Knowbox, an Alibaba-backed online education startup, is reportedly laying off a large number of its employees, according to local media Beijing News.
An account verified to be a Knowbox employee broke on Maimai, a Chinese career networking app known for sharing anonymous gossips about local internet companies, that the company was letting go of 40% of its employees as it failed to monetize its business model.
The coding department was dismissed, in addition, both the tutoring center and the business development units were scaled down massively. An anonymous source on Maimai also said that the company was expecting more job cuts in the coming months.
Knowbox did not confirm the large-scale layoff and instead said that the company is undergoing a normal structural optimization when contacted by Beijing News on Thursday.
Knowbox, founded in Beijing in 2014, specializes in providing online question banks to students, parents, and teachers. The company teaches the subject through games and contests and has 3.7 million daily active users.
The edtech firm closed its Series D round in May with a USD 150 million investment from Chinese tech titan Alibaba. It has also received investments from big-name investors, including YF Capital, Legend Star, TAL Education, and JD founder Richard Liu.
Knowbox is not the only online education provider that has been forced to cut down on employees to survive, as the overall online education sector is still in hot water.
Chinese online education company Hujiang has reportedly laid off around 1,000 employees across all business units and corporate functions, amid other cost-cutting adjustments and optimizations to appeal to the capital market, local tech media 36Kr reported.
Gogokid, Bytedance’s online education platform, had a massive layoff involving more than 70% of its employees in April. Another Bytedance-owned online tutoring service, AiKID, has reportedly suspended its operation for four months as of April.
The online education market in China has been struggling with extremely high costs to acquire customers. As a result, many players are still far from profitable after burning a large amount of cash to win over customers. An industry insider disclosed that it will cost online education startups more than RMB 1,000 (USD 142.5) to gain one customer, and more than 80% of the startups are still in the red, said local media National Business Daily.
36Kr is KrASIA’s parent company.