Meituan buys founder’s months-old ‘OpenAI for China’ for $234M

Meituan buys founder’s months-old ‘OpenAI for China’ for $234M

One of China’s highly anticipated artificial intelligence (AI) startups, Guangnian Zhi Wai, also known as Light Years Beyond, is undergoing a significant shift in its trajectory. Founded just four months ago by Wang Huiwen, a co-founder of Meituan, with the ambitious goal of becoming the “OpenAI for China,” the startup is now being acquired.

In a recent filing, Meituan announced its complete acquisition of Light Years Beyond for a cash amount of $233.7 million, in addition to assuming the startup’s debt of $50.66 million. The acquisition comes shortly after Wang Huiwen’s resignation from all corporate positions at Meituan, citing health reasons. Reports circulating online, claiming insider knowledge, have suggested that Wang is battling depression, prompting discussions about mental health challenges faced by entrepreneurs in China’s tech industry.

The deal entails Meituan paying various investors of the AI startup, including $5 million to Qimai, controlled by Meituan’s current CEO Wang Xing, $28 million to HongShan (formerly known as Sequoia China), and $201 million to other investors. These transactions collectively amount to the $234 million cash payment.

Initially, Wang had announced plans to personally invest $50 million in Light Years Beyond through a series of recruitment posts on Jike, a popular social network in the Chinese tech community. It is possible that the startup received funding from the founder in the form of a convertible note, a type of debt that can be converted into equity, which aligns with the company’s $50.66 million debt. Consequently, the total purchase price of the deal reaches approximately $284 million.

According to the filing, as of June 29, Light Years Beyond had approximately $285 million in net cash. Therefore, Meituan is effectively acquiring Light Years Beyond at no additional cost.

While the filing states that the deal enables Meituan to “obtain” AI technology and talent, it is plausible that without Wang’s visionary leadership, the AI experts may not have been as inclined to join Meituan, a company primarily focused on on-demand neighborhood services.

The limited expenditure of Light Years Beyond’s raised funds suggests that its progress has been hindered in recent months. Developing large-scale language models is a costly endeavor, particularly given the skyrocketing prices of AI chips after the U.S. imposed export restrictions on Nvidia’s cutting-edge semiconductors to China.

Despite not having a product, Light Years Beyond achieved a valuation of $200 million at its inception, as mentioned in one of Wang’s Jike posts. This valuation speaks to investors’ confidence in Wang’s innovative product vision and their eagerness to support the potential of an “OpenAI for China.” Regrettably, the startup’s journey may have been cut short prematurely.

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