AI, IPO, Tech

China’s AI-Powered English Teacher LAIX Files For US$100M US IPO

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Chinese artificial intelligence (AI) firm LAIX Inc. which operates the online English language learning platform Liulishuo, is planning to hit the US market with an initial public offering size of US$100 million, according to the prospectus.

LAIX had confidentially filed for floating IPO on June 13, 2018, without disclosing any financial terms. But the company had confirmed Morgan Stanley and Goldman Sachs as the joint underwriters on the deal. The company would trade under the ticker symbol "LAIX".

Upon completion of the offering, the company’s three founders, Wang Yi, Hu Zheren and Lin Hui, will own majority of the voting power.

The company will use the proceeds for research and development, selling and marketing and general corporate purposes.

Backed by IDG Capital, Trustbridge Partners, GGV Capital, and CMC Capital Partners, the Shanghai-based LAIX had introduced its flagship English language learning app Liulishuo in 2013.

The company’s IPO comes at a time when China is becoming one of the world’s most promising online education markets, thanks to its growing household spending power, an under-supply of education resources and the introduction of the two-child policy.

The size of the English language learning market in China, as measured by revenue, reached about RMB228.8 billion (US$33.5 billion) in 2017.

The market is expected to grow at a compound annual growth rate (CAGR) of 19.6% between 2018 and 2022 to reach RMB548.8 billion (US$80.5 billion) by 2022, according to a Chinese market research and consulting company iResearch.

"Given the broad potential for AI applications for learning, AI-powered online education has a large total addressable market and high growth potential globally and in China," the company said in the filling.

As of June 2018, LAIX has 83.8 million users globally . The company’s average active monthly users has grown to 7.2 million in the first six months of 2018 from 4.4 million in 2017, it said.

The company witnessed an increase in the number of paying users from 815,700 in 2017 to over one million in the first half of 2018. Despite the rise, the company has reported revenue loss of US$27.5 million in the six months through June.

In July  2017, Liulishuo had secured roughly US$100 million Series C financing round jointly led by CMC Capital Partners and Wu Capital.

The company provides a course package with a freemium model to attract users and additional purchasable service. The company began monetizing its product in 2016.

The English learning app Liulishuo, which literally means "speaking fluently" in Chinese, is an AI-powered online education platform that delivers personalized English learning service to consumers.


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