Blacklisting Undermines Megvii IPO, China’s AI Ambition. Huawei is important for the supply chain to various industries such as telecommunications and consumer electronics., and a longer-term ban on Huawei will have knock-on effects for others such as Megvii. A study conducted by Arun Chaganty at Eloquent Labs (quoted by a 16z) that researched questions submitted to a chatbot in the customer support space shows a diminishing marginal value of data. But we do not think this will continue in the near term, mainly from the observation that data source costs will remain a significant part of revenue. Megvii provides a variety of AI solutions that can be adapted for specific problems, operating across three broad verticals of “personal, supply-chain, and smart city” Internet-of-Things (IoT) solutions. "Even if it [the U.S. blacklisting] does not slow down Megvii's growth fundamentally, it will have put doubt in investors' minds as to how easily Megvii can be impacted by macro regulatory factors," Toh said. Scenario is the key, but space is limited Now, Megvii is aggressively pushing the pedal to add more status to its brand via commercialization pathways, while hinting at aspirations of a future listing on the rocking Shanghai’s Stock Exchange Science and Technology Innovation, also known as the Star Market. Megvii's suppliers also use items imported from the U.S., and it is unclear if these items can be replaced with those of the same quality and price in China or from other countries, he added. With no other public company selling comparable products, it will likely price its shares against those of video surveillance specialists Hangzhou Hikvision Digital Technology Co. Ltd. and Zhejiang Dahua Technology Co. Ltd., analysts said. Allowing for the as-yet-to-manifest profitability aspect of the business layer for trends such as AI, regulations and governance are assuming that this and other transformative waves will soon enter a robust and mature stage of influence, and are following suit. "As a result, our costs would increase and our business, financial condition and results of operations would be adversely affected.". It frames itself as one of the “few” companies that can offer full-stack, end-to-end solutions rather than just niche algorithms. Megvii IPO valuation complicated by lack of direct peers, US blacklisting Author Priyanka Boghani Stefen Joshua Rasay Xiuxi Zhu Megvii's upcoming Hong Kong IPO could be complicated by a lack of comparable public companies, trade restrictions with the U.S., and the fact that it has yet to make a profit, analysts said. Please continue to part II. It said in its prospectus that it served 112 cities in China, 38% of the country’s total, as of June. Megvii occupies a unique place within the computer vision domain and benefits from increasing awareness about leveraging artificial intelligence (AI) and the Internet of Things (IoT) in managing business and public management from the government and business side. Megvii Brakes IPO Plan, with CEO Claiming a Sufficient Cash Flow On July 29, Megvii’s Co-founder and CEO Yin Qi (印奇) responded to the company’s initial public offering plan. Only a handful of industries have realized digitalization. While Arcsoft’s revenue and gross margin were on a steady growth stage from 2016 to 2018, Megvii saw a meaningful dip in 2019H1, as mentioned above. Megvii's August 2019 stock exchange filing shows a net loss of 5.2 billion Chinese yuan and revenue of 949 million yuan for the first six months of 2019. Facial recognition is a key part of China's drive to become a world leader in AI technology by 2030, and both companies are benefitting from that as the technology has been deployed in cities across China. AI’s prosperity resides on the success of digitalization – unless AI can learn like a real human, who does not need categorized data. Simply put, Megvii is looking a lot more like a hardware company than a software solutions company, despite its aggressive insistence on the preeminence of its core algorithms. As a result, that trap of data network effects mentioned before can be mitigated and a flywheel of intelligence can be set running – the model will be better, as will the product. The updated filing should provide new information about the company's financial performance, which should help investors assess Megvii's valuation more easily, Toh said. Please contact your professors, library, or administrative staff to receive your student login. It’s topped a $100 billion valuation. To solve a strategic problem and build up industry, know-how could likely yield a deep moat. Their continuous attempts to do so can guide them to discover more opportunities across industries and understand what changes they can inspire. Megvii started in a niche area within the face recognition domain. In the first six months of this year alone, the company lost 5.2 billion yuan — more than the amount it lost throughout 2018. On August 25, the Megvii IPO was filed with the Hong Kong Exchange . Transcending ‘smart security,’ the ‘smart city’ is another playground for Chinese AI companies as well as other participants. Such a project should be able to integrate fragmented city functions into one system: utility management, traffic regulation, civil services entry, cross-department communication, and so on. Megvii is known for its facial recognition platform Face++ and offers AI software for personal, smart city and supply chain internet of things devices. Chinese artificial intelligence (AI) firm Megvii has filed for a public listing in Hong Kong. A new spring may be imminent. A decade is not enough for an industry to mature. Megvii’s cost structure for its SaaS and IoT solutions remains debatable.