Wu Hai, Chairman of China Net Investment: How does the National Team Investment Fund tap into a real growth AI company?

The Surging News reporter Yang Yang

The 2021 World Artificial Intelligence Conference will be held in Shanghai from July 8 to 10. Over the past six decades, ai has had ups and downs. Today, the figure of AI has become ubiquitous and the application threshold has been greatly reduced. At the same time, AI entrepreneurship is also constantly "sinking".

"The artificial intelligence industry has experienced three waves of development, and AI investment has experienced the first wave of investment." Wu Hai, chairman of China Internet Investment Fund Management Co., Ltd. (hereinafter referred to as China Net Investment), said in an interview with the surging news recently that at present, the investment in the artificial intelligence industry mainly reflects two characteristics, one is to maintain the heat but return to rationality, and the other is that some of the middle and late stage projects of the track are more favored. From the perspective of capital hotspots, at present, autonomous driving, robots, and new AI chips have become more active areas for investment and financing.

"At present, the number of start-ups in the AI chip track has increased, and the pace of investment has been too fast and overheated." Wu Hai reminded that some companies in the start-up period, A round of financing and reached a billion financing, the valuation is close to 10 billion, which in the past seemed unimaginable logic. Through capital assistance, we can accelerate the catch-up speed of AI chips, but we must also fully do a good job in risk assessment in terms of technical route feasibility, talent team stability, and product application promotion when investing.

China Net Investment is the national team in the field of equity investment in the digital economy. In 2017, the China Internet Investment Fund was established with the approval of the State Council and jointly initiated by the Central Cyberspace Administration of China and the Ministry of Finance. The total size of the fund is planned to be 100 billion yuan, and the initial scale is 30 billion yuan. China Net Investment is responsible for the market-oriented operation and professional management of the fund. "In our investment, we mainly proceed from the strategy of network power and strive to build a solid foundation for China's digital economy information." Wu Hai said.

Wu Hai, Chairman of China Internet Investment Fund Management Co., Ltd

The following is the transcript of the surging news's interview with Wu Hai, chairman of China Net Investment:

The Paper: The China Internet Investment Fund (hereinafter referred to as "China Net Investment") was established in 2017, which was the "first year of artificial intelligence application". After more than four years, what changes have taken place in the investment ecology of the artificial intelligence industry?

Wu Hai: The artificial intelligence industry has experienced three waves of development, and AI investment has experienced the first wave of investment. At present, the investment in the artificial intelligence industry mainly reflects two characteristics: First, it maintains the heat but returns to rationality. Statistics show that from 2012 to 2017, the amount of AI private equity investment in China grew rapidly to the highest point at a compound annual growth rate of 68%, and since then, with the impact of the new asset management regulations on equity investment, the total amount of investment has declined after 2018, which is still hot compared with other fields and is more rationally focused. Second, some of the middle and late stage projects of the track have been favored. At the level of algorithm technology, Internet companies, listed companies and related enterprises (such as the "Four Little Dragons" of computer vision) have gradually gained competitive advantages, and at the same time reduced the threshold for downstream applications by adopting open source strategies. If there is no major breakthrough in AI algorithms, the opportunities for start-ups to serve in algorithm technology will be correspondingly reduced, more start-ups will look for breakthrough opportunities for integrated applications from AI+ commerce, transportation, manufacturing, etc., and some companies will gradually become the leaders of the subdivision track.

From the perspective of capital hotspots, at present, autonomous driving, robots, and new AI chips have become more active areas for investment and financing. First, investment in automatic driving has increased. With the enhancement of perception devices and the improvement of data standards, the solution has begun to develop from safe assisted driving (L2) to autonomous driving in limited scenarios and manned conditions, and Internet companies and traditional car companies have cooperated to accelerate the process of networking and intelligence of automobiles. In the first two months of 2021, there were 24 investment and financing incidents in the field of autonomous driving, and the total amount of investment and financing disclosed was 17.64 billion yuan. Second, the field of robotics is full of flowers. In the first two years, robots, especially commercial robots, service robots industry has experienced a downturn in development, according to statistics, from January to April this year, domestic robot enterprises have invested in 67 cases, the cumulative amount of more than 10 billion yuan, the amount of more than 100 million single financing has more than 30 cases, the industry is more optimistic about the application prospects of medical robots and service robots. The third is the joint organization of AI chips by talents and capital. The industry's demand for computing power has become more urgent than ever, and the domestic foundation in related fields is relatively weak. According to the investment research statistics of China Internet Investment Fund, more than 70 computing chip companies have emerged in the past three years, and various types of special computing chips and general computing chips have cut into the scenes of cloud training, cloud reasoning and terminal reasoning. Taking GPGPU as an example, at the beginning of the establishment of several companies, the chip did not stream the chip to obtain billions of financing, with a valuation of billions or even nearly 10 billion. These enterprises are generally founded by foreign technical teams, and capital has tracked these teams early.

The Paper: Artificial intelligence cannot be separated from application scenarios. With the accelerated commercialization of artificial intelligence technology, what specific areas will China Net Investment give priority to and which segments will be favored?

Wu Hai: China Internet Investment Fund takes capital to help the strategy of network power and serve the development of the digital economy as its mission, and our starting point for helping the development of the artificial intelligence industry is to make up for shortcomings and strengthen the long board, to support breakthroughs in core technology innovation, improve the upstream and downstream collaborative ecology, and generally carry out investment layout in accordance with the four dimensions of technological innovation, infrastructure, industrial integration, and security: First, support core technology innovation. Deeply lay out technological innovation enterprises such as vision, speech, and natural language processing, and continue to pay attention to theoretical breakthroughs and technological innovations, such as unsupervised learning, near-existing computing, brain-like computing, etc. The second is to pay attention to the computing power data infrastructure. In-depth layout of AI chips for new computing architectures, taking into account both dedicated computing and general-purpose computing, focusing on programmable, reconfigurable new architectures, including photoelectric chips and quantum computing that may produce disruptive innovations and systematic innovations. In addition, we have invested in some high-quality data platforms and industry big data platforms that serve AI. The third is to help industrial integration and application. According to the current maturity of AI technology integration application and commercialization, it is mainly optimistic and invested in unmanned systems, service robots and data intelligent service directions with mature business models in limited controlled scenarios. The fourth is to ensure AI safety. Serve the country's security regulatory requirements for AI, data, etc., and invest in AI security and data security, such as: Ruilai Wisdom, which has invested in AI security, Fushu Technology, and Ming Dynasty Wanda and Sunjet Information in data security.

Surging News: As a key link in the card neck, artificial intelligence chips are currently hot spots in the industry, but they are also full of bubbles. What is the real dilemma behind domestic artificial intelligence chips? How does China Net Investment view the current situation of investment in this field?

Wu Hai: The outbreak of artificial intelligence chips has superimposed two favorable factors, one is the continuous improvement of artificial intelligence computing power and the gradual landing of large-scale scenarios; the other is the shortage of production capacity and the security of the industrial chain. Both of the above aspects require better hardware and chip architecture, which are further improved in terms of computing efficiency and energy consumption ratio. The AI chip industry is a highly talented, capital, and technology-intensive segment, with high investment, long cycle, and high risk. On the one hand, to enable chip development to cope with the challenges of algorithm diversification and rapid evolution, the formation of cloud training, cloud reasoning, terminal reasoning series products, and to adapt to video, voice, search recommendation and other different types of application needs, on the other hand, foreign giants through the integration of software and hardware to occupy the monopoly position of the cloud market, it is difficult to shake in a short period of time, chip fragmentation in terminal applications is more obvious. At present, the number of start-ups in the AI chip track has increased, the pace of investment is too fast and overheated, and some companies have reached a billion financing amount in the start-up period and A round of financing, and the valuation is close to 10 billion, which is unimaginable logic in the past. Through capital assistance, we can accelerate the catch-up speed of AI chips, but we must also fully do a good job in risk assessment in terms of technical route feasibility, talent team stability, and product application promotion when investing.

The Paper: On June 10, the Data Security Law of the People's Republic of China was officially deliberated and passed, and will be implemented from September 1. Data security and network security are one of the focuses of China Net Investment Investment, how to view the trend of data security investment in the next two or three years?

Wu Hai: In recent years, China's laws, regulations and governance systems related to network security and data security have been continuously improved. In 2012, the Standing Committee of the National People's Congress issued the Decision on Strengthening the Protection of Network Information, and in June 2017, the Cybersecurity Law came into effect, in which the Cybersecurity Law stipulates the protection of data security in network services, involving data security principles, objectives, measures, obligations and responsibilities. Recently, the 29th session of the 13th National People's Congress Standing Committee passed the Data Security Law, which provides important guidelines for solving data security and ownership issues. Internet information, public security, industry and information technology, finance, energy, medical and other competent departments will also successively introduce regulatory and governance measures, and carry out special law enforcement inspections on data leakage, data discrimination and other issues, and data security will become a new compliance requirement. At the industry level, data security has become an endogenous demand. At present, the development of the new economy is obviously data-driven, the concept of data assets as the center has gradually penetrated into various industries, and the establishment of a full-life cycle management covering data collection, storage, exchange, use and destruction has become the actual needs of government and enterprise users.

China's data security market has the characteristics of strong protection and high security, and has formed product solutions such as file storage encryption, data encryption transmission, and cross-network exchange. In recent years, the state has continuously improved its efforts to ensure data security, requiring strengthening the country's ability to protect key data resources, enhancing data security early warning and traceability capabilities, and at the same time, government and enterprise units have continuously increased the protection of business data, technology patents, digital products and personal privacy. Taking data assets as the center, the need to achieve comprehensive management, real-time protection, and dynamic tracking has spawned a new type of data security enterprise represented by data leakage prevention, data discovery governance, and data processing exchange. Data security is not achieved overnight, more to start from data governance, the future data security vendors will shift from a single product provider to a comprehensive solution and service provider, the proportion of consulting services will increase, and is an important means to import users in the early stage.

The Paper: Since the beginning of this year, China Net Investment has paid attention to some new areas, such as the first layout of the private aerospace field, the investment in nine-day MSI, and the leading investment in the Origin Quantum A round of financing, and so on. What are the considerations behind increasing investment in the field of quantum and satellite communications?

Wu Hai: At present, the information technology industry is in a period of explosive innovation breakthroughs in new technologies, new formats and new applications, and technological innovation in some areas is significantly ahead of the rhythm required for our production and life, in other words, the demand is followed by a guidance period and a user education period. There are also views in the industry that the industrial cycle of 4G is actually not over, 5G is already on the way, and satellite Internet, space-space integration, etc. are also promoting applications.

Cutting-edge technologies, especially some subversive technologies, may bring innovative changes to the industry, and investing in innovative and subversive technologies is also the embodiment of the sense of strategic mission and historical responsibility of investment institutions. We focus on the three networks of the Industrial Internet, the Internet of Things, and the Satellite Internet, as well as the new computing and storage architecture represented by new storage, quantum technology, blockchain, brain-like computing, and privacy computing. For example, quantum technology as the world's top frontier technology, countries are actively exploring the three major application areas of quantum: quantum communication, quantum computing, quantum measurement, although many are still in the laboratory or from the laboratory to the market stage, there are still uncertainties in various technical routes. As a national team, China Net Investment should actively play a leading and guiding role and help establish the advantages of new technologies and new industries. At the end of 2020, we led the investment in the quantum computing enterprise Origin Quantum, the current development situation of the company is good, in the first quarter of this year released the first domestic quantum computer operating system - "Origin Sinan" to further build a software and hardware system.

The Paper: The carbon neutrality boom is spreading rapidly within the VC/PE circle. What are the new opportunities for equity investors to target carbon neutrality? What is the layout of China Net Investment?

Wu Hai: The goal of carbon peaking and carbon neutrality is an important international commitment for China to highlight the responsibility of a big country, and it is also an important starting point for transforming the development mode internally and achieving sustainable economic development. Recently, Yi Gang, president of the Chinese Min min bank, predicted at the high-level seminar on "Green Finance and Climate Policy" that china's carbon emission reduction needs to invest 2.2 trillion yuan per year by 2030; from 2030 to 2060, it needs to invest 3.9 trillion yuan per year. To achieve the "30, 60" goal, one is to optimize the energy structure and build an energy system based on renewable energy; the other is to realize the optimization and upgrading of the economic structure, from resource energy-driven to talent-based knowledge-driven, from "three highs and one capital" high-cost, high-pollution, high-energy consumption, resource-based industries to the knowledge economy and digital economy transformation. These two aspects are very large incremental markets, and I believe that equity investment will make a big difference.

We believe that carbon peaking and carbon neutrality strategies complement the development of the digital economy, which is not only a new variable for improving economic quality and efficiency, but also a "new blue ocean" for economic transformation and growth. China Net Investment mainly focuses on the three aspects of digital industrialization, industrial digitalization and digital governance to help achieve the goal of "double carbon". In terms of digital industrialization, there is a lot of room for energy conservation and emission reduction in China's digital infrastructure, and attention should be paid to the optimization and consumption reduction of algorithmic computing power, and the artificial intelligence chip company We recently invested in Helm Computing, with the same performance as the industry, can reduce consumption by 3-4 times. In the field of industrial digitalization, science and technology enterprises should use the construction of the energy Internet to achieve efficiency improvement and structural optimization, and we have laid out the wisdom of Luculent in the direction of power generation, the Qingdao Keyue in the direction of transmission and distribution, and the national energy credit control in the direction of wind power and energy storage. In the direction of digital governance, it is necessary to build a smart city through digital governance, let information run more, the masses run less errands, and use a new generation of information technology to guide the flow of funds to enterprises that use low-carbon technology.

The Paper: In the endless conceptual innovation and subversive business models in the Internet field, how can investment institutions judge whether a company is really growing or a pseudo-concept?

Wu Hai: Doing investment is the process of removing falsehoods and storing truths and seeing the sun in the clouds. At present, the Internet industry as a whole has gradually entered the industrial Internet from the consumer Internet, from focusing on model innovation to focusing on technological innovation and technological empowerment. Under this general trend of transformation, we believe that to distinguish between "true growth" and "pseudo-concept", the key is what independent core technologies are available, and the other is what real problems can be solved or what real needs can be met by users. Enterprises still have to take technological innovation as the core, take products or services as the carrier, find the target market and be able to effectively realize, that is to say, they can really land and commercialize.

As the national team in the field of equity investment in the digital economy, China Net Investment mainly starts from the strategy of network power in investment, and strives to build a solid digital economy information base in China. In terms of overall strategy, we first make up for the shortcomings, ensure the security of the Internet and information technology, and make every effort to solve the "card neck" link; the second is to strengthen the advantages, lay out a new generation of information technology such as 5G and Yundazhi, and give full play to the advantages of the digital economy industry cluster driven by domestic applications; the third is to lay out the future, lay out cutting-edge applications and subversive technologies, and win the development opportunities.

Editor-in-Charge: Li Yuequn