Chinese artificial intelligence (AI) giant 4Paradigm has raked in $700 million in a Series D round of financing jointly led by the country’s private equity (PE) companies Boyu Capital, Primavera Capital, and Hopu Investments, the firm announced in a statement on Friday.
With the new financing, 4Paradigm roped in a group of strategic investors with close links to the government, including China’s National Manufacturing Transformation and Upgrading Fund, a 147.2-billion-yuan ($22.8 billion) state-owned fund led by the Ministry of Finance.
China Development Bank, led by China’s State Council; state-owned investment firm China Reform Holdings Corporation (CRHC); China Jianyin Investment Limited (JIC Group); investment bank & brokerage firm CSC Financial; and Hong Kong-listed securities firm Haitong Securities, also participated.
Other investors in the new round included Sequoia Capital China, which had first invested in 4Paradigm’s angel round in 2015; CITIC’s asset management firm CPE; Goldman Sachs; Jinyi Capital, and China-dedicated PE firm FountainVest Partners.
4Paradigm plans to use the new proceeds to speed up its business layout across major industries, to build AI-enabled enterprise-level ecosystem, and to cultivate AI talent.
Co-founded in 2014 by former Baidu senior scientist Dai Wenyuan, 4Paradigm mainly provides clients with a suite of software tools that allow them to develop smart applications and run complex algorithms on their data without the need to employ high-trained engineers.
The big-ticket financing is potentially 4Paradigm’s pre-IPO round. The well-funded AI specialist was mulling an initial public offering (IPO) on Shanghai’s Nasdaq-style STAR Market, co-founder and CEO Dai told Chinese publication Caixin Global in August 2020. Dai said that the firm would be ready to file a prospectus in early 2021.
4Paradigm stepped up its fundraising efforts as dealmaking activity in China’s AI space continues to heat up with more investors buying into the sector amid proliferated applications of AI in the nation.
Horizon Robotics announced in December 2020 a plan of raising over $700 million in a Series C round. The firm has by far closed a combined $550 million through two tranches of transactions in Series C1 and C2 rounds. MiningLamp Technology raised a total of $500 million across Series E and E+ rounds in 2020. In May 2020, Enflame Technology garnered 700 million yuan ($108.2 million) in a Series B round led by investment firm SummitView Capital.
Beijing-based 4Paradigm delivers full-stack, standardised AI products to clients including the five largest state-owned commercial banks in China, namely Agricultural Bank of China, Bank of Communications, Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), and China Construction Bank (CCB).
Apart from the firm’s main service of delivering tools for banks to detect fraud, identify customers and perform analysis, 4Paradigm also provides solutions and services to customers in a wide range of sectors, such as finance, retail, healthcare, manufacturing, Internet, logistics, agriculture, and energy.
The completion of the Series D round came less than one year after 4Paradigm raised $230 million in a Series C+ round in April 2020 that brought the company valuation to $2 billion.
In December 2018, the firm entred into the unicorn club at a valuation of $1.2 billion, after securing over 1 billion yuan ($154.6 million) in its Series C round from investors like Sequoia Capital China, Beijing-based Agricultural Bank of China, China’s Bank of Communications, and state-owned real estate developer China Poly Group, among others.