AI start-up Fourth Paradigm, formed by Huawei veterans, becomes China’s latest unicorn

Fourth Paradigm is the latest Chinese start-up to net a valuation north of US$1 billion. Founded just three years ago by Huawei Technologies veterans, the Beijing start-up is fast winning favour among state-backed banks preparing a plunge into artificial intelligence.

The start-up – known also as 4Paradigm – said in a statement it’s scored more than US$150 million of funding at a valuation of about US$1.2 billion. With that financing, its investors and paying customers now include four of China’s five largest banks: a major boost for a little-known outfit hoping to compete with the likes of Alibaba Group Holding and Ant Financial in the massive undertaking of wrenching a state-dominated US$37 trillion banking arena into the digital age.

Unlike other Chinese AI players are developing consumer apps or facial recognition, Fourth Paradigm works in a more mundane field. It essentially hands its clients a suite of software tools that let them run complex algorithms on their data without needing to employ highly trained engineers. Its main service provides tools for banks to detect fraud, identify customers and perform other analysis.

“What we are doing is to set up a platform for the data they collect, from all the different data sources, to generate their own models,” said co-founder and Chief Executive Officer Dai Wenyuan.

Dai was an architect of Baidu advertising systems before joining Huawei’s AI division, a business his co-founder Yang Qiang helped form.