China’s Xiaoice Chatbot Business Set to Raise ‘Hundreds of Million Yuan’

What’s new: Xiaoice, a Chinese chatbot business spun off from Microsoft Corp., said it’s close to raising “hundreds of million yuan” in a pre-A round of financing from gaming giant NetEase and Northern Light Venture Capital.

The pre-A financing is intended to enable the company to run as an independent business as soon as possible after the spinoff, Xiaoice Chairman Harry Shum said Tuesday. The spinoff plan was announced in July.

The company also announced a strategic partnership Tuesday with Microsoft, which retains a small share of the new company. The software giant will provide a cloud computing platform and client resources to Xiaoice, Shum said.

The background: Xiaoice, which translates as “Little Bing” in Chinese, has been a big hit in China since it was launched in 2014. The chatbot — an artificial intelligence-powered software application for automating online chat conversations — said it has 660 million users and 450 million third-party smart devices globally.

Differentiating itself from other AI-powered voice assistants, Xiaoice focuses on longer back-and-forth conversations with humans instead of just completing user-instructed tasks.

In August, Xiaoice said it generated annual revenue of more than 100 million yuan ($15.2 million). The company is valued at about $700 million, according to an investor who considered investing in the company.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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