Singapore, October 20, 2015 - Beijing-based company is a leader in Chinese-language search technology
Google has taken a significant minority stake in Mobvoi, a Beijing-based start-up that has developed Chinese-language voice recognition and search technology for mobile devices.
The investment underscores how rapidly Chinese entrepreneurs are developing new technologies for the domestic market and comes as the Silicon Valley group continues to look for ways to rebuild its internet services offering in the country.
“The new funding by Google will enable the company to further enhance its core artificial intelligence technologies, and develop new consumer products empowered by [artificial intelligence], and explore robotics technologies,” Mobvoi said.
Earlier this year, the two companies signed a strategic partnership agreement, with Mobvoi providing search and speech recognition for Android Wear, Google’s smartwatches.
The companies did not disclose the value or the size of the investment, but people familiar with the matter said it was between 10 and 20 per cent.
Voice recognition applications are among the hottest areas for tech groups on both sides of the Pacific. In the past, the flow was almost entirely one way from the US to China but the relationship has evolved.
Li Zhifei, Mobvoi’s founder and chief executive, received his PhD in speech recognition and natural language processing in the US and worked at Google before returning to China in 2012 to start his own company.
“Without Johns Hopkins University and my two years at Google, I could never have gotten funding so easily,” said Mr Li. “Now, though, a real ecosystem is emerging in China with a market and investors and scale.”
Neil Shen, founder of the Chinese arm of Sequoia Capital, the venture capital firm, said the combination of a potentially vast mainland market for voice recognition apps and Mr Li’s background was the key driver behind his decision to invest in Mobvoi on day one.
The tie-up between Google and Mobvoi will inevitably lead to speculation about the US group’s wider ambitions in China.
The company has seen a steady decline in the popularity of its search engine in the country since it moved the servers powering it to Hong Kong in 2010, after dropping its censored domestic search service on the mainland.
Chinese internet companies Baidu, Alibaba and Tencent dominate but some observers believe there is an opportunity for a better service to thrive.
“There is still a huge opportunity for search in China”, said the head of one asset management group. “People want Google to come in. Monopoly power means firms have no incentive to improve.”
However, Google is not considering relaunching a domestic Chinese search engine, according to a person familiar with its plans, but is seeking regulatory approval to launch a mobile app store for users of its Android mobile operating system.
Hardware companies in the country are developing a reputation for producing cutting-edge technology. Mobvoi, whose Chinese name is Chumenwenwen, produces its own wearable devices, notably a smart watch that uses its own operating system and has a months-long backlog on orders. Shenzhen-based DJI is the largest maker of consumer drones worldwide and has a valuation of at least $8bn.
Mobvoi’s voice search function is mainly directed at enquiries about travel and local services but Mr Li hopes to move on to cars and robots with Google’s help.
The new investment financing brings total equity capital raised to $75m in three rounds of financing. In addition to Sequoia and Google, Mr Li has funding from Susquehanna Investment Management and two strategic investors involved in the smart watch operation.
“We were impressed by their innovative approach and the early traction that they’ve seen, which is why we’re pleased to support them with this investment,” said Don Harrison, vice-president of corporate development at Google.
THE FINANCIAL TIMES