Chinese artificial intelligence startup Megvii announced on Wednesday that it has raised $750 million after closing the second tranche of its Series D equity funding, showing signs that public investors clearly remain committed to disruptive technologies despite a significant cooldown in China’s private equity market this year.
Among the investors in the Series D round are Bank of China Group Investment, a private investment arm of the state-owned bank, and ICBC Asset Management. Foreign investors such as Macquarie Group and a wholly owned subsidiary of Abu Dhabi Investment Authority, one of the state’s sovereign wealth funds, also participated in the latest funding round.
This brings Megvii’s total fundraising to around $1.2 billion since its inception in 2011, and values the firm at more than $4 billion, according to sources familiar with the situation.
Megvii has been able to secure fresh capital despite the clear reduction in liquidty in China’s private equity market since the beginning of the year. Investors have turned cautious about investing in unlisted companies. That could be partly attributed to the sub-par performance of large private companies that went public last year.
As it stands, Megvii’s Series D funding is the year's second-largest private fundraising in China behind auto trading platform Chehaoduo’s $1.5 billion in March.
“We are excited to welcome these investors to Megvii to help us progress to the next phase of our growth,” said Yin Qi, founder and chief executive of Megvii. “We aim to accelerate our development as a trusted global leader in AI and IoT, empowering humans and enabling industrial progress.”
Artificial intelligence is one of the key industries under Beijing’s “Made in China 2025” masterplan. China wants to achieve significant breakthroughs in AI technology in 2025 and develop solutions across various industries including medicine, infrastructure, manufacturing, agriculture and national defence.
Megvii is at the forefront of China’s AI development. The eight-year-old company is one of the few that has already commercialised AI-enabled solutions.
Commercial banks such as Industrial and Commercial Bank of China (ICBC) and Bank of Bejijng already use Megvii’s facial recognition technology, known as Face++, to help authenticate payments and other banking services. Smartphone developers like Oppo and Vivo also use Megvii’s technology in their mobile devices.
Ant Financial, an existing investor of Megvii and the operator of popular mobile payment service Alipay, developed the so-called “smile to pay” feature using Megvii’s proprietary Face++ technology. It allows users to authorise digital payments without using their smartphones or credit cards.
The company also counts China Life Insurance, China Citic Bank, Foxconn Technology Group, as well as China’s State Taxation Administration among its customers.
Megvii’s proprietary deep learning framework Brain++ serves as an underlying architecture for advanced computing, supported by its data management platform Data++.
The company applies deep learning technology in various internet-of-things applications, including smart cities.
Traffic departments can use Megvii’s deep learning technology to enhance efficiency by controlling traffic lights, identifying free parking spaces and optimising street lighting. Government departments can use the technology to optimise the collection and route planning of waste, maximise energy conservation and minimise water loss, among others.
Megvii is also aiming its deep learning technology at the industrial sector to help manufacturers make their supply chains more efficient. The smart technology has already been applied in some robotics operating systems that allow manufacturers to unpack, assemble and deliver products without human interference.
“Megvii is a global AI technology leader and innovator with cutting-edge technologies, a scalable business model and a proven track record of monetisation,” said Andrew Downe, Asia regional head of commodities and global markets at Macquarie Group. “We believe the commercialisation of artificial intelligence is a long-term focus and is of great importance.”