Megvii (Face++)

Megvii — the Chinese software developer for face recognition. By October, 2017 a system which is developed by the company uses data on persons about 1.3 billion Chinese (the biggest similar database in the world) who are stored in base of the ministry of public security of the People's Republic of China. Megvii is also known under the name of Face ++.

Developments of Megvii apply the companies Lenovo Group, Ant Financial and also some banks.

We want to create eyes and a brain of the city which will help police to analyze more widely cars and people, than the person can do it — it is written on the website Megvii.

History

2019: Getting into the black list in the USA

In October, 2019 the U.S. Department of Commerce added to the black list of 28 Chinese companies among which there are a DAHUA Technology, Hikvision Digital Technology, Megvii Technology and SenseTime. Read more here.

2018: Attraction of $0.5 billion investments and assessment in $3.5 billion

In the middle of December, 2018 it became known of investment of $500 million Megvii and assessment of the company into $3.5 billion according to the results of a new round of financing. Most of all for face recognition enclosed investment division of the Chinese national bank of Bank of China in the developer of technologies — Bank of China Group Investment Ltd.

As notes Reuters news agency, investment into Megvii happens against the background of plans of Beijing to construct a national video surveillance system and to turn China into the international leader in the field of artificial intelligence — technologies which quickly become key in the different markets.

The AI developer with the Russian investments attracted $0.5 billion to face recognition and is estimated at $3.5 billion

Both local, and foreign investors invest in the Chinese AI startups. Investments to this sector in 2018 made about $2 billion within 75 transactions that is four times more than money which brought together such companies for two previous years combined, analysts of Refinitiv counted.

The specified amount includes $327 million which earlier in 2018 received Megvii from Internet giant Alibaba Group which uses developments of a startup for implementation of function of payment by scanning face in Alipay payment system.

In addition to Alibaba, Ant Financial, Lenovo Group and Huawei Technologies and also state bodies and state companies, reported on the website Megvii are among primary clients of Megvii. Among investors  the Russian-Chinese investment fund appears.

A main competitor of Megvii in the Chinese market of sensing technologies of persons is the SenseTime company which in 2018 attracted more than $1.2 billion investments and received value assessment in $4.5 billion. The Bloomberg agency reports that according to the results of a financing round in December, 2018 Megvii can quite estimate^[1] at $4 billion^[2]

2017: Investments into $460 million

On Wednesday, November 1, Megvii announced attraction of $460 million investments from the Public venture fund of China (it is created by Government commission for the control and to asset management in August, 2016, has volume in $30 billion) and the Russian-Chinese investment fund (the joint project of RDIF and China).  Besides, private investors among whom — Ant Financial companies (financial "subsidiary" of Alibaba Group) invested in a startup.

According to the Bloomberg agency, the South Korean conglomerate SK Group, the Taiwan contract producer of Foxconn Technology Group electronics and CCB International Holdings, Qiming Venture Partners and Sinovation Ventures funds which already provided earlier means to the Chinese developer could also participate in financing of Megvii.

The Russian-Chinese fund invested in the developer of a sensing technology of persons

Interlocutors of Bloomberg connected the interest of the Chinese authorities in Megvii with plans of Beijing to use technologies of the company for warning of crimes and "threats for social stability".

The The Financial Times edition specifies that China aims to become the superstate of the artificial intelligence (AI) to resist to the USA. In 2017 the State  Council   of People's Republic of China unveiled the plan for transformation of the country into the world leader in the field of researches and use of AI technologies by 2030 that was an incitement to the large-scale venture funding of local startups.

According to the international consulting company KPMG, by the beginning of November, 2017 the Chinese government through state funds invested more than $1 billion in the startups which are at early stages of development.

To the investment bargain concluded on November 1, 2017 Megvii was estimated at 10 billion yuans (about $1.5 billion). How much is the company after new financial influences, is not reported. Bloomberg calls the amount of $1 billion.

Investments from public foundations mean that Face ++ will get more political support from the government, and it should bring considerable benefit to their business — Leng Biao, professor of Peking University of aeronautics and astronautics specializing in sensing technologies of people by their parts of a body says. — However there are also risks because national financing imposes restrictions for the one who can invest in them in the future.

Megvii is going to spend the money received from investors, in particular, for the international expansion. In July, 2017 the company opened the first foreign research laboratory — it is started in the American Seattle. This project was headed by the former senior research associate  of Adobe Wang Jue.

According to professor Len Ceng, the systems of face recognition actively are implemented across all China. Each district in the country (their number makes 294) invested not less than 100 million yuans (more than $15 million) in creation of own video surveillance systems using sensing technologies of persons, he noted.^[3]

Notes