The Tech Unicorn That Could Eat the FANGs

In our opinion, SenseTime is the most important tech unicorn anywhere in the world right now. Founded in Hong Kong in 2014, the company specializes in a wide range of video-based technologies powered by artificial intelligence. A partial list of their main areas of expertise here:

• Facial and body recognition technology. The ability to scan video and still images and identify individuals in milliseconds, even in large crowds and with partial information. The technology also allows the validation of a live person to their picture identification and other applications.

• Public and professional image detection. Identification of clothing, objects, landscapes, alphanumeric characters and automotive brands in real time.

• Video content review. Identifying inappropriate content in videos, automated content tagging, and other real time analyses.

• Improving video and image processing. Making still and moving images sharper and clearer using AI powered automation.

• Virtual reality and 3D object detection and tracking.

• Video based robotic sensing and control.

• Autonomous vehicle software. Pedestrian and vehicle detection and analysis, lane detection, and scene analysis, among other use cases

• Full website here: https://www.sensetime.com

SenseTime just raised capital at a $4.5 billion valuation; a year ago the company did a round at a $1.5 billion value. That sort of move means something is clearly going very, very right. Alibaba is the lead investor in this latest fundraising and is reportedly now SenseTime’s largest shareholder. Qualcomm is also in the mix, as is Singapore’s Temasek Holdings.

Why this is important (2 issues):

#1. That list at the top of this section covers a large array of important applications in very important end markets. Name brand investors are giving this company an outsized valuation for a reason: the technology works, and likely works as well/better than the competition.

That competition would be public US technology companies like Apple, Facebook, Google, and Amazon.

#2. Chinese companies in the AI video/facial/object recognition space have a huge advantage over western ones (i.e. the ones likely in your portfolio).Rather than facing government oversight on privacy concerns, SenseTime has a real partner in Beijing. This allows them to develop technology with government backing that will have applications everywhere from self-driving cars to consumer electronics and many facets of day-to-day life.

Summing up: SenseTime is the perfect case study in the difference between Chinese and western technological development. Artificial intelligence, and especially the AI that powers visual analytics, is a critical technology for a raft of new products. The western companies have their own advantages, to be sure. But the Chinese model of government sponsorship AND private capital is coming on very strong. SenseTime may be the hit investment of the moment coming out of this approach, but it certainly won’t be the last.