AI star­tups win record 19.3 bil­lion yuan in fi­nanc­ing

China Daily (Hong Kong) - - BUSINESS - By JING SHUIYU jing­shuiyu@chi­

China’s ar­ti­fi­cial in­tel­li­gence-fo­cused star­tups re­ceived record fi­nanc­ing of 19.3 bil­lion yuan ($2.87 bil­lion) in the first half of 2017, with mid- and late-stage deals dom­i­nat­ing across the pe­riod, ac­cord­ing to a re­cent re­port.

The same re­port pre­dicted that the in­dus­try is very likely to “en­ter an ad­just­ment pe­riod” in the next half year.

Ac­cord­ing to a re­port con­ducted by, a Chi­nese web­site ded­i­cated to tech-in­vest­ment data, the num­ber of deals in AI-en­abled star­tups in the coun­try reached 96 in the first six months. Top ver­ti­cals in­clude health­care, au­to­mo­bile, se­cu­rity, fi­nance, logistics and ware­hous­ing.

The na­tion­wide deal­mak­ing spree echoed China’s am­bi­tions for core AI in­dus­tries. In July, the cen­tral gov­ern­ment out­lined a na­tional plan aim­ing to grow the in­dus­try to 150 bil­lion yuan by 2020, 400 bil­lion yuan by 2025, and 1 tril­lion yuan by 2030.

Yang Lei, manag­ing direc­tor of North­ern Light Ven­ture Cap­i­tal, said the com­pany has been pay­ing close at­ten­tion to AI star­tups with do­main ex­per­tise at a ba­sic level.

“Un­der­ly­ing tech­no­log­i­cal in­no­va­tions of­ten pro­vide high bar­ri­ers of en­try, and could com­pete with tech heavy­weights,” Yang said. “In this sense, any break­through would count for much.”

Also, the ven­ture firm, which over­sees 10 bil­lion yuan, is eye­ing op­por­tu­ni­ties on the ap­pli­ca­tion layer.

“Self-driv­ing tech­nol­ogy is a tril­lion-dol­lar in­dus­try… In this cat­e­gory, star­tups adept in­ter­dis­ci­pli­nary con­nec­tion and ver­ti­cal in­te­gra­tion can stand out,” Yang said.

He cited, which is cre­at­ing ar­ti­fi­cial in­tel­li­gence soft­ware for au­tono-

clinched in AI-en­abled star­tups in the first half of this year

mous ve­hi­cles us­ing deep learn­ing.

Ac­cord­ing to, AI in in­tel­li­gent ro­bot­ics is the lead­ing cat­e­gory for deals in 2017 so far, ac­count­ing for nearly one-third of to­tal deals. Com­pa­nies lever­ag­ing nat­u­ral lan­guage pro­cess­ing, a sub­set of AI, re­ceived the most cap­i­tal.

Part of the rea­son be­hind the fore­cast of an “ad­just­ment pe­riod” lies in the im­bal­ance in cash flows be­tween the well-funded and early-stage com­pa­nies, the re­port said, cit­ing lat­est fig­ures.

Al­most 60 per­cent of the cap­i­tal went to the top five com­pa­nies in terms of fund­ing. By con­trast, only 21 per­cent flowed to AI-re­lated star­tups in se­ries-A round and ear­lier, which are still rel­a­tively nascent and ac­count for 77 per­cent of to­tal deals.

Some busi­nesses in com­puter vi­sion and im­age, cloud com­put­ing equip­ment, nat­u­ral lan­guage pro­cess­ing and aided driv­ing are poised for growth. Those fo­cus­ing their ef­forts on sen­sor com­po­nents, laser radar, and tech­no­log­i­cal plat­form are still at early stage.

There are two bot­tle­necks, ac­cord­ing to Yang Lei, that slow the com­mer­cial­iza­tion of ad­vanced AI tech­nolo­gies.

“The ex­ist­ing com­puter ar­chi­tec­ture, the the­ory be­hind the de­sign of a com­puter, is not spe­cially built for AI ap­pli­ca­tions. The other one is the lack of tal­ent (among peo­ple who are) knowl­edge­able about both tech­nol­ogy and in­dus­try devel­op­ment,” Yang said.

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