Technology

America may have created AI, but China is taking the ball and running when it comes to one of the worldmost pivotal technology innovations.

Thataccording to Kai-Fu Lee, a world-renowned AI expert who founded Sinovation, a China-U.S. fund that raised its fourth fund worth $1 billion earlier this year.

Speaking at TechCrunch Disrupt San Francisco, Lee — who led Google in China before it left the country — said any lead Americatech industry may have enjoyed is rapidly being eroded by hungry Chinese entrepreneurs who have oodles more data at their disposal to build, train and deploy AI systems.

&People assume that because the U.S. is so strong in AI research, that theU.S. should dominate,& Lee said. &But actually, China is catching up really fast.&

Sinovation already has five AI companies in its portfolio that are valued at over $1 billion — that might be a record for any VC firm worldwide — and he explained China&magical ascent& in AI has taken just two years.

&Coming from way behind, now [China] is actually ahead of the U.S. in AI implementation,& Lee said. &AI we should think of it as electricity. Thomas Edison [the inventor of electricity] — and also the AI deep learning inventors who were American — they invented this stuff and then they generously shared it.

&Now, China, as the largestmarketplace with the largest amount of data, is really using AI to find every way to add value to traditional businesses, to internet, to all kinds of spaces. The Chinese entrepreneurial ecosystem is huge so today the most valuable AI companies in computer vision, speech recognition, drones are all Chinese companies,& Lee added.

But it isn&t just progress in the eyes of investors — who create valuations through their investment — Lee said thatChinese AI firms generate more sales, too, while Chinaaccounts fornearly halfof all VC investments and43 percent of allAI startups.

&These are companies that were founded between two and four years ago,& Lee explained.&This is really how fast itbeen, you have to be there to see the excitement and the pace.&

In the case of Sinovation, their billion-dollar AI companies include crypto firm Bitmain, image recognition company Megvii (known as Face++), fintech-focused4th Paradigm, autonomous driving AI company Momenta and chip outfitHorizon Robotics.

Much of the reporting around how China is using artificial intelligence centers around ways that the government is using facial recognition for surveillancepurposes. While that has included crime fighting, with facial recognition successfully used to identify and capture suspects, there are also concerns around more sinister applications, such as the surveillance of Chinese minorityUighur Muslims. China is reported to have detained as many as one millionUighurin camps, and facial recognition technology is believed to be one key part of surveillance strategy.

Lee, however, brushed off concern around the darker applications of AI in China, pointing out that the technology has the capacity to be abused anywhere in the world. He said China is also using the technology to develop new kinds of retail, manage busy urban traffic, build new kinds of educational services and more.

Indeed, Sinovation takes an unusual route to develop technologies and startups. As well as investing, it also develops technology in-house using a team of 200 people in its &institute.& Not only does that team work with portfolio companies and on a consultancy basis, but it develops its own services where it sees gaps in the market.

Indeed, the firm recently spun out its first venture from that tech team, which helps traditional retailers develop online-to-offline capabilities, which essentially marry the benefits of online commerce with more traditional brick and mortar retail. Thata strategy in which Chinese e-commerce giants Alibaba and JD.com have invested heavily.

McCarthyFinch sounds a bit like a law firm — and with good reason. The startup has developed an AI as a Service platform aimed at the legal profession. This week, itcompeting in the 2018 TechCrunch Disrupt Battlefield in San Francisco.

The company began life as a project at a leading New Zealand law firm, MinterEllisonRuddWatts. They wanted to look at how they could take advantage of AI to automate legal processes to make them more efficient, cost-effective and faster, according to company president Richard DeFrancisco.

&They were working on leveraging technology to become the law firm of the future, and they realized there were some pretty tremendous gaps,& he explained. They found a bunch of Ph.Ds working on artificial intelligence who worked with more than 30 lawyers over time to address those gaps by leveraging AI technology.

That internal project was spun out as a startup last year, emerging as an AI platform with 18 services. MinterEllison, along with New Zealand VC Goat Ventures, gave the fledgling company US$2.5 million in pre-seed money to get started.

The company looked at automating a lot of labor-intensive tasks related to legal document review and discovery such as document tagging. &Lawyers spend a lot of time tagging things with regards to whatrelevant and not relevant, and itnot a good use of their time. We can go through millions of documents very quickly,& DeFrancisco said. He claims they can lower the time it takes to tag a set of documents in a lawsuit from weeks to minutes.

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He says that one of their key differentiators is their use of natural language processing (NLP), which he says allows the company to understand language and nuance to interpret documents with a high level of accuracy, even when there are small data sets. Instead of requiring thousands of documents to train their models, which he says law firms don&t have time to do, they can begin to understand the gist of a case in as little as two or three documents with 90 percent accuracy, based on their tests.

They don&t actually want to sell their platform directly to law firms. Instead, they hope to market their artificial intelligence skills as a service to other software vendors with a legal bent who are looking to get smarter without building their own AI from scratch.

&What we are doing is going to technology service providers and talking to them about using our solution. We have restful APIs to integrate into their technology and do a Powered By-model,& DeFrancisco explained.

The startup currently has 10 trials going on. While he couldn&t name them, he did say that they include the largest law firm in Europe, largest global provider of legal information and the fastest growing SaaS company in history. They are also working on agreements with large systems integrators including Deloitte and Accenture to act as resellers of their solution.

While they are based in New Zealand, they plan to open a U.S. office in the Los Angeles area shortly after Disrupt. The engineering team will remain in New Zealand, and DeFrancisco will build the rest of the company in the U.S as it seeks to expand its reach. They also plan to start raising their next round of funding.

People like to say that brick-and-mortar retail is dead, but direct-to-consumer businesses continue to dabble with physical stores all the same.

Why Because brick-and-mortar retail provides businesses with benefits an online shopping platform can&t, namelyconsumer experiences that create and sustain shoppers& relationships with brands.

To help the next generation of digitally native stores expand into the physical world, Uppercase, formerly known as thisopenspace, is launching out of stealth with $3.5 million in venture capital funding.Lerer Hippeau has led the round, with participation from CRV and SV Angels.

Uppercase works with real estate agents, architects and designers to build stores for online brandsin New York City, Los Angeles and Toronto.

Co-founder and CEO Yashar Nejati started the company after noticing that online brands were experimenting with pop-up shops then establishing permanent storefronts.

Menretailer Frank - Oak, which picked up a $16 million Series C this year, is a great example of that trend. The company began as an internet retailer and now has several stores throughout Canada. Luggage startup Away, trendy shoe company Allbirds and Emily Weiss& makeup company Glossier have done the same.

&Anyone can launch an online brand,& Nejati told TechCrunch. &Brands truly stand out from the crowd once they grow beyond digital — we&re seeing this with Warby Parker, Casper and Indochino, who will have over 350 stores by the end of 2018. Uppercase is part of a modern growth strategy, providing tech-enabled flexible retail stores for brands to launch, analyze and grow their retail presence.&

So far, Uppercase has built stores for furniture company Joybird and Venus et Fleur, which sells artfully arranged roses.

Early-stage investor Lerer Hippeau has backed a number of direct-to-consumer brands, including the aforementionedAllbirds and Casper.

&We&ve seen the importance of an omnichannel strategy as companies scale,& Lerer Hippeau Graham Brown told TechCrunch. &Uppercase is the perfect partner for brands born online looking to expand into the physical world.&