Chinese startup Liulishuo, whose flagship offering is an AI-powered English learning app of the same name, raised up to $71.9 million on its New York Stock Exchange debut and placing the edtech company firmly on the global map.
Liulishuo is the fifth Chinese education company to list in the US after OneSmart, Puxin, Sunlands, and Ambow.
According to KrAsia, the platform operator saw its share surge up by 28% from its opening price of $12.50 apiece to $16 per share as soon as it hits the market.
“The expense of having a private teacher is too high for most families”
However, the share price soon started to fall, trading at $13.67 per share by midday to end the day at $12.65 apiece.
Founded in 2013, Liulishuo, which loosely translates to ‘speaking fluently’, began by offering AI-backed products and services to help Chinese learners of English.
According to China Daily, Liulishuo CEO Wang Yi – a former product manager at Google – returned to China in 2012 and discovered that despite Chinese students’ ability to achieve high grades in written tests, most could not match the equivalent score when it came to tests in spoken English.
“It is mainly caused by the traditional teaching methodology in which a single teacher faces a class of at least 30 students, making it impossible for teachers to give professional advice to every student. And the expense of having a private teacher is too high for most families,” said Wang.
Wang and his partners began to work on the smartphone app that uses AI to provide self-paced mobile language courses that cater to a wide range of users, from beginners to advanced learners.
Liulishuo claims to have amassed more than 80 million registered users as of June 2018, with around 1 million paid users.
Debuting on the NYSE under the ticker symbol “LAIX” at the end of September, Liuishuo planned to raise $300 million at a valuation of $2 billion, but fell short of its target and raised up to $71.9 million.
But Wang said he believed that Liulishuo’s gross profit margin would rise thanks to its business model which counts on AI to serve as English tutors, as compared to traditional education companies that have to hire human mentors.
In response, however, KrAsia editor Ben Jiang said that securing only 24% of its initial intended amount could be “a major roadblock for Liulisuo’s future plans”, amid a fiercely competitive edtech market.
China’s AI-powered online education market size is said to be valued at $537 million and is expected to grow to $25 billion by 2022.
