Chinese AI startup Megvii, also known as Face++, raises $750M led by Bank of China Group Investment, source says at a $4B+ valuation, ahead of its Hong Kong IPO
HONG KONG (Reuters) - Chinese artificial intelligence (AI) provider Megvii Inc, commonly known as Face++ …
Context & Ripple Effects
Megvii's fundraising arc has been accelerating: a reported $460M round in late 2018 for its Face++ developer platform was followed by talks for $500M at a $3.5B valuation just a month later, and by January it was weighing a Hong Kong IPO of up to $1B. This $750M round closes that gap between private capital and a listing.
The lead investor is the notable change: Bank of China Group Investment brings state-affiliated money into an Alibaba-backed startup at a $4B+ valuation, weeks before the company was expected to test the public market in Hong Kong.
First-order effects
- Megvii's valuation steps up from the $3.5B discussed in December to $4B+, with the fresh $750M shoring up its balance sheet ahead of the Hong Kong listing it had been considering since January.
- Bank of China Group Investment becomes the round's anchor, adding state-affiliated capital alongside Alibaba's earlier backing.
Second-order effects
- A state bank's investment arm leading a pre-IPO round gives other Hong Kong-bound Chinese AI startups a template for de-risking their listings with domestic institutional money rather than relying on foreign funds.
- For IPO investors, the state-led round functions as a signal of domestic political backing for a facial recognition business whose overseas exposure — 300K developers across 150 countries — could attract scrutiny.
Third-order effects
- The pattern this points toward is Chinese AI firms layering state-affiliated capital before going public as a hedge against geopolitical risk — a hedge that proved prescient for Megvii, whose Hong Kong IPO application later lapsed after US blacklisting and which refiled in Shanghai instead.
- If state-backed pre-IPO rounds become standard for China's AI champions, the sector's capital structure splits from Silicon Valley's, with listings and valuations increasingly set by domestic institutions.
The trend: China's leading AI startups are pairing private-market scale-ups with state-affiliated pre-IPO capital, repositioning their listings toward domestic exchanges as US scrutiny of facial recognition firms hardens.