Where will Baidu Capital invest its USD 3 billion?

shutterstock_267236174_600x310Increasing competition in the Chinese Internet market has pushed search giant Baidu to invest in new technologies, notably in artificial intelligence (AI) and auto-related technology.

Baidu has also recently announced a 20 billion yuan (USD 3 billion) investment fund called Baidu Capital to invest in mid- to late-stage Internet company investments.

New investments in start-ups focused on internet innovation are expected to help Baidu compete with players such as Alibaba and Tencent as the markets evolves, analysts say.

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Over the past five years, Baidu has only recorded 96 investments in its database while competitors while Alibaba and Tencent have made 171 and 311 respectively, according to market research firm ITJuzi.

What type of startups could be backed by Baidu?

Although the company has not yet indicated how the new fund will be broken down, it’s worth looking at where it has spent much of its R&D: automotive-related investments.

The company has three major research labs, focusing on AI research at its Silicon Valley lab, big data at one Beijing lab, and self-driving car technology and deep learning at a second Beijing lab.

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Baidu is also working with BMW on autonomous driving technology and made a USD 600 million investment in Uber China in 2014. The company also teamed up with Ford, investing USD 75 million in Velodyne LIDAR technology in 2016, and created a separate invesment fund, Baidu Venture, which will invest USD 200 million in artificial intelligence, virtual reality and augmented reality technologies.

Auto-based tech investments

Analyst Egil Juliussen highlights the depth of the company’s automotive technology efforts in a recent IHS Markit report titled “High-Tech Industry Impact on Automotive: Apple and Other Potential Disruptors.”

The chart below helps demonstrate Baidu’s focus on various auto-based investments.

BAIDU.PNG

“Baidu also has several other important auto industry activities,” according to Juliussen. “Baidu has over 320 million users of its maps. It is also active in telematics services. Baidu CarLife is likely to become the leading smartphone apps integration system in China, as many of the major OEMs have already signed up to use CarLife. Both iPhones and Android smartphones can use CarLife for smartphone control from the head unit.”

Based on the depth of its automotive technology investments, it’s likely that a portion of the USD 3 billion fund would be spent on this segment.

Carolyn Mathas

MathasPhoto2015__2_@CarolynMathas is a technology writer/editor for a number of industry publications. She writes for the LED and Wireless Networking Design Centers on EDN, and previously several DesignLines and CommsDesign for EE Times.  Previously, she was a Senior Editor at Lightwave Magazine and a West Coast correspondent for CleanRooms Magazine.

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