Baidu’s smart device and edtech bets seek fresh funds, multibillion-dollar valuations

Baidu has entered a deal to seek new funds for its smart device unit Smart Living Group at a post-money valuation of about US$2.9 billion
Zuoyebang, which spun off from Baidu in 2015, is also said to be looking to boost its valuation to US$10 billion with a new round of funding

Baidu

Josh Ye

Published: 5:15pm, 1 Oct 2020

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Baidu’s smart device unit and online education platform Zuoyebang – which spun off from the Chinese search engine giant in 2015 – are both seeking new funds, with each said to be expecting to be worth billions of dollars after their latest funding rounds.

On Tuesday, Baidu announced that it smart device unit, Smart Living Group (SLG), had entered into a definitive agreement with CPE, Baidu Capital and IDG Capital for Series A financing at a post-money valuation of about 20 billion yuan (US$2.9 billion). The transaction is expected to close in the fourth quarter of 2020 subject to “certain closing conditions”, Baidu said in a press release, adding that it will be the majority shareholder of SLG and hold super voting rights after the deal.

SLG is best known for its Alexa-like DuerOS voice assistant, which powers its Xiaodu smart speakers. In June, Baidu said that its Xiaodu smart speaker system supports 110 million devices – such as rice cookers and air conditioners – by 400 home appliance brands including Midea, Haier and Skyworth.

On Wednesday, Reuters also reported that Zuoyebang, China‘s largest K12 online education platform which spun off from Baidu in 2015, was seeking around US$650 million in a new round of funding to boost the company’s valuation to US$10 billion.

Baidu and Zuoyebang did not immediately respond to separate requests for comment for this story. The Reuters report quoted a Zuoyebang spokesman as saying “the numbers” were not accurate, without providing further details.

China’s Midea, Baidu team up on AI-powered smart home appliances

The new funding rounds reflect investor interest in Chinese tech companies, which have been among the few beneficiaries of the coronavirus pandemic, as the stay-home economy supercharges the country’s digitalisation.

The number of voice queries on Xiaodu devices reached 2.8 billion in June this year, nearly double the number during the same period last year, according to a Baidu press release in August.

According to market data firm IDC, Baidu shipped about 15 million Xiaodu speakers in 2019, making it the second-largest player in China following Alibaba Group Holding and ahead of Xiaomi.

(Alibaba is the parent company of the Post.)

Beijing-headquartered Zuoyebang has also seen enormous growth in the past few months, with its number of monthly active users reaching over 170 million in June. The company raised US$750 million in a Series E fundraising in June from investors including New York-based Tiger Global and Chinese private equity fund Fountainvest Partners.

This article appeared in the South China Morning Post print edition as: Two Baidu units seek more funding

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