According to iResearch, China’s online education market is projected to grow to $40 billion in 2019 from $23.5 billion in 2016. Riding this wave are China’s leading Internet giants Baidu, Alibaba Group Holding, and Tencent, who have invested heavily in online education. A beneficiary of this interest is Yuanfudao, which early this year became the first Chinese Billion Dollar Unicorn in the sector.

Yuanfudao’s Journey

Beijing-based Yuanfudao was founded in 2012 by former NetEase employees Yong Li, Li Xin, and Shuai Ke. Formerly known as Yuantiku and Fenbi.com, it provides an online tutoring platform targeting primary and secondary school students in China who want to improve their test scores. It connects students with tutors who livestream through the platform.

It initially offered several programs like vocational exam training platform Fenbi, question database Yuantiku, and question search Xiaoyuansouti that together have over 160 million of student users. The company has a paying user base of over 1 million. Its online tutoring courses range from primary school English, Mathematical Olympiad to all-subject courses in secondary school.

Chinese parents place a premium on education and spend an average of about $580 per year on their child’s private or buke classes, with some parents spending close to $12,149 a year. For them, Yuanfudao’s online courses with fees ranging from RMB 3 to RMB 399 ($0.45 to $60), offer a convenient and affordable alternative. Its live streaming service to provide one-on-one tutoring is priced at RMB 39 ($5.86) an hour. Available on PC, tablet, and mobile, the app allows a teacher to teach up to 1,000 students simultaneously. There is strong demand for one-to-one online tutoring from test takers in tier-3 and tier-4 cities where good quality teachers are in short supply.

Yuanfudao has been investing top dollar in building up its teacher talent pool. In 2016, it hired about 100 new teachers for an annual salary ranging from $30,000 to $50,000.