One of China’s most highly anticipated artificial intelligence startups is undergoing a significant change of direction.
Guangnian Zhi Wai, or Light Years Beyond, which was founded merely four months ago by Wang Huiwen, a co-founder of Meituan, with the ambition of becoming the “OpenAI for China”, is getting bought out.
In a filing released on Thursday, Meituan announced that it will be fully acquiring Light Years Beyond for $233.7 million in cash. It’s also taking on the startup’s $50.66 million debt.
The acquisition came shortly after Meituan announced Wang Huiwen was resigning from all his corporate roles at the food delivery giant due to health reasons. A widely circulated blog post claiming knowledge of the matter said Wang had been diagnosed with depression, sparking discussion on entrepreneurs’ mental health issues in China’s tech community.
As part of the agreement, Meituan will be paying the AI startup’s various investors, including $5 million to Qimai, which is controlled by Meituan’s current CEO Wang Xing, $28 million to HongShan, which was called Sequoia China before the recent restructuring of the parent firm, and $201 million to other investors. These transactions roughly amount to the $234 million cash payment.
In a series of recruitment posts on Jike, a social network popular in the Chinese tech community, Wang initially said he planned to personally invest $50 million in Light Years Beyond. It’s possible that the startup received the founder’s financing in the form of a convertible note, a type of debt that can be converted into equity, which would correspond to the company’s $50.66 million in debt.
That makes the deal’s total purchase price about $284 million.
According to the filing, Light Years Beyond had net cash of around $285 million as of June 29. That means Meituan is effectively acquiring Light Years Beyond at no cost.
While the filing says the deal helps Meituan “obtain” AI technology and talent, it’s possible that without the visionary leadership of Wang, the AI experts may not have been as inclined to join Meituan, which focuses on on-demand neighborhood services.
The startup’s limited spending of its raised funds suggests that its progress has been constrained in recent months. Developing large language models is known to be an expensive undertaking, especially given the soaring prices of AI chips after the U.S. banned the export of Nvidia’s state-of-the-art semiconductors to China.
With no product, Light Years Beyond had a valuation of $200 million at 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. Its journey might have been cut short too soon.