“Elusive” profits cause Chinese online education apps to close

Increasing numbers of Chinese online education start-ups are set to close this year due to problems maintaining a profitable status. This comes in stark contrast to 2015 when the online education sector was a popular choice of business model for venture capital with around 19 out of 90 start-ups receiving funds of more than $20m, and a handful receiving upwards of $100m. However, many of these platforms have failed to build a long-term, sustainable business capable of turning a healthy profit and have been forced to close. More than 30% have already exhausted their finances and have closed as a result; a state of affairs that has daunted some venture capitalists from investing further in the sector as they see it as being unlikely that they will receive worthwhile return on investment.

After a flood of venture capital into the sector over the past two years, many online education start-ups are shutting down due to unprofitable business models