Investments

China Leaves US Behind With $5 Billion AI Investment

The influence of the Chinese government plays a key role in attracting investment
China Leaves US Behind With $5 Billion AI Investment
Image credit: Pexels
Entrepreneur Staff
Correspondent, Entrepreneur Asia-Pacific
3 min read

Chinese startups are not shying away from adopting new technologies like facial recognition, artificial intelligence and virtual reality, and there has never been a more exciting time for the country’s AI startup ecosystem.

A recent research by New York-based market advisory firm ABI Research has found that Chinese AI startups raised $5 billion in venture capital funding in 2017 and overtook their US counterparts. The study, which was released on August 27, shows that investors are confident with the technologies developed by Chinese startups, their business strategies, and market potential.

Where The Big Bucks Are

The overall investment value for AI startups increased year on year by a staggering 150 per cent globally in 2017, growing from $4 billion in 2016 to $10.7 billion in 2017, the research says.

Contrary to their US counterparts who raised $4.4 billion of investment from 155 investments, Chinese startups raised $4.9 billion from 19 investments, indicating a sharp focus by the investors on mature AI applications with strong commercial viability and successful use cases.

What’s more, the research shows that the influence of the Chinese government plays a key role in attracting investment in AI startups. “The bullish sentiment shared among Chinese investors is a clear sign that China is going all-in in artificial intelligence (AI). The government of China is setting clear policy guidelines for the future development of AI and startups are responding with cutting edge AI technologies across many industries,” said Lian Jye Su, principal analyst, ABI Research.

Among all the Chinese startups, Bytedance raised the highest funding. The creator of Toutiao, a personalized news aggregation platform, and Douyin, a personalized video clip app, has raised over $3 billion in investment last year and is enormously popular among Chinese youth, due to its content personalization and curation algorithms.

Another sector that received a lot of attention was facial recognition. Startups like SenseTime and Face++ managed to raise significant funding owing to the adoption of facial recognition technologies by various public agencies, payment and e-commerce companies.

“While 2017 was a roaring success for Chinese startups, the real fruits and impact will be felt in 2018 and beyond. Already we are seeing a few startups launching new products, venturing into new business, or being acquired in 2018,” says Lian Jye Su.

AI Chipset Innovation

The research observed that Chinese startups are not merely focusing on software development only as it is the case in other sectors, but are also deeply involved with AI chipset innovation.

Startups like Cambricon Technologies and Horizon Robotics have raised $100 million in Series A funding respectively to design and manufacture purpose-built AI chipset for machine vision.

“The aim to launch a ‘Made in China’ chipset is one of the key priorities of the Chinese government. Previous attempts have been futile, but the technologies developed by Cambricon Technologies and Horizon Robotics seem to be promising. Cambricon’s chipset IP has been integrated into Huawei’s premium smartphones, while Horizon Robotics focuses heavily on machine vision in the automotive industry. Such a multi-prong AI investment approach in both hardware and software will ensure that the Chinese AI ecosystem continues to flourish, innovate, and stay ahead of the competition,” the research explains.

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