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Jul 10, 2020 · iyiou.com
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Jul 10, 2020 · iyiou.com

SenseTime Announces OpenMMLab Upgrade Strategy

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AI May Display People in the Workplace

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Analysis EO
Apr 19, 2020
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Analysis EO
Apr 19, 2020

Why Is There No AI Unicorn Like SenseTime in the US?

SenseTime, a Chinese AI startup established in 2014, has claimed (via their CEO Li Xu) to have a post-money valuation of USD 70 million, after an investment of USD 1 Billion from SoftBank. As an AI algorithm provider, it developed Computer Vision (CV) technology for multiple industries, including autonomous vehicles, security and fintech, after becoming famous for facial recognition when it was established. CB insights released a list of the most valuable AI unicorns around the world and evaluated SenseTime at USD 4.5 billion in 2019. There was only one US company – Tanium – that had a higher valuation (USD 6.5 billion). Unlike SenseTime, which acts as an AI algorithm provider serving customers from various industries, each US unicorn with valuation higher than USD 3 billion has a specific focus on one application area. So why is there no full-stack AI platform unicorn like SenseTime – a company that offers commercially applied AI algorithms for players in a wide range of emerging industries – in the US? Detailed analysis of SenseTime’s evaluation The SenseTime Story Since its founding as an AI facial recognition algorithm specialist, SenseTime has become known for its professionalism in AI technology research.  With a founding team from world famous universities including MIT, Tsinghua University, and CUHK, SenseTime has become one of the most prolific institutes regarding paper publishing in top AI conferences, including CVPR and ICCV. SenseTime also shaped its public image by various types of connection with Universities and industrial giants, including establishing AI labs, building academic alliances, and making technology commercialization collaborations. SenseTime is the prototype of startups that rode the AI wave in China since 2015. Propelled by Beijing AI-related industries have developed at a rapid speed, bringing a list of AI technology companies to public attention. SenseTime, along with similar companies like MEGVII and YITU, has been chased by hot money since then.  In September 2018, SenseTime was asked to build China’s next generation national AI open innovation platform. Analysts view it as the symbol of entrance into the Chinese ‘National Team’ along with tech giants Alibaba, Tencent, Baidu, and iFLYTEK. With ample funding and attention from the public and government, SenseTime then extended its service to more general CV fields, including large-scale video data understanding/mining and image processing /augmentation, for a wide range of industries like public security, autonomous vehicle and healthcare. SenseTime is facing more challenges as the commercialization of AI technology moves further. As it enters simultaneously into several industries, it inevitably competes with industrial giants, which have also developed related AI technologies over the years. In the public security industry, as SenseTime’s recent focused area, wherein AI technology is considered to have the most support from local governments, SenseTime is struggling to compete with Hikvision, the largest surveillance system provider in China and globally, which also has an applied AI technology accumulation (details for Hikvision and Chinese security industry). Picture of US AI unicorns AI startups, although also very popular in the US, have little chance to become unicorns without deep application of AI technology in a fixed industry. Comparing top AI startups in Silicon Valley and New York, the Bay Area AI startups generally have higher valuations because of their potential to apply cutting-edge technology to emerging industries. AI unicorns in the US generally have a clear focus on autonomous vehicles, biotech, enterprise services, etc. Startups like SenseTime that act as full-stack AI platforms for various industries are less likely to be recognized in the US because of the more developed and realistic venture capital market.  With a developed finance system, venture capital investments in the US are now distributed in a few areas with concentrated emerging industries, such as Silicon Valley. The more realistic investors require target companies to provide proven approaches to their ideas instead of arbitraging from hot concepts. So, AI startups betting on single industry and digging deeper are typically more favored. The Chinese venture capital market is, on the contrary, on the move, developing fast with ready investment money. Following the economy, cutting edge technologies with the potential to improve social efficiency are always treasured by the public and government. The undoubted benefit of AI technology to Chinese society, which is still not fully developed, is the real support backing SenseTime’s USD 3 billion historical funding. Dilemma of the Chinese AI unicorn The latest news has come out that SenseTime will not seek IPO opportunities in the near future on the Hong Kong Exchanges and is looking for PE financing instead (more details). This indicates that SenseTime is less confident in attracting global secondary market investors compared with venture capitalists. Meanwhile, Chinese venture capitalists in the AI sector are also getting realistic after witnessing the volatile investment market after 2018. The investors of SenseTime are mostly top long-term players with ample funding that aim to gain from the appreciation of SenseTime’s market value following the twisted but upgoing AI sector. It does not mean that investors are careless in SenseTime’s commercialization. SenseTime is now under the pressure of profitability, which can be seen from its recent focus in the Chinese government-led public security industry – a sector that is promising, but highly competitive. SenseTime seems to be in such a dilemma. On the one hand, commercialization requires it to first be rooted in one profitable industry, and government-led industries are the best choice in Chinese market due to Beijing’s firm support for AI; on the other hand, the public image of the Chinese AI algorithm unicorn stops it from fully turning to these industries as it is considered not transparent and not ‘high-tech’ by the mainstream capital market. SenseTime’s effort to enter most other industries is paying back slowly. The ToC market is monopolized by Internet giants like Alibaba, Baidu and Bytedance, as they have massive customer data and also the ambition to develop their own AI technology. Most ToB markets in China like automobile, smartphone and finance are also hard to penetrate, since the industrial oligarchs started to bet on similar technology even before the recent AI wave. There is still a long way to go before SenseTime finally becomes a full-stack AI platform that has deep cooperation with players in various industries. As an AI research startup, SenseTime is inevitably facing barriers when entering new markets. Maybe learning from its US peers and labelling itself as a specialist in a smaller industrial sector is a better choice, at least in the near future.

Analysis EO
Apr 5, 2020
report
Analysis EO
Apr 5, 2020

SenseTime to Stay Private Involuntarily

Source – Nikkei Asian Review (March 18). SenseTime (商汤科技) suspended its IPO plan on the Hong Kong Exchange. Instead, it would seek a new USD 1 billion financing series. Established in 2014, SenseTime, or say VCs, has made itself the most valuable AI company in the world valuing at USD 7.5 billion. SenseTime has raised nine rounds of financing, making a total of USD 3 billion. The latest financing series created a record in the industry, USD 1 billion for a single round. Many investors are big names in corporate funds and VC funds such as Qualcomm, Alibaba, Softbank, Tiger Global, IDG Capital, etc. It has witnessed the maniac AI investment time and now the No.1 AI unicorn is questioned for its over-inflated AI valuation. After six years of operation, SenseTime has been rumored for times of going public. While it remains private, another AI unicorn, Megvii (旷视科技) launched its IPO in 2019 with hurdles and tumbles: after passing the second hearing in Hong Kong Exchange, Megvii deferred ringing the opening bell due to the COVID-19 outbreak, which may cause its IPO application to expire. So far, China’s ‘Four CV (computer vision) Dragons’ – SenseTime, Yitu (依图科技), Megvii and CloudWalk (云从科技) – are staying private. Apart from Megvii, each of their IPO timetables is yet to be clarified. Investment frenzy in AI sector ends The year of 2018 marked the craziest AI investment period. Many dollars flushed into the sector and lifted up AI startups’ valuations – AI unicorn companies appeared one after another with hundred-million level VC investments. Among them, SenseTime became the ‘shining pearl’ after it was given the highest valuation, and also the highest deal value recorded, the USD 1 billion Series D funding from SoftBank China. Not only in the AI sector, China’s VC investment heat across the board has been cooling after the peak in 2018. VC development requires a financial market that can provide as many exits as possible and a healthy and stable environment for startups to grow and scale. In 2019 we witnessed exacerbating global trade tensions between China and other countries: we saw certain of China’s companies pause infrastructure projects, watched fluctuating (most of the time increasing) tariffs on both sides between China and the United States, the creation of the US commerce blacklist, and so on. Chaos is stirring in the background, and some global investors like Tiger Global, are shifting their focus to other regions like India and Southeast Asia. Singapore’s AI companies received general investments from VC investors last year, and among these companies, Advance.AI was funded the most, landing USD 80 million in its Series C financing. Still, China is one of the biggest markets for VC investors, but it is not the only one. China has the most unicorn companies in the world – 206 unicorns as of 2019 – while the United States has the second most unicorn companies, 203. What is SenseTime doing? Backed up by billions of dollars, SenseTime founded its own corporate fund to invest in AI startups and in the meantime, according to Tianyancha’s record, it has founded tens of AI companies with support from regional governments. SenseTime has cooperated with provincial and civil education departments to advance AI + Education mode. As early as late 2018, the Qingdao government signed an MOU with SenseTime to promote AI education, and starting from September 2019, Qingdao launched the AI courses in K12 education with over 20,000 students involved. As reported by Reuters, SenseTime expected USD 750 million for its 2019 revenue and we have sufficient reason to believe that major clients of SenseTime are from the government side. Excepting education, SenseTime’s revenue mainly depends on security-related products and services. Under the rising concept of the ‘Smart City,’ SenseTime has cooperated with nearly 100 cities in China to support their upgrading projects. However, the ticket price to be a Smart City partner is never zero. In 2017, SenseTime signed an MOU with the Shanghai government, mentioning that the AI unicorn would invest no less than CNY 5 billion (USD 700 million) within five years, whereas expected revenue for 2019 was USD 750 million. The billion-level investment deal for a three-year-old startup has a different meaning: a deal for a deal. SenseTime soon founded its Shanghai branches and pushed AI-related projects with support from the top. We can expect similar cases when it cooperates with some of the other regional governments. How many deals or contracts can a CNY 5 billion investment bring back to SenseTime? How about several CNY 5 billion investments? By looking at SenseTime’s current performance, its investors are not able to profit from revenue earnings – but surely can be well paid by successor investors as the valuation is pumped. Slimming and deliberate trying Indeed, security and Smart City are critical for SenseTime at this stage and they contribute significantly to the revenue. The company has been seeking non-government side opportunities. Smartphone OEMs are one of the targets. AI companies provide facial recognition solutions for smartphones and the business seems to be promising: yearly global smartphone shipment exceeded 1 billion units for the past five years. The cooperation was a good deal until smartphone OEMs began setting up their own teams to develop facial recognition solutions and other computer vision functions. Hardware manufacturers with AI teams will be a headwind for ‘soft’ AI companies on their way to commercialization. Along with the fierce competition, public concerns about data security also shadow the way ahead. SenseNet (深网视界) was a company invested in by SenseTime. A data leakage scandal occurred in 2019 and destroyed the company’s reputation. SenseTime swiftly got rid of the company. Besides SenseNet, SenseTime also sold all its shares in Tangli Technologies (汤力科技) and reduced investments from co-founded companies to get slimmer. Starting from CV, SenseTime has developed its business in many areas, including but not limited to fintech, mobility, healthcare, education and advertising. At the early stage, we can see a clear pattern in China’s ‘Four CV Dragons:’  SenseTime focused on public security, Yitu was famed for its efforts in healthcare, Megvii worked on facial recognition and CloudWalk pioneered in fintech. Now, they have all expanded to multiple areas and their product mix is transformed from vertical focus to fuller coverage. Expansions are on the way. For SenseTime, 2019 is a year for attempts in education and smart cities. The most valuable AI unicorn does not have a clear timetable for its IPO. As Megvii has been tumbling on the winding IPO track since mid-2019, SenseTime has remained private. The overinflated valuation problem makes all AI companies into embarrassments before they can truly stand on their own feet. In this sector, companies’ profitability issues concern most public investors, who care less about passionate stories but emphasize more real financial statistics. When the current ‘Black Swan’, COVID-19, hit all industries worldwide, investors became even more cautious and conservative. Raising money in either the private market or public will be more difficult than before. Many of Masayoshi Son's portfolio companies such as WeWork, OneWeb and others are in turmoil –  returns below expectations or holding on their last breath. SoftBank's used-to-be-shining tech startup portfolio is dimmer than ever. Meanwhile, SoftBank-invested SenseTime’s IPO will not be anytime soon given an environment of declining market confidence and a global economic recession – SoftBank’s ‘curse’ arising from its portfolio companies’ IPO tracks continues.

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Mar 27, 2020 · SenseTime
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Mar 19, 2020 · Sina technology
News EO
Mar 19, 2020
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News EO
Mar 19, 2020

SenseTime Delays Hong Kong IPO

Hong Kong-based artificial intelligence startup SenseTime has postponed its IPO of up to USD 750 million in Hong Kong this year and has moved towards the private equity market to raise as much as USD 1 billion.  The firm, which is backed by giants such as Alibaba, Qualcomm and Softbank Group, has raised a staggering amount of USD 2.6 billion to date. SenseTime started a joint IPO with China Investment Bank and China International Capital Corporation last year, but its IPO plan met hurdles due to it being one of the eight Chinese companies blacklisted by the US. According to a Chinese media outlet, Techweb, people familiar with the matter, there were reports that the company's 2019 revenue would increase by 200%. Considering its investment plans, the company's cash flow remains negative. They predict that SenseTime may consider raising USD 500 million to USD 1 billion from existing and new investors. SenseTime held several meetings with investors last year to explain the company's evolving new businesses, including facial recognition, robotic delivery, smart healthcare and education. The firm has information that Beijing-based rival Megvii recently obtained an IPO approval from the Hong Kong Stock Exchange, but has decided not to list for the time being given the current challenges.  SenseTime has neither confirmed nor denied the fundraising plan. Instead, the company said in an emailed correspondence “At this stage we do not have any new financial plans or information to share.” So far, the COVID-19 pandemic has infected nearly 200,000 people, causing nearly 8,000 deaths, and with borders closed, supply chains and labor severely disrupted, many businesses and economies have been marginalized. As the global economy is likely to decline, investors have opted for safe-haven investments. Global stock markets have lost nearly USD 20 trillion since their highs in mid-January. Potential IPO applicants had to postpone plans as investor meetings were canceled. According to Dealogic's data, Hong Kong was the world's largest IPO market last year, and the size of new shares issued in February decreased by 93% from the same period last year to USD 49 million. At the same time, only two companies were listed in Hong Kong in February, compared with 11 in the same month last year. Market research firm CB Insights valued the company at USD 4.5 billion last year, but later that year in September, media quoted SenseTime co-founder and CEO Li Xu as saying that the company's valuation had exceeded USD 7.5 billion. In a speech at MIT in 2018, Tang Xiaoou (汤晓鸥宣), co-founder of Shangtang Technology, announced that his company defeated Facebook and its facial recognition technology achieved a near 99% success rate, making it one of the most advanced artificial intelligence solution providers.

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