Meituan Settles Biggest AIGC Deal in China to Continue Cofounder’s Ambitious Newborn Venture

BEIJING, June 30 (TiPost)— The world’s No.1 food delivery service provider joined a heated artificial intelligence (AI) race with the biggest Artificial Intelligence-Generated Content (AIGC) deal in its homeland. The new effort was deemed as a brilliant move to kill two birds with one stone, as it is also a bailout for an ambitious newborn venture when its leader was unexpectedly forced to exit.

Credit：Visual China

Meituan announced that it has entered into the agreements of share purchase and equity transfer to acquire the entire interest in an AI startup Light Year Group. Meituan will pay about US$233.67 million in cash, including a payment of US$28 million to a previous investor HongShan, a spinoff of venture capital giant Sequoia, and assume liabilities of RMB366.92 million, according to a filing with the Hong Kong Stock Exchange on Thursday. Meituan will inherit about US$285 million of net cash owned by Light Year. Upon completion of the agreements, the Ai firm will become Meitan’s wholly-owned company.

Light Year is engaged in research and development of large language models (LLMs), which empower the popular generative AI products including ChatGPT. The startup was born with much attention in China’s tech sector as it was founded by Meituan’s co-founder Wang Huiwen, who invested in US$50 million as a controller and revealed US$230 million of subscription funds from the leading venture capital obtained in February.

In a statement last Saturday, Meituan suddenly disclosed that Wang resigned as the non-executive director due to personal health. Future of Wang’s AI firm turned more uncertain. When Wang realized he had to quit all the jobs for he was surely not in good health, he talked with his team and investors about the health issue, and contacted with four companies, including Tencent, ByteDance, Meituan and Kuaishou, to work on a variety of possible solutions, according to GeekPark, a Chinese tech news media outlet.

The recent takeover of Light Year suggests that Meituan, led by Wang’s ally, will hold his legacy and step up exploration into AI. Wang and Meituan CEO Wang Xing are classmates at Tsinghua University and used to live in one room, where one of them slept at the top bunk and another at the bottom. After graduation, the duo co-founded Meituan and Xiaonei Network, a Facebook-like social media later renamed to Renren. In an open letter released following Wang Huiwen’s announcement of retiring from Meituan in late 2020, Wang Xing called his partner “a lifelong friend who can have collision of thoughts and soul conversations with me”.   

Wang Xing’s action speaks even louder. He announced that he decided to join in Light Year’s Series A round of funding and serve as a board director in March, a month right after the startup’s inception.  “The AI ​​model made me not only excited for the upcoming huge productivity that it creates, but also worries about its future impact on the whole world,” Wang posted at Tencent’s social media WeChat. “Wang (Huiwen) and I have been together on the road of entrepreneurship for nearly two decades. Since he is determined to embrace this big wave, I must support.”

Meituan’s board doesn’t expect the acquisition would have any material financial impact on the earnings, assets and liabilities of the company.The latest financial report showed Meituan has enough firepower to do a multi-million-dollar deal.   Meituan held cash and cash equivalents of RMB26.9 billion and short-term treasury investments of RMB84.5 billion as of March 31.

The quarter ended March saw Meituan revenue increased 26.7% year-over-year (YoY) to RMB58.6 billion, and the operating loss for its New Initiatives, a segment including the community group buying platform Meituan Select and the online fresh grocery marketplace Meituan Grocery, continuously narrowed to RMB5.0 billion, with a 40.5% YoY decrease. The company vowed to continue to implement the “Retail + Technology” corporate strategy, leverage technology to bring new advancements and growth opportunities, fulfill its mission that “We help people eat better, live better”, and create more value for all the participants in our ecosystem.

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