NetEase Youdao Completes Its First Strategic Funding, Getting the Firm Admitted into the "Unicorn" Club with a Valuation of $1.1 Billion

BEIJING, April 27, 2018 /PRNewswire/ -- NetEase Youdao, China's largest online education brand in terms of user numbers, announced the completion of its first strategic funding on April 17. This round of financing, led by MOOC-CN Investment and co-participated by Legend Capital, with China Renaissance exclusively serving as the financial advisor, has elevated the firm's valuation to $1.1 billion. The successful funding round marks a milestone that Youdao has recently hit for becoming the third independently financed firm of NetEase, following the firm's the other two affiliate brands - NetEase Cloud Music and NetEase Weiyang. In the meantime, it also brought Youdao into the "unicorn club" of China's Internet companies.

In his keynote speech delivered at the press conference, William Lei DING, the founder and CEO of NetEase, said that online education is powering the exponential growth of the Internet industry, in which NetEase Youdao had emerged as a major player.

Feng ZHOU, the Senior Vice President of NetEase and CEO of Youdao, said that this landmark financing round, the very first and strategic one for Youdao, will help the firm deepen its commitment to creating values for its users. By developing the best-of-class content of courses and substantially increasing its investment in R&D of educational technologies, Youdao is set to provide users with a better and more enriching experience, and to unleash the potential of every individual through education.

During the conference, NetEase Youdao also unveiled for the first time its "TEACH" model for online education. The model showcased in the conference is comprised of Youdao's five key business segments: "T" represents the pool of users that learning APPs (Tools) have helped create, and by that standard Youdao has already been the largest Internet education brand in China; "E" denotes a mutually beneficial relationship that has been maintained by the firm with top-tier teachers (Educators), who have been strictly selected and in the meantime, adequately empowered to carry out their teaching; "A" stands for artificial intelligence (AI), centering on which an array of cutting-edge education technologies have been developed, especially in terms of translation and learning scenarios; "C" means quality content, representing the company's endless and determined quest for high-quality content for education; "H" represents hardware, an area where Youdao has reaped invaluable word of mouth and sales volumes since launching its first intelligent hardware product - the Translation Egg - at the end of last year. Additionally, the firm also announced two more upcoming intelligent hardware products in the conference - Youdao Translation Egg (2nd generation) and Youdao Dictionary Pen.

Presently, NetEase Youdao has emerged to be China's largest Internet-based education brand in terms of user numbers. The firm is now serving more than 800 million Internet users from China, with the number of Youdao Dictionary users exceeding 700 million in early 2018. NetEase Youdao is operating an array of mass education products, including utility and online education offerings, that are highly valued by users, such as NetEase Youdao Dictionary, Youdao Course, Youdao Translator and Youdao Note, etc. By the end of December 2017, the utility APPs operated by NetEase Youdao had grown to be a product matrix with 17 million daily active users, while Youdao Course had also been brought onto a fast-growing track. The revenue of paid services increased by 530% in 2017, as compared with that in 2016.

Dr. Yu ZHANG, a partner of MOOC-CN Investment, said, "As an education foundation established by MOOC-CN Education, a core affiliate to Tsinghua Holdings engaged in the sector of modern education, MOOC-CN has long been dedicated to seeking and investing in top-quality companies in segmented areas of education. We highly appreciate the cumulation that NetEase Youdao has achieved in terms of technology, product offering and word of mouth among users over the years, as well as the vast development prospects it commands in online education. Building on our partnership at the capital level, MOOC-CN Investment will work closely with Youdao to facilitate in-depth cooperation with Tsinghua University and the MOE Research Center for Online Education. In the meantime, we will leverage our quality education resources to help Youdao export its brand, enhance its teaching research and channels, and bolster its business synergy with other member firms, so as to improve its product experience and influences in online education area, enable it to better integrate technology into education, and ultimately improve quality and promote equality in education.

Rui CHEN, the general manager of Legend Capital, said, "Legend Capital has long been focusing on the development of the education industry. As a leading brand in online education, NetEase Youdao has provided users with a wide range of top-class products, which have significantly helped the sharing of quality education resources and improved users' learning efficiently. With a grand vision and outstanding capacities in technology and product development, the management team of Youdao is bound to lead the firm to greater accomplishments in the future."

This financing round marks an increasingly open mindset held by Youdao, as well as its long-term determination and planning for business in education.

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