One of China’s most highly anticipated artificial intelligence startups is undergoing a major change of course.
Guangnian Zhi Wai, or Light Years Beyond, which was founded just four months ago by Wang Huiwen, a co-founder of Meituan, with the ambition to become the “OpenAI for China”, is being bought out.
In a document released Thursday, Meituan announced it will fully acquire Light Years Beyond for $233.7 million in cash. It also takes on the startup’s $50.66 million debt.
The acquisition came shortly after Meituan announced that Wang Huiwen was resigning from all his business positions at the food delivery company due to health reasons. A widely circulated blog post claiming he knew about the matter said Wang had been diagnosed with depression, sparking a discussion about the mental health issues of entrepreneurs in China’s technology community.
As part of the deal, Meituan will pay the AI startup’s various investors, including $5 million to Qimai, which is controlled by Meituan’s current CEO Wang Xing, and $28 million to HongShan, which predates the company’s recent restructuring. the parent company was called Sequoia China. and $201 million to other investors. These transactions roughly amount to the cash payment of $234 million.
In a series of recruiting posts on Jike, a social network popular in China’s tech community, Wang initially said he planned to personally invest $50 million in Light Years Beyond. It’s possible the startup received funding from its founder in the form of a convertible bond, a type of debt that can be converted into equity, equivalent to the company’s $50.66 million debt.
That makes the total purchase price of the deal about $284 million.
According to the filing, Light Years Beyond had a net present value of approximately $285 million as of June 29. That means Meituan is essentially taking over Light Years Beyond for free.
While the filing says the deal helps Meituan “acquire” AI technology and talent, it’s possible that without Wang’s visionary leadership, the AI experts wouldn’t have been so inclined to join Meituan, which focuses on on-demand neighborhood services.
The limited spending of the funds raised by the startup suggests that progress has been limited in recent months. Developing large language models is known to be an expensive endeavor, especially given the skyrocketing prices of AI chips after the US banned the export of Nvidia’s state-of-the-art semiconductors to China.
Without product, Light Years Beyond had a $200 million valuation at its inception, as noted in one of Wang’s Jike posts. It speaks to investors’ confidence in Wang’s product ingenuity and their eagerness in chasing the potential OpenAI for China. His journey may have been cut short too soon.