Bloomberg
Beijing
Megvii Inc, a strategic partner of Alibaba Group Holding’s finance affiliate, is seeking to raise funds at a valuation of as much as $2bn, according to a person with direct knowledge of the matter.
The Beijing-based owner of Face++ facial scanning technology may conduct an initial public offering in 2017, with a preference for the US, the person said, asking not to be identified because the matter is private. The company provides face-scanning systems to Zhejiang Ant Small & Micro Financial Services Group, which operates the dominant payments service on Alibaba’s e-commerce platforms.
Alibaba and Internet companies from Facebook to Google and Baidu are embracing biometric technologies and artificial intelligence to improve security and smooth e-commerce. A $2bn valuation would be 10 times Megvii’s May appraisal, when it raised $47mn from investors including Qiming Venture Partners and Innovation Works, the incubator founded by Google’s former China head. Megvii is working with Ant Financial on a system allowing users to set up bank accounts online through facial scans, provided it receives regulatory approval.
“We are preparing for the next round of fundraising,” Megvii said in an e-mailed statement. “It may be the pre-IPO round for us but there is no clear schedule for IPO yet.” Ant Financial declined to comment in an e-mailed statement. Ant Financial introduced facial scanning for Alipay, Alibaba’s electronic payments business, this week. Such scans can also be used as identification for changing of mobile phone registration information online, Yang Xinyun, an Ant Financial spokeswoman, said by phone on Wednesday.
Megvii’s application uses facial scans held in a ministry of public security database drawn from legal identification files on about 1.3bn Chinese. Face++ doesn’t compromise privacy because neither a user nor company can see the police data, according to Megvii.
China’s biometric market may climb about 15% annually over the next four years, according to Research and Markets.
