(Yicai Global) Sept. 18 -- Online education service provider Lele Ketang has completed its USD40 million Series C funding, the proceeds of which will mainly go toward talent, content research and development, and technology for kindergarten-to-grade 12 education in lower-tier Chinese cities.

International education technology investment fund Owl Ventures led the financing, while many of Beijing-based Lele Ketang’s existing shareholders like China’s Morningside Venture Capital, Lightspeed China Partners, New Oriental Education and Culture Industrial Fund and US-based BlueRun Ventures followed up, the firm said in a Sept. 16 statement.

Lele Ketang mainly targets classroom education for primary and middle school students in third- and fourth-tier cities, Mao told Yicai Global. Finding an education model that fits actual local conditions is the key to its success. “Education companies can only truly succeed if they delve deep into localities, understand the real needs of their institutions, parents and students and help them soothe their pain points,” Mao added.

Ma'anshan and Wuhu in eastern China typify two geographically close cities that use different textbooks and entrance exams, which sows the localization of teaching with such difficulties, Mao stated.

Lele Ketang does not deprive its local educational institution partners of their own brand operations when cooperating with them to develop a local market, and they also need not pay franchise fees to it, and this reflects the features of the company’s localized teaching, he told Yicai Global.

The education and training market in China’s big cities is on fire, but high-quality education resources are always scarce outside these major metropolitan areas, Zhu Tianyu, managing partner of BlueRun Ventures, told Yicai Global. This affords market opportunities for companies like Lele Ketang.

The company has achieved profitability and its cash flow and profits have stayed positive since 2018, Mao Ying, its founder and chief executive, said in an interview with Yicai Global. The firm’s revenue topped CNY200 million (USD29.6 million) last year, 80 percent of which came from pure online education services with the rest from offline education demonstration centers.

Lead investor US-based Owl Ventures also recently invested in Yanka Industries, operator of US online teaching platform MasterClass, and Indian educational technology company Think and Learn Private, which owns the popular BYJU'S teaching app.

Editors: Tang Shihua, Ben Armour