CloudWalk raises $250M and plans IPO as biometrics firms flourish in China during pandemic response
CloudWalk has raised RMB 1.8 billion (US$254 million) in funding from a group of provincial and municipal funds in China to become the fourth most well-funded biometric facial recognition company in the country, according to a report in Chinese-language publication 36Kr covered by its English-language affiliate KrAsia.
CloudWalk intends to launch an IPO on Shanghai’s Star Market by the end of 2020, according to the report. The company has raised a total of RMB 2.8 billion ($400 million) so far.
CloudWalk provides facial recognition for numerous public agencies, including the Bank of China, Shanghai Pudong Airport, and China Mobile’s brick and mortar stores.
Megvii has been exploring IPO possibilities, but a planned $500 million launch to Hong Kong’s exchange lapsed earlier this year amid concerns including its inclusion on a U.S. blacklist and the COVID-19 outbreak which was not yet a pandemic at that point. SenseTime postponed its planned $750 million IPO on the Hong Kong exchange in March. Both Megvii and SenseTime are now reported to be considering launching their public offerings to the Star exchange. Those two companies and Yitu are the Chinese facial recognition providers that have received higher total funding amounts. While CloudWalk is not named on the U.S. Entity List, the other three biometrics unicorns are.
Megvii is also among companies identified as benefitting from what a French external trade department report calls the “dazzling development” of the Chinese security and surveillance monitoring industry during the pandemic, according to Intelligence Online. Kuang-Chi, which makes helmets integrated with AI technologies, and facial recognition company FaceGo, the biometric business of Hanvon, are also identified as firms seeing increased demand during the pandemic response. Computer imaging, AI and biometrics are being used for detecting fevers and people wearing masks, among other applications related to outbreak containment.
SenseTime, for its part, is reported by The Wall Street Journal to be floating a billion-dollar fundraising round. Sources told the publication that the new capital would give the company a valuation of at least $9.5 billion, and would be the last fundraising before launching its IPO. SenseTime declined comment.
The company’s technology is in use for fever checks and mask detection in addition to previous applications around China, according to the report.
The Journal also notes that SenseTime transferred the 51 percent stake it held in a joint venture to its Xinjiang-based surveillance technology partner for free shortly before the Entity List placement.
CloudWalk’s technology has reportedly been used by police in more than 10,000 arrests of suspected criminals, though VP Candy Wu suggested last year that implementing facial recognition in a way that addresses privacy concerns is a balancing act.
The company raised $140 million in a Series B+ funding round in 2018, and has since then the majority of its funding has come from public funds, according to KrAsia.
Many AI companies in China have cozy relationships with public entities. Intellifusion CEO Chen Ning was appointed as an advisor to the Bao’an district of the city of Shenzhen in April, Intelligence Online reports.
Intellifusion provides facial recognition surveillance cameras to Shenzhen police to identify traffic violations, and is also expected to file for an IPO in the near term.