With the rise of middle class and growingly anxious parents, China’s K12 online education market reached a size of $4.4 billion in 2017 and CAGR of over 30% since 2012. VIPKid, an EdTech platform founded in 2013 in Beijing, matches K12 students in China with teachers in North America for real-time English tutorials. VIPKid currently connects over 500,000 paying students with over 60,000 teachers.
Function of the Platform
Similar to how Uber matches riders and drivers, VIPKid’s virtual classroom allows a student in China to have a 1:1 live session with a teacher in the United States (see Chart 1). The curriculum is based on the U.S. Common Core State Standards. Students pay on average $3000 annually to enroll in VIPKid’s curriculum. Teachers get paid at $14-22 hourly rate depending on assessment and reviews.
Interesting Elements of VIPKid
Untapped market segment
VIPKid tapped into a market segment where parents couldn’t afford international school’s tuition yet still want their kids to have customized learning experience taught by native English speakers. Existing offerings such as lectures or 1:1 offline tutoring are either ineffective or expensive. VIPKid came in to address this market segment.
Product: Immersive learning experience at affordable rate
Prior to taking the course, students will go through an initial test to assess their English level followed by course recommendations. The preview animation videos in each module raise kid’s interest in the class. After each class, kids will be asked to do the review in the form of games. This product offering ensures that kids have an immersive learning experience that’s effective and fun.
Highly selective faculty
Teachers at VIPKid have to go through a series of interviews and background check before officially onboard. Besides, VIPKid requires all teachers to obtain the TESOL (Teaching English to Speakers of Other Languages) certificate. Teachers are constantly evaluated by parents for performance.
Personalization: As mentioned above, VIPKid provides kids with customized and immersive learning experience.
Flexibility: Students can schedule a class whenever and wherever convenient.
Access to native speakers: Students at VIPKid have access to native English speakers in North America to learn both pronunciations and cultures.
Flexibility: Teachers can work from home and manage their own schedule.
Make money while having fun: Teachers can use their free time to make money and enjoy interactions with students globally.
Skip course planning and grading: Lesson plans are provided by VIPKid. Teachers just need to review the material a few hours before a class.
VIPKid’s referral scheme encourages teachers to refer teachers, and parents to refer parents to grow its user base both on the supply side and demand side. VIPKid also spent aggressively on PR to build its premium brand image. For example, Kobe Bryant was invited as VIPKid’s spokesman.
VIPKid’s platform is fueled by its strong technological capability. Its network system “Starry Cloud” installed five transpacific cables to ensure streaming quality and keeps latency under 200ms.
Backed by leading investors such as Coatue Management, Sequoia Capital and Tencent, VIPKid received checks that totaled $825 million since 2013. The most recent round in April 2018 valued the company at over $3 billion.
The Road Ahead
In 2017, VIPKid launched Lingo Bus, a product focused on teaching Mandarin to kids globally. We can imagine how similar products could be launched for other language vectors — for example, teaching French to a Japanese student. VIPKID’s potential might just be at the tip of the iceberg.
 iResearch. “2018 China’s Online K12 Education Report.” http://www.iresearchchina.com/content/details8_45510.html, accessed February 2019.
 VIPKid. “About Us.” https://www.vipkid.com.cn/web/about, accessed February 2019.
 VIPKid Teachers. “About VIPKID, FAQ.” https://www.vipkidteachers.com/faq, accessed February 2019.
 Kuang, Shi. “Perspective IVIPKID: Leading Online K12 English Tutorial Sector via Brand Positioning and Curriculum Edges.” GF Securities, September 15, 2017. https://wenku.baidu.com/view/b50424b9b9f67c1cfad6195f312b3169a551ea11.html, accessed February 2019.
 Business Wire. “Kobe Bryant Announces Investment in Chinese Education Company VIPKID.” August 23, 2016. https://www.businesswire.com/news/home/20160823005760/en/Kobe-Bryant-Announces-Investment-Chinese-Education-Company, accessed February 2019.
 “VIPKid’s Technological Capacity.” 21st Century Business Review, September 30, 2018. https://baijiahao.baidu.com/s?id=1612917196257861129, accessed February 2019.
 Crunchbase. “Funding Rounds, VIPKid.” https://www.crunchbase.com/organization/vipkid#section-funding-rounds, accessed February 2019.
 Lunden, Ingrid. “China’s VIPKID, which links English tutors with online learners, raises $500M at $3B+ valuation.” TechCrunch, July 2018. https://techcrunch.com/2018/06/21/chinas-vipkid-which-links-native-english-speakers-with-online-learners-raises-another-500m-reportedly-at-3b-valuation/, accessed February 2019.
 Business Wire. “VIPKID Launches New Chinese Online Learning Platform Lingo Bus.” August 23, 2017. https://www.businesswire.com/news/home/20170823005630/en/VIPKID-Launches-New-Chinese-Online-Learning-Platform, accessed February 2019.