China Roundup: Kai-Fu Lee's Europe Bet & WeRide Acquisition

TechCrunch China Roundup: Recent Developments and Global Implications

Welcome to this week’s edition of TechCrunch’s China Roundup. This digest focuses on recent events impacting the Chinese tech sector and their broader global significance.

Despite ongoing geopolitical challenges for international tech companies seeking access to the Chinese market, numerous firms continue to pursue opportunities, particularly when establishing reliable local partnerships.

Prophesee: A French Startup Gains Traction

This week’s roundup includes an insightful discussion with Prophesee, a French startup specializing in innovative vision technology. The company recently secured funding from prominent investors, including Kai-Fu Lee and Xiaomi.

Prophesee’s success highlights the potential for foreign tech firms to thrive in China through strategic collaborations. Finding a dependable partner is often key to navigating the complexities of the Chinese market.

Key Takeaways

• Foreign tech companies are still entering the Chinese market despite geopolitical obstacles.
• Strategic partnerships are crucial for success in China.
• Prophesee, a French vision technology company, recently received funding from Kai-Fu Lee and Xiaomi.

The continued investment in and expansion of tech companies like Prophesee demonstrate the enduring appeal of the Chinese market. This trend suggests that China remains a vital area for innovation and growth within the global technology landscape.

Identifying Growth Potential in the Chinese Market

Similar to numerous European enterprises focused on innovative and advanced technologies, Prophesee originated as a company spun out from academic research. I have previously reported on two Swedish firms with comparable origins: Imint, specializing in video enhancement for smartphones utilizing deep learning, and Dirac, a leader in audio optimization.

These three companies share key characteristics: they each operate within highly specialized sectors, and they have all successfully cultivated a strong customer base in China.

For Prophesee, this translates to engagement with manufacturers, automotive companies, and smartphone producers in China who are actively seeking advancements in perception technology. These improvements will ultimately enhance the responsiveness of their robotic systems to surrounding conditions. Consequently, it is logical that Xiaomi and Inno-Chip, a Chinese investment firm concentrating on semiconductors, participated in Prophesee’s most recent funding round, spearheaded by Sinovation Venture.

While the exact funding amount remains confidential, TechCrunch reported it to be within the “tens of millions USD” range. This also marks the first European investment undertaken by Kai-Fu Lee through Sinovation. As Prophesee’s CEO, Luca Verre, recounted:

The company, headquartered in Paris, wasn’t proactively pursuing funding, but recognized that incorporating Chinese strategic investors could facilitate increased access to this intricate market.

Instead of transmitting data from sensors and cameras to external computing systems, Prophesee integrates the processing directly within a chip – manufactured by Sony – that replicates the functionality of the human eye. This is achieved through the principles of neuromorphic engineering.

Traditional methods rely on capturing a series of static images, which demands substantial computational resources as data volume increases. Conversely, Prophesee’s sensors, termed “event-based,” only register alterations within the environment, mirroring the photoreceptors in human eyes, enabling continuous and rapid data processing.

Neuromorphic computing has been a focus of innovation in Europe, but Verre has observed a recent increase in related research originating from Chinese universities and technology companies. This trend reinforced his belief in the market’s strong demand.

Despite China’s pursuit of technological self-sufficiency, Verre believes Prophesee’s potential market is substantial – estimated at $20 billion. He acknowledges, however, that it would be unrealistic to assume Prophesee will be the sole beneficiary of this opportunity.

Key Advantages of Prophesee’s Technology

• Event-Based Sensors: Focus on changes, reducing computational load.
• Neuromorphic Engineering: Mimics the human eye for efficient processing.
• Integrated Processing: Data processing occurs within the chip itself.

The company’s approach offers a significant advantage in applications requiring real-time responsiveness and reduced power consumption.

WeRide Acquires Autonomous Trucking Firm MoonX

A leading Chinese robotaxi developer, WeRide, has completed the acquisition of MoonX, a company specializing in autonomous trucking technology. The financial details of the transaction have not been revealed publicly. However, it is known that MoonX secured a substantial Series A funding round, amounting to “tens of millions RMB,” approximately fifteen months prior.

WeRide’s primary focus remains on achieving Level 4 autonomous driving capabilities. Simultaneously, the company is actively pursuing alternative revenue streams as it prepares for the widespread deployment of its robotaxi service. This strategy has already included the development of autonomous minibusses, and the integration of MoonX – including its founder and a team of over fifty engineers – is expected to further broaden its income base.

Shared History Between Founders

The relationship between WeRide and MoonX extends beyond a simple business deal. The founders of both companies, Tony Han and Yang Qingxiong, previously collaborated at Jingchi, the company that ultimately evolved into WeRide.

Han was a co-founder of Jingchi and assumed the role of CEO in March 2018. Yang initially served as vice president of engineering but later departed to establish MoonX.

Upon Yang’s return, Han welcomed him back into the WeRide organization. Yang has been appointed to lead the company’s research institute and oversee operations at its new Shenzhen location, which was formerly MoonX’s base of operations.

WeRide’s main campus is located in Guangzhou, situated approximately one hour away by car from the Shenzhen office.

• Key Acquisition: WeRide has purchased MoonX, an autonomous trucking company.
• Funding: MoonX previously raised “tens of millions RMB” in Series A funding.
• Strategic Diversification: This acquisition supports WeRide’s efforts to diversify revenue streams.
• Founder Connection: Both companies’ founders previously worked together at Jingchi/WeRide.

This move signifies WeRide’s commitment to expanding its presence within the broader autonomous vehicle market, encompassing both passenger and freight transportation. The integration of MoonX’s expertise is anticipated to accelerate the development and commercialization of autonomous trucking solutions.

Cloudwalk's Impending IPO: A Milestone for Chinese AI

Cloudwalk is a leading Chinese company specializing in AI surveillance technology. It rose to prominence during the latter part of the 2010s, providing computer vision solutions to various governmental bodies throughout China.

Alongside competitors like SenseTime, Megvii, and Yitu, Cloudwalk was famously referred to as one of the “four AI dragons.” This moniker highlighted their rapid growth in valuation and substantial funding achievements.

The Evolution of the AI Landscape

The label “AI dragon” is becoming less accurate as artificial intelligence applications become increasingly widespread across diverse sectors. Investors have recognized the necessity for these companies to broaden their income sources beyond solely relying on smart city projects.

Consequently, there's been considerable anticipation for opportunities to realize investment returns. Cloudwalk is now poised to potentially be the first company from this group to initiate a public offering.

Financial Details and IPO Approval

This week, Cloudwalk received approval for its application to raise 3.75 billion yuan, equivalent to $580 million, through an Initial Public Offering (IPO) on the Shanghai STAR board.

However, the actual commencement of trading may still be several months away. A review of the company’s financial performance reveals a net loss of 720 million yuan recorded in the year 2020, which may be a point of consideration for potential investors.

Recent Developments

• Within the rapidly evolving landscape of autonomous driving technology, CalmCar, a specialist in vehicle vision systems, announced this week that it secured $150 million during a Series C funding round. Established in 2016 by a team of engineers who previously worked abroad before returning to China, CalmCar employs deep learning techniques to create ADAS (Advanced Driver Assistance Systems). These systems find application in the automotive, industrial, and surveillance sectors.
• The direct-to-consumer baby apparel brand, PatPat, has reported raising a combined $510 million across Series C and D funding rounds. The growing strength of China’s supply chains is attracting increasing attention from venture capital firms within the D2C market. Companies such as Shein, Cider, and Outer, alongside PatPat, have successfully obtained funding from well-known venture capital investors.

PatPat was founded by three graduates from Carnegie Mellon University.

The company’s investor base includes prominent firms like IDG Capital, General Atlantic, DST Global, GGV Capital, SIG China, and Sequoia China.