Chinese state-backed facial recognition major CloudWalk Technology has collected 1.8 billion yuan ($254 million) in a new funding round from domestic investors with close ties to the government, the company told DealStreetAsia on Thursday.
Shanghai-based state-owned investment platform Guosheng Group, and Nansha Financial Holding, a financial services firm launched by the local government in Guangzhou’s Nansha district, invested in the new round. China Internet Investment Fund (CIIF), a 100 billion yuan ($14.09 billion) fund jointly launched by China’s Ministry of Finance and the country’s central internet regulator, also participated in the round.
Other investors in the round included Chinese state-owned commercial bank Industrial and Commercial Bank of China (ICBC) and Haier Financial Holdings, an IoT-focused platform of Chinese home appliances giant Haier Group.
CloudWalk declined to disclose its post-money valuation. The company was valued at $3 billion last year, according to the Hurun Global Unicorn List 2019.
Created as an incubation project of the Chinese Academy of Sciences (CAS), CloudWalk was founded in 2015 by computer vision scientist Zhou Xi, who left his job at the national science research academy with some fellow researchers from the facial recognition team to start the venture.
The company, which initially targeted the financial services market, claims to be the largest AI supplier to the Chinese financial services industry and boasts a market share of 82.8 per cent in the country’s banking sector. The firm delivers products and services to four Chinese state-owned banks, namely the Bank of China (BOC), the China Construction Bank (CCB), the Agricultural Bank of China (ABC) and the Industrial and Commercial Bank of China (ICBC).
Its facial recognition technology has been deployed by over 30 provinces across China.
By far, all of CloudWalk’s existing investors are China-based companies. The unicorn announced the completion of a Series B round in October 2018 from a group of predominantly government-linked investment institutions including the China Reform Fund, SF International Holdings Limited, Bohai Industrial Investment Fund, and Yuexiu Financial Holdings Limited.
The company did not reveal the financial details of the previous round, but Chinese business data platform Tianyancha.com indicated that it raised about 1 billion yuan ($141 million) in the Series B+ round.
In November 2017, CloudWalk secured 500 million yuan ($70 million) in a Series B round, along with an additional 2 billion yuan ($282 million) financial support from the Guangzhou government. The Series B round was jointly led by Shunwei Capital, Hangzhou-based venture capital firm Puhua Capital, and SIP Oriza Seed Fund Management, an early-stage equity investment platform of China’s Oriza Holdings.
According to 36Kr, CloudWalk is mulling an initial public offering (IPO) by the end of 2020 on a mainland board, potentially on the Nasdaq-style STAR Market. CloudWalk refused to comment on its listing plans.
CloudWalk’s major domestic competitor Megvii Technology was reportedly facing additional queries from the Hong Kong bourse ahead of its proposed IPO, in which it had hoped to raise between $500 million and $1 billion.
Hong Kong-based SenseTime Group, another Chinese prominent AI unicorn that counts Alibaba Group, Qualcomm and SoftBank Group among its backers, reportedly deferred its plan for an up to $750 million IPO in Hong Kong this year. It now aims to seek as much as $1 billion in funding in private markets.