VIP sparring was sold: once the top in the industry

Image source @ Visual China

Text | Pencil road

The long-dormant online education and quality education market has broken a big news.

Xiaoyin coffee group, known as the "most well-known offline music and art counseling platform", announced that it has completed the wholly-owned acquisition of VIP sparring, the "largest online music sparring platform in China", and has become its sole shareholder.

During the epidemic, two Shanghai education companies finally chose to huddle together for warmth.

Endorsed by the piano prince Lang Lang, he was shot by GSR Venture Capital for 4 consecutive rounds... VIP sparring has always been one of the top streams in the online music education track. According to Pencil Road, the valuation of VIP sparring is close to $1 billion.

However, the pain points in business models such as uneconomical scale, high operating costs, and difficulty in solving teacher problems have made the online music sparring industry enter a period of rapid elimination after a short peak.

In 2021, affected by the "double reduction", the operation of major platforms is difficult, and platforms such as Yuzu practicing and fast sparring have fallen one after another. As one of the head players, VIP sparring is also negatively plagued by problems such as app removal, false publicity, and difficulty in refunding fees.

"Capital's vision and expectations for the music education market are good, but some of the logic of capital in this industry may not work." An investor analyzes the pencil road.

Independent listing is not successful, and mergers and acquisitions have become a new option. Under this premise, VIP sparring can be regarded as providing a new development sample for the quality education track.

Jinshajiang threw four rounds in a row, and Lang Lang endorsed it

On April 11, Xiaoyinca Group announced that it had completed its wholly-owned acquisition of VIP sparring and became its sole shareholder. After the acquisition was completed, VIP Sparring's brand and business line remained independent.

According to the enterprise investigation, Xiaoyinka Group was founded in 2015, and in 2019, it was invested by Shanghai Youth Industry (Group) Co., Ltd., a subsidiary of Shanghai Jiushi (Group) Co., Ltd., to provide a music and art platform for more than 40 kinds of musical instruments, mainly providing music and art tutoring for children aged 4-16.

For this merger, Li Ai, founder and CEO of Xiaoyinka Group, told the media, "The acquisition of VIP sparring is based on the common musical and artistic dreams of both parties, and the two sides will fully grasp Shanghai's cultural advantages in the field of music and art, strong alliance, complementary advantages, and development exploration in new fields between the two sides." ”

According to the data, VIP sparring is an online musical instrument sparring application software developed by Shanghai Miaoke Information Technology Co., Ltd. Since its inception in 2014, the company has begun to experiment with the Internet + music education model.

In 2016, VIP sparring pioneered the "live one-on-one online instrument sparring" model, focusing on solving the practice problems of 6-16-year-old children. The new education model has allowed VIP sparring to begin to rise rapidly and become the "star" of online education. In just 3 months, VIP sparring has completed two rounds of financing, pre-A and A rounds of financing invested by GSR Ventures.

Starting from the user's pain points, VIP sparring does have certain innovations, which solves various problems that parents cannot tutor, have no time to supervise, and cannot solve problems encountered by piano children after class. As of 2018, VIP sparring has been claimed to have a team of professional sparring teachers with thousands of people, and for the online sparring mode of piano, violin, accordion and guzheng, tens of thousands of piano children in more than 14 countries have become its paying users in two years, and the daily scheduling of classes on the platform has exceeded 10,000 sessions.

In 2018, when the domestic online education is crazy, VIP sparring has also become the darling of capital. At the beginning of 2018, it received Series B financing from GSR Ventures, Orchid Asia, Feldspar Capital, Tencent Investment and Lanchi Venture Capital. At the end of 2018, VIP Sparring once again completed a US$150 million Series C financing, led by Tiger Global Fund, followed by old shareholders such as Tencent, Orchid Asia, GSR Ventures, Lanchi Venture Capital, Changshi Capital, and Beijing Hualian Changshanxing.

While becoming one of the "top streams" in the online sparring industry, in 2019, VIP sparring also invited Lang Lang, the "top stream" of the piano industry, as a "brand ambassador". It is worth noting that Lang Lang also participated in the investment of another online sparring platform "Xiaoyezi Piano" and served as a spokesperson.

In fact, before the news of mergers and acquisitions once again became the focus, VIP sparring was also negative.

In 2021, the Ministry of Industry and Information Technology issued a notice on the list of apps that infringe on the rights and interests of users, and many apps, including VIP sparring, suspended their violations in accordance with the law and directly removed them from the shelves due to the existence of infringement of user rights and interests. In addition, media exposures reflecting false publicity and difficulties in refunding VIP sparring are not uncommon. VIP sparring is also frequently on the hot search because of the problem of sparring teachers being "squeezed salary".

Epidemic + double reduction: Online music platforms are struggling to survive

Compared with the online K12 subject counseling industry, the domestic online music sparring industry has a short history of development, and several institutions with better development in the industry were basically established around 2015.

After the establishment of VIP sparring, platforms such as fast sparring, yuzu piano training, Finger, fun sparring, and panda piano sparring appeared in groups. Xiaoyezi Music, which started with hardware, has also begun to test the new business of online sparring; the head of the 1-to-1 online quality education sub-brand "palm sparring" has expanded to the music discipline; and platforms such as music notes and Meiyue piano have also added online music sparring services on the basis of the original online music teaching.

The data shows that between 2016 and 2018 alone, more than 20 companies with music sparring as their main business have emerged, of which 40% of institutions have received investment.

For the music sparring industry, Ye Bin, founder and CEO of Xiaoyezi, once said: "For a long time, the pain points of learning musical instruments have been difficult and expensive. 'Difficult' makes it impossible for many people to stick to it, while 'expensive' makes music learning impossible to popularize. "The online sparring has solved the pain points of expensive courses, difficulties, irregular teachers' time, and difficult appointments in the traditional sparring mode in the past, improving the efficiency of students' practice and reducing costs."

However, the online sparring platforms that solve the pain points of students are difficult to solve their own pain points in the business model. The scale of live one-on-one sparring is not economical and costly, and enterprises also have to invest quite high costs in platform technology and user operation. Lu Wenyong, CEO of Fast Sparring, has previously admitted, "It seems to be a simple online live broadcast, allowing teachers to accompany children to practice the piano." But in my opinion, [the company] didn't have hundreds of millions of dollars to start with, and it might not be able to do it. ”

Therefore, the incident of online sparring institutions thunderstorming due to the break of the capital chain often occurs. In August 2019, the real online piano sparring institution "Yusi Piano Sparring" was suspected of running away, the lesson fees of more than 100 students did not land, the online sparring teachers were also owed wages, and the person in charge of the company replied to the media that "the company's capital chain has been broken." ”

Just over a year later, on the evening of November 30, 2020, Yuzu Lianqin also issued an announcement on the official public account: due to the market environment and poor management, the company has been in a state of loss, and there has been a cash flow break, the company has been insolvent, can not continue to operate, and has started bankruptcy liquidation legal procedures. After that, Yuzu Practice disclosed the follow-up progress on the official WeChat, saying: "Fast Sparring" will provide Yuzu training students with sparring assistance courses worth 500 yuan and 1,000 yuan, and users can voluntarily choose according to the remaining value of their own lesson packages.

Unexpectedly, a year later, the fast sparring partner who supported Yuzu's practice also encountered a crisis a few months later. In September last year, Fast Sparring issued a notice to stop the "live sparring business". After the introduction of the "double reduction" policy, the news of educational institutions running away from the road and thunderstorms was frequent, causing parents to panic and run the refund. After less than two months, the fast sparring partner also declared bankruptcy with a paper announcement.

It said in the announcement, "The recent industry turmoil, we have also been greatly affected, the company is experiencing huge operational challenges and pressure, the original planned to complete a new round of financing in the near future, but also due to a variety of industry factors were suddenly told to cancel." We are facing an unprecedented test of survival, and after many efforts, we still have little effect. ”

If external factors accelerate the collapse of the platform, but the serious homogenization of products in the online sparring industry and the low competitive barriers are the root causes of the platform being forced to withdraw from the competition. "In the case that the product does not have too high barriers and is easy to be imitated and interpreted, when faced with competition, the competitiveness of enterprises will quickly become lower, and the overall revenue will be squeezed." This is a common problem in the entire music education industry. Wang Feng (pseudonym), an investor in the education track, once said to Pencil Road.

Online and offline integration, the way out of music education?

"In recent years, the music education industry has been the key direction of capital in the field of quality education, and sparring is just needed in music education, so it has also been favored before." Fang Xin (pseudonym), an investor in the education sector, told Pencil Road.

But it's one thing to be optimistic, it's another to be willing to invest in real money. After experiencing the norms of the education and training industry, practitioners and investors are also more calm and pragmatic. Today's investors will pay more attention to whether the business model of the invested enterprise is innovative, whether the business has a new extension, etc.

After the completion of the acquisition of VIP sparring, Li Ai, founder and CEO of Xiaoyinca Group, said, "This means that the largest online music sparring platform in China and the most well-known offline music and art counseling platform are merged into one to form the largest children's music and art group in China." ”

The music sparring model was once considered easy to replicate, but it wasn't so easy to scale up quickly. Fang Xin believes that the acquisition of VIP sparring by Xiaoyin Cafe can, to a certain extent, the combination of online and offline can help it quickly expand to the whole country "with points and areas". But even with the combination of online and offline, the inherent problems of the music education industry have not been completely solved for the time being, especially in terms of teachers.

In fact, there are many K12 educational institutions that have tried to enter the music education market many times before, but after each industry study, the conclusion is "difficult to do", or even "impossible to do".

Compared with other education categories, the music education industry is close to the traditional "tutoring model", unlike K12 education, which can be taught "one-to-many", and music education pays attention to "one-to-one". Whether it is VIP sparring, or the fast sparring that fell down before, Yuzu practicing, or other offline music training institutions are the same.

Especially in the field of music sparring where VIP sparring is located, the strength of teachers is more critical, which is the biggest industry threshold and determines the attractiveness of the entire educational activity. However, in actual operation, the number of high-quality music teachers in the industry is difficult to match the number of students, and the head of the master music teachers is very scarce, which has led to the problem of music sparring has always been in short supply. The one-on-one sparring model also makes it difficult to achieve scale, and the business scale of the platform depends entirely on the number of teachers, and the marginal effect is difficult to reflect.

The level of sparring teachers is uneven, and there are very few really good teachers, and they are often replaced, resulting in unsatisfactory sparring effects. Even because there are not enough qualified sparring teachers, many platforms have the behavior of impersonating graduates by college students. "This is also one of the reasons why many peers are doing AI sparring business." Earlier, a relevant practitioner told Pencil Road.

However, due to technical reasons, allowing AI to help children learn to practice the piano cannot completely solve the relevant pain points.

"Capital's vision and expectations for the music education market are good, but some of the logic of capital in this industry may not work." In the view of the industry in the music training market, music education is heavy on teaching quality and user experience, respect for the essence of education, respect for the current rules of the industry, design products and services for the real just needs of target users, use the most direct way to make profits, users are willing to pay for the high-quality products they need, and enterprises can continue to survive.

In fact, compared to rapid expansion, there are now many music education practitioners who emphasize "slower".