China AI player Megvii raises $750m Series D

Abu Dhabi Investment Authority, ICBC Asset Management, and Macquarie Group also participated. Megvii is said to be preparing for a $1 billion Hong Kong IPO within the year.

The capital will be applied to technology development in facial recognition and internet-of-things (IoT), as well as the recruitment of customer service personnel, and international expansion. “Megvii is a global AI technology leader and innovator with cutting-edge technologies, a scalable business model and a proven track record of monetization,” Andrew Downe, Asia regional head of commodities and global markets at Macquarie, said in a statement.

Megvii, also known as Face++, provides AI-enabled facial scanning, recognition and analysis technology to customers including China’s Ministry of Public Security, Ant Financial, China Merchants Bank, and Lenovo Group. Security and surveillance is the core business area. Other operations encompass industrial supply chain IoT, identify authentication for financial services, warehouse automation, and smart city applications such as traffic optimization.

The public sector is the biggest user of facial recognition technology and represents the bulk of Megvii operations, with the company’s systems reportedly used for surveillance by police departments in some 260 Chinese cities. The company raised a $450 million Series C round in 2017 led by China’s state-owned Venture Capital Fund with participation from the Russia-China Investment Fund, a private equity vehicle backed by sovereign wealth funds from the two countries.  

Founded in 2011, Megvii is the oldest of a clutch of Chinese facial recognition AI companies that have recently achieved unicorn status. The largest of these is SenseTime, which has raised $1.6 billion to date, including $620 million in Series C funding last year at a valuation of more than $4.5 billion. Meanwhile, Horizon Robotics has raised $600 million in Series B funding, and Yitu has raised $300 million in Series C funding, giving both companies valuations around $3 billion.

China’s emergence as a world leader in AI development is attributed to local strengths in data collection, processing capacity, and policy support, as well as rapid growth in investor interest. Private equity and venture capital in Chinese AI companies increased 3,500% in the past three years to about $5 billion in 2018, while $1.8 billion has been invested so far this year. The uptake has triggered concerns about valuations, commercialization, and the ethics of AI applications.  

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• Topics
• Greater China
• Expansion
• Technology
• China
• Bank of China
• Abu Dhabi Investment Authority (ADIA)
• ICBC
• Macquarie Group
• artificial intelligence
• TMT