Alibaba-backed artificial intelligence company Megvii filled for Hong Kong IPO. Alibaba is an e-commerce giant whereas it backed Megvii along with state-owned corporations like Bank of China Group Investment, the private equity arm of the bank. Magvii sells Artificial Intelligence-based products from facial recognition tech to algorithms developed for traffic management. It did not share its shares’ pricing or its initial public offering (IPO) timeline. Whereas, the company gestured confidence in the market of Hong Kong instead of the continuing protests and the latest report that Alibaba postponed its listing there.
Previously in the last month, Megvii did a funding round of $750 million, allegedly putting its valuation north of $4 billion. Sensetime, the nearest rival of Megvii, has a valuation at above $4.5 billion.
Losses of Megvii Continue to Increasing
Facial recognition is a core part of the Chinese drive to become a world forerunner in Artificial Intelligence technology by 2030. Moreover, both firms are getting benefit from that as the technology installed in various cities of China. In addition, the government of China is one of its main customers.
It helped Megvii to experience speedy revenue growth. In 2018, the organization hit $199.7 million (1.42 billion yuan) in revenue, which is an increase of over 350%. Megvii gathered 948.9 million yuan during the first half of 2019. Whereas losses continue to increase. In 2018, Megvii made a loss of 3.35 billion yuan as compared to 2017 758.8 million. In the first half of 2019, the firm lost 5.2 billion yuan that is greater than the amount it lost during 2018. Megvii attributed this to continuous investment in development and search.
Risks of Trade War
Megvii highlighted various risks for its business from development cost and ballooning research to negative publicity linking to facial recognition technology. Such as the latest report from Human Rights Watch connected Megvii to mass surveillance of China of the minority Uighur residents in Xinjiang. Latterly, the report modified to demonstrate that Megvii not involved.