Xueba100 stopped running because of huge debts
At the end of 2020, the Beijing office of Xueba100 ceased operation. The courses were stopped, but the tuition were not refunded. A large number of parents gathered at the Beijing headquarters of Xueba100 to recoup their tuition. Its courses are taking over by 51Talk.
Founded in 2013, Xueba100 is a well-known online education brand. In 2016, it launched an online one-to-one tutoring product. In 2018, VIPKID, 51Talk, Ape Tutoring, Xueersi and others began entering the online education market which was gaining popularity. Advertisement spending grew rapidly as companies focus on customer acquisition. Smaller companies with little financial backup were quickly being squeezed out of an increasingly competitive market.
Xueba100 refused to quit, and in order to keep up with ad spending raised approximately $150 million in financing in 2013. However, as funds began running dry the company encouraged parents to pre-order courses, take out loans to pay tuition, and welcomed in franchisees to provide classes. This move met with initial success as many parents ended up pre-ordering classes in bulk and approximately 150 new Xuebajun franchisees contributed CNY 100 million to the companies depleting funds.
This, unfortunately, was still not enough to keep up with competition and the high advertising fees of Tencent and Byte Dance. By 2020, Ape Tutoring, XueerSi, zybang and Genshuixue spent CNY 1.5 billion, CNY 1.2 billion, CNY 1 billion, and CNY 800 million, respectively, on summer marketing and promotion. The industry’s players were burning through cash, and fast.
As of today, Xueba100 is a whopping CNY 600 million in debt and has stopped operations. About CNY 540 million is owed to 54,000 students, CNY 30 million is owed to suppliers, and CNY 30 million is owed to its employees.
By the way, we have talked about “growth at all costs” by Danke in a previous post.