Chinese online education service provider leo1v1.com faces financial crisis as the rift between the company and its incubator widens with a legal battle. The company allegedly failed to return tuition fees to its existing customers, and defaulted on staff salary, according to sources.
Le01v1.com apparently put up posters in their office saying the services have been suspended due to an ongoing legal battle.
According to reports, leo1v1.com, co-founded by Wang Haibing, is an incubated company of Taomee (淘米网络). The latter sued Haibing for harming the company’s interest, following which, leo1v1’s bank account with RMB 100 million was judicially frozen.
At the time the company secured Series A funding last year, leo1v1 was still hiring android algorithm engineers, full-time teachers and sales consultants. Now that its cash flow is cut off, all the projects are paralyzed.
With no refund and worried about the loans taken for the courses, parents of about 4,000-6,000 students all over China are seeking to safeguard their rights through online petitions and labour arbitration.
Even though the one-on-one e-education pattern received a big wave of investment earlier this year, many of them have failed to progress. The lack of feasible income and weak financial model makes it difficult for them to sustain in the long run. Beyond that, many of the platforms are also involved in digital lending to enable the student to pay their tuition fees.
According to a report by Jiemian.com, a Shanghai based news portal, the one-on-one e-education model is being questioned due to low-profit margins, poor quality of service and inefficient results.
In an effort to address the concerns of the users, on October 26, a symposium was held in Beijing by the Ministry of Education to push forward the rectification of off-campus training institutions. Local governments were asked to adhere to comprehensive policies and accelerate reforms.
(Reported by Xintong Chen, an intern at The Passage.)