Why SenseTime's IPO is Important
China's Superiority in Facial Recognition
If China needs to catch up in the Cloud, in Chip supply chains and in other areas, its superiority in AI, facial recognition companies, retail tech and payments is considerable. How about consumer apps that have actual utility, mini-programs and super-apps?
At the Last Futurist, we've been following China's hotbed of facial recognition startups and they are around 10 years ahead of the U.S. now. Facial recognition at scale has many uses cases that have already gone live in China years ago.
China has more Big Data optimization at scale than most countries will have twenty years from now. Its version of augmented surveillance capitalism is already what companies like Google or Facebook could only dream of.
Chinese artificial intelligence (AI) company SenseTime has filed for an initial public offering in Hong Kong. SenseTime said Thursday that it raised $620 million in fresh funds from investors like Fidelity International, Hopu Capital, Silver Lake and Tiger Global. Alibaba is also a big backer in this company already, as it previously raised $600 million in funds from Alibaba, Suning.com and Temasek.
If Rivian's valuation is crazy high, SenseTime will go IPO with a rather modest valuation. This ain't no SPAC fraud but a mature AI company.
SenseTime will go IPO at $2 Billion and is a Softbank backed company. China is building entire cities based on AI, with urban planning projects that dwarf anything else happening in the world of smart cities.
Founded in 2014, SenseTime has developed AI technology for facial recognition, autonomous driving, the smart city and clinical practice, among other applications.
Even as China tightens regulation, SenseTime is one of the pioneers of facial recognition real time technology. It's important to remember that in 2019 SenseTime was put on the U.S. Entity List, an export blacklist, which restricts the company’s ability to get access to certain technologies originating from the U.S. As blatantly hackable as some of Amazon's video products are, China's surveillance tech is way ahead.
According to Tech in Asia, SenseTime's revenue increased 2x in the first half of this year, while its gross profit margin was slightly up to 73% from 72.1% during the same period in 2020. China has dozens of AI companies evolving that serve functions that are just products in American monopolies.
America doesn't even have the equivalent startups since startups cannot compete in the rigged hierarchy of Silicon Valley where free-market capitalism isn't so free any longer.
SenseTime and its competitors bring facial recognition to a next fundamental level. SenseTime has more than 2,400 customers and its technology is also used on more than 450 million smartphones and 200 apps. Out of those apps, five have more than 500 million monthly active users. It's hard to imagine that scale and with 1 billion netizens in China, the Chinese consumer facilitates a scale that cannot be duplicated in other parts of the world easily, if at all. More data means better AI.
SenseTime makes money by selling AI software platforms. This is not unlike what ByteDance is now doing with BytePlus. SenseTime has raised more than US$3 billion to date and counts prominent companies such as SoftBank, Alibaba Group, Temasek, Singtel Innov8, and IDG Capital as investors.
SenseTime now has its HQ in Beijing, whose AI fund was clearly an early supporter of the SenseTime's potential. SenseTime is generally considered China's biggest AI firm now in 2021, even though that's really ByteDance, which pretends for various reasons that it isn't actually an artificial intelligence company.
China's Baby AI Dragons Are Hatching
The Chinese lockdowns around Covid-19 have obviously been good to SenseTime. The SoftBank Group Corp.-backed company, which makes AI technology for interpreting images, has thrived during the Covid-19 pandemic, according to Bloomberg. The need to enforce lockdown measures increased demand for its facial-recognition software in China. SenseTime’s cameras have been used by the government to tell whether people are wearing masks, to read their temperature and to determine their identity when their faces are covered. In surveillance capitalism proper, how facial recognition evolves is actually quite interesting.
China will eventually export its augmented surveillance capitalism to the world, and ByteDance and SenseTime are a rather big part of how that occurs. From advertising to social commerce, how Chinese companies are growing in South America, South-East Asia, South Asia, Africa and parts of Europe show we are going to live in a different world very soon.
China's baby AI dragons are something that's not documented properly by Western media outlets. American BigTech are not keen to advertise they are behind China in several important key areas in surveillance capitalism, not just in AI but also in the R&D that these growing specialized startups are able to do with access to huge amounts of data.
SenseTime is finding itself on the bleeding edge of image recognition with a likely end game in Health Tech. For instance:
SenseTime develops AI technology for use in 2021 in
Medical image analysis and other fields.
As it matures it's going to be one of Softbank's better picks and Softbank will have seen better ROI from its Chinese investments than its American ones that included spectacular failures.
With regards to AI companies of scale, it doesn't take much analysis to see where the majority of it will happen in the 2025 to 2035 period and SenseTime and ByteDance's IPOs, I think, will reflect that.
How good are SenseTime's prospects? As it bifurcates into new areas of growth, it's very good. In the first half of 2021, the company reported revenue of 1.65 billion yuan ($255.4 million), up 91.8% year-on-year.
However it reported a net loss of 3.71 billion yuan (about $0.6 Billion U.S) from January to June this year. Originally a Hong Kong based company, SenseTime benefits from being a smart city, smart car and smart image company. It can profit from the metaverse as well.