compound annual growth rate of 13.6%. The expansion of the market scale is not only fast, but the “rigid demand” behind the growth has also become more obvious and certain in the unprecedented pressure of competition for further education and job hunting. Not only offline education and training, online training is also rapidly increasing, and has long become the main battlefield for the next round of competition. By 2024, the online K12 penetration rate is expected to exceed 40%, reaching the level of a 300 billion market, and its growth rate will far exceed offline.

On the other hand, the K12 teaching and training track itself has gathered many players, not only traditional offline starters such as New Oriental and Good Future, but also online-based such as Ape Guidance, GSX and Homework Assistant, and Cross-track entrants like ByteDance are eyeing.

Although the head organizations all started from different vertical fields and each had their own dedicated track, they were all expanding their boundaries in order to break the operating bottleneck. When business boundaries began to overlap, users in the center became the focus of contention, and competition began to intensify.

Since the war has begun, how to arm yourself with capital, consolidate the foundation, and build a moat is the most important issue for everyone who enters the game.

What is a moat for education companies? After the cash-burning and customer acquisition battles in the summer and winter, I am afraid that everyone who enters the game will fully realize that customer acquisition is only the first step, and retention, renewal, repurchase and new acquisition after customer acquisition are the key indicators to test the company’s operating results. . The current competition is far from a competition of a single element. The comprehensive capabilities of the team’s teaching and research capabilities, content quality, organizational capabilities, service capabilities, and market resilience are the key to the success of educational enterprises. Therefore, if companies in a fast-growing period want to continue to appreciate, and companies in a stable period want to break the situation, they must rely on the power of capital. The ability to make good use of capital and build one’s core competitiveness is related to life and death.

Education companies need money, and on the other hand, capital is willing to “transfusion”.

From the perspective of financing amount, Ape Coaching and Job Gang accounted for nearly 80% of the financing amount in the primary market of the education industry last year. Capital is undoubtedly going all the way to the top The company places a bet. And those who pay attention to this track are also the top funds of the primary market: IDG, Hillhouse, Sequoia, Softbank, Jingwei, etc. have participated in multiple rounds of financing of Yuanjiao and Jiabao.

The K12 market structure itself is extremely fragmented, but in recent years there has been a trend of accelerated integration. The top five training institutions