​The IPO is broken, the glory is not there, what happened to “AI”?

Gone are the days when you could “scam money” everywhere with the two letters of AI.

Gone are the days when you could “scam money” everywhere with the two letters of AI.

Looking back to 2015, the artificial intelligence robot AlphaGo fought against the world champion of Go, Li Shishi and easily won 4:1. For a time, various entrepreneurial projects around artificial intelligence (AI) sprang up wildly. At that time, the VC/PE market was sufficiently funded. The wave of cast enthusiasm is higher than the wave. Some investors described the grand occasion at the time: “The angel round project investors look at the direction, the team, and talk about it. Many companies don’t have anything. As long as a PPT is labeled as AI, it can get a good valuation. “

“In fact, everyone didn’t know the profit model of AI very clearly at the time, but this technology is definitely advanced. It is the common idea of ​​many AI startup companies to think about landing after taking a position in technology.”

At the same time, the big companies at the time were also determined to the future of artificial intelligence-Baidu took the lead in expressing the determination of “All in AI”, Tencent subsequently proposed “AI in All”, Alibaba launched the NASA program and founded the Dharma Academy , Huawei’s full-stack AI strategy was launched quickly. The AI ​​era has great momentum to take over the Internet and become the next future.

But in this unknowingly, the capital flow of hard technology has undergone a subtle change-the sudden rise of semiconductors, autonomous driving, robotics and other higher-level fields have entered a period of rapid development. The once capital darling AI, Go down the altar.

On the one hand, the cold feedback of AI unicorns in the secondary market has made the primary market investment calmer and accelerated the clearing of the AI ​​bubble; on the other hand, the development of AI has entered a plateau period today. There are not many fruits left, and the next step is to climb more difficult and dangerous peaks. When AI becomes the infrastructure, the direction of the main track has also shifted.

​The IPO is broken, the glory is not there, what happened to "AI"?

Listed discount

The latest bad news comes from Yitu, one of the “AI Four Little Dragons”.

Yitu’s listing application was accepted by the Shanghai Stock Exchange in November 2020, and it plans to raise 7.505 billion yuan. It was hoped that it would become the first AI share among the four little dragons, but just last week (July 2), the Shanghai Stock Exchange decided to terminate the review of Yitu’s initial public offering of depositary receipts and listing on the Science and Technology Innovation Board. To put it bluntly, Yitu’s dream of going public was completely stranded.

The fate of the other AI dragons is also not very optimistic.

Megvii submitted the form on the Hong Kong Stock Exchange in August 2019, but it has not seen any progress. Last June, “Latepost” reported that Megvii had voluntarily suspended the listing process on the Hong Kong Stock Exchange due to the impact of the US entity list. This year, Megvii officially launched its impact on A-shares. It accepted listing counseling in January, handed over forms to the Science and Technology Innovation Board in March, and submitted post-hearing information in April.

Another AI unicorn, Shangtang, came on the A+H listing within the year last month, and the company’s official practice “no comment”.

On the whole, the feedback from Shangtang, Yitu, Megvii, and Yuncong in the secondary market, which were once famous in the primary market and known as the “financing machine”, was not satisfactory. In addition to the “AI Four Little Dragons”, there are Haitian AAC, Yuntian Lifei, Geling Shentong, Yunzhisheng (discontinued), and other rumors of listing also include Horizon, Fourth Paradigm, Sibi Chi and so on.

The only AI company that has torn open is the Cambrian that has landed on the Sci-tech Innovation Board under the name of “the first stock of AI chips.” But the situation is not optimistic.

On the first day of listing, the Cambrian opened higher, and its opening price increased by 288.26% from the issue price. On the second day, it continued its upward trend, with an intraday increase of over 27%, triggering a temporary cessation, and its total market value approaching 110 billion. But within a week, the stock price quickly entered a downward channel. Now the stock price is 129 yuan per share, and the market value is 51.6 billion yuan. This figure has been cut from its peak value of 112.4 billion yuan.

Cambrian performance report came, and it was still at a loss. The net loss for the whole year of 2020 was 435 million yuan, compared with a loss of 1.179 billion yuan in the same period last year. A loss of 206 million yuan in the first quarter of this year, a loss of 108 million yuan in the same period last year.

The performance of the secondary market is inverted by the primary market, and capital loses patience with AI companies with “high valuations and long return periods”.

​The IPO is broken, the glory is not there, what happened to "AI"?

Bubble cleared

From the booming and bright days of 2018 to today’s declining interest and declining IPOs, how does the AI ​​field survive and grow in the game of technology and capital? AI has been “de-bubbling” for some time, what is the progress?

Combining the investment and financing in the AI ​​field in the past year, “Shenxiang” found that in the past three years, the number of investment events in the AI ​​field has dropped significantly, but in terms of the total amount of financing, there is an upward trend.

The latest data of the enterprise check shows:

  • Since 2016, a total of 4,389 financing incidents have occurred in the artificial intelligence track, with a disclosed financing amount of 796.155 billion yuan.
  • From the perspective of the number of financing events, the number of financing events remained above 900 from 2016 to 2018; there was a slight decrease from 2019 to 2020, and there were still more than 500 cases. A total of 367 incidents occurred in the first half of 2021, and the annual total is likely to exceed last year.
  • From the perspective of the amount of financing, the amount disclosed in the artificial intelligence track in 2020 is nearly 340 billion yuan, the highest in history. In the first half of this year, the disclosed amount reached 91.594 billion yuan, still at a high level of financing.
​The IPO is broken, the glory is not there, what happened to "AI"?

The reason is that AI companies have gradually entered a mature stage after experiencing the peak period of entrepreneurship, and the head effect has begun to appear, and funds are tilted towards mature companies. The start-up AI project that draws big cakes no longer attracts attention. Investors are staring at the head companies that are beginning to be commercialized, and they also reflect that investment institutions are seeking to withdraw, and they are safe in the early days.

There are not many high-quality new standards. IT orange data shows that as of March this year, the total number of artificial intelligence companies in China is 5684. 2015 and 2016 were the peak periods for the establishment of AI companies, but last year, only about 60 new AI companies were established.

According to the rounds of investment and financing, according to the company’s data:

  • From 2016 to 2020, about 67% of the financing events that occurred in the AI ​​track in the A round and the rounds before the A round, but the proportion is declining year by year.
  • At the same time, the proportion of rounds B and beyond continues to expand. In the first half of this year, companies such as Fourth Paradigm, Horizon (multiple C+ rounds), Yunzhisheng and other companies have completed large D rounds of financing.

Having passed the stage of pure technology accumulation, “commercialization” and “profitability” have always been the sword of Damocles hanging on top of AI companies. The listing process and subsequent performance of the first batch of AI technology companies will determine the future investment direction And market valuation logic.

However, judging from the data disclosed in the current prospectus, the answer sheet given by the leading company is not optimistic.

In terms of Megvii, Yitu, and Yuncong, the financial data revealed during the listing process is obvious-although the revenue is growing at a high speed, the high loss and high investment situation shows no signs of change. The prospectus and public data show:

  • The oldest Megvii, from 2016 to the first half of 2019, in three and a half years, the accumulated revenue was about 2.8 billion yuan and the loss was 9.7 billion yuan;
  • From 2017 to the first half of 2020, Yitu has accumulated revenue of 1.5 billion yuan and a loss of 7.3 billion yuan;
  • Cloud, known as the “AI National Team” because of the background of the founding team of the Chinese Academy of Sciences and the industrial fund behind it, has accumulated revenue of 1.6 billion yuan and a loss of 2.3 billion yuan from 2017 to the first half of 2020;

(Megvii and Yitu’s huge losses were partly due to changes in the fair value of preferred stocks, that is, after multiple preferred stock financings, the company’s valuation increased and the fair value of preferred stocks continued to rise, resulting in losses from changes in the fair value of each period of the trip, and debt transfer Into the owner’s equity. But in short, even if the impact of changes in fair value is removed, it is still a loss.)

The huge losses are slightly embarrassing when compared with their high valuations. The achievements of the predecessors directly affected other AI startups.

In fact, the leading AI companies are looking for their own commercial positioning, struggling to differentiate from their peers. From the official website of the “Four Little Dragons”:

  • SenseTime is an AI platform company, positioning an AI algorithm provider, focusing on smart cities, smart transportation, smart parks, smart property, smart transportation, smart cultural tourism, smart cars and other industries;
  • Megvii is an artificial intelligence product and solution company. The three major sectors are consumer Internet of things, urban Internet of things, and supply chain Internet of things;
  • YITU divides its business into smart public services (smart cities and smart healthcare) and smart business;
  • From its positioning as a human-machine collaboration solution provider, Cloud has deployed four major business areas: smart finance, smart governance, smart travel, and smart business.

However, capital is chasing profits and does not believe in word games. The technological development and commercialization process may not be fast enough to change the wind.

Track offset

Why is it difficult for AI companies to make a profit? First of all, the investment in technology is large and the cycle is long; secondly, the technology in the laboratory must be applied in scenarios.

The development of the industry and investment behavior complement each other and evolve. When the consensus that “AI is infrastructure” was formed, people looked at not only technology, but “industry + technology + capital”.

“In the past few years, we have invested in some unicorns, mostly basic technology innovation companies; in 2018, we must look at the scene and create scene value; in 2019, we must have data. The data speaks for itself; this year is the deep penetration of the’AI+ industry’.” Xu Jingming, chairman of iFlytek Ventures, a subsidiary of iFLYTEK, said in an interview last year.

According to the IT orange classification, from the perspective of the industry chain, AI companies are distributed into the basic layer, algorithm layer, and application layer:

  • The basic layer is more hardware-oriented, with high production investment costs, high thresholds, and fewer startups, mainly including chips, data platforms, sensor systems, and cloud computing equipment;
  • The technical layer includes machine learning, data mining, natural language processing, etc., among which speech recognition and image recognition are currently approaching maturity;
  • The application layer is the link closest to the C-end and B-end consumers and customers. There are many classifications. There are many AI companies rooted here, covering various vertical industries such as industry, transportation, power, security, agriculture, retail, education, home furnishing, etc. /Scene solution.

In 2017 and 2018, when the wave of AI investment was set off in China, computer vision (the core technology is image recognition) and voice were popular tracks. After all, breakthroughs in deep neural network research were the first to land in these fields. After 2018, the number of investment events in the voice and vision track has declined, and attention has shifted to other areas.

Although the loss of AI companies is still normal, the commercialization prospects of the technology will only become broader. Broadly speaking, robots, AI chips, and autonomous driving (smart cars) are all currently driven by AI. Capital is still willing to pay for imagination and take up cutting-edge technology, but is this role ripening or boosting?

It is also worth noting that while the technology giants build their own laboratories, they also improve the AI ​​matrix through CVC, which has become an important capital pool in the AI ​​investment field. The investment of giants pays more attention to business synergy with their own economies.

​The IPO is broken, the glory is not there, what happened to "AI"?

According to the company’s data, since 2016, Tencent has invested 36.024 billion yuan in the artificial intelligence track, surpassing Ali, Baidu, and Byte, with 59 financing incidents, ranking first. Tencent is a long-term investor in Weilai Automobile, big data service company Minglue Data, and AI chip Suiyuan Technology.

The number of financing events comparable to Tencent is “All in AI” Baidu, with 58 cases, but the financing amount is only 7.126 billion yuan, mainly for incubation.

Alibaba has a small number of investments, but he was willing to spend money. There were 29 financing incidents, but the amount of financing reached 14.264 billion yuan, and his vision was accurate. The AI ​​companies covered by Ali are more inclined to the basic layer and the technical layer. It is an investor in the Cambrian, Megvii, SenseTime, and Spitz.

As a new small giant, BYTE’s investment in AI is slightly inferior to that of its big brothers. There were 24 financing incidents and a disclosed amount of 1.207 billion yuan.

In essence, AI is an underlying technology, and the opportunity lies in deep integration with various fields. However, in the unpredictable mood of the capital market and the slow accumulation of technology, AI companies still have to find a balance and recognize their positioning and the market to take root.

After all, this is not only a technological war, but also a business game.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/%e2%80%8bthe-ipo-is-broken-the-glory-is-not-there-what-happened-to-ai-2/
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