Sources: Chinese AI company Megvii, whose Face++ facial recognition tech is popular among developers worldwide, is in talks to raise $500M at a $3.5B valuation
HONG KONG (Reuters) - Chinese artificial intelligence provider Megvii Inc, commonly known as Face++, is targeting to raise $500 million …
Context & Ripple Effects
Megvii's December 2018 raise talks cap a fast climb: weeks earlier, a profile of the Face++ maker noted a reported $460M November round and a developer base of 300K across 150 countries, with Alibaba already among its backers. By January, sources had it weighing a Hong Kong IPO that could raise up to $1B.
What came after validates the trajectory this round set up: a $750M round led by Bank of China Group Investment at a $4B-plus valuation, then a Hong Kong IPO filing — before a Trump-administration blacklist lapsed that application and pushed Megvii to refile in Shanghai. This $500M round is the hinge between venture-scale growth and state-backed scale.
First-order effects
- Megvii converts Face++'s 300K-developer footprint into pricing power: a $500M raise at $3.5B would more than double the valuation implied by the $460M November round, funding expansion ahead of a planned Hong Kong listing.
- Alibaba's existing stake gets marked up against a rising private-market price, strengthening its position in one of China's most visible AI companies.
Second-order effects
- State-linked capital follows the signal: Bank of China Group Investment leads the next round at $4B-plus, putting sovereign money alongside Alibaba's strategic backing and resetting what rival Chinese AI startups must raise to compete for talent and customers.
- A well-capitalized Megvii pressures other facial-recognition vendors in China's AI cohort to accelerate their own fundraising and IPO timelines rather than cede the developer platform layer.
Third-order effects
- Geopolitics, not markets, becomes the binding constraint on exit paths: the Trump-administration blacklist lapses Megvii's Hong Kong application and forces a Shanghai refiling, meaning US sanctions now effectively choose the listing venue for Chinese AI firms.
- If the pattern holds, China's AI champions consolidate around domestic capital — state banks plus local exchanges — reducing dependence on Hong Kong and Western investors for their largest raises.
The trend: Chinese AI startups are scaling through ever-larger rounds blending strategic and state capital, while US sanctions increasingly dictate whether they list in Hong Kong or Shanghai.