BEIJING — Investment in China's humanoid robot sector fell more than 40% in a single month in September after regulators sharply raised the bar for such companies to go public. Some investment firms have stopped reviewing new deals altogether. Still, money continues to flow to leading players, which analysts say marks the start of a shakeout in the industry.
Chinese financial outlet STCN reported on the 26th, citing multiple people in the investment industry, that the funding frenzy around humanoid robot companies has entered a cooling phase. An investment manager covering artificial intelligence at a Chinese state-owned investment institution said the firm has effectively stopped reviewing physical AI projects since June. Zhang Zhikuan, a director at China's Co-Stone Capital, which has invested in AgiBot and several other robot companies, said that because valuations at many physical AI companies have already reached high levels, decisions on additional investments require greater caution.
The data bears out the cooling. According to Chinese advanced-industry data analytics firm NE Times, investment in physical AI fell 40.1% in a single month, to 11.6 billion yuan (2.3 trillion won) in September from 19.4 billion yuan (about 3.85 trillion won) in August. The share of total investment accounted for by the top 10 projects also fell to 59.4% from 67.7%. By contrast, the number of early-stage deals — seed, angel and pre-Series A — rose to 24 from 19 over the same period. That suggests investment in early-stage companies is continuing even as investors grow more cautious about large deals. Third-quarter investment totaled 33.335 billion yuan, according to local financial outlet Yicai, down 28.7% from the 46.75 billion yuan quarterly average implied by first-half investment of 93.5 billion yuan.
The immediate trigger for the cooling, investors say, is weaker expectations of early exits through initial public offerings after Chinese authorities tightened listing reviews. U.S. technology outlet The Information reported on the 9th of last month, citing multiple sources, that the China Securities Regulatory Commission had signaled through informal "window guidance" that it would raise the bar for approving listings by humanoid robot companies. Companies must now demonstrate a sustained ability to generate revenue, a path to narrowing losses and substantive technological innovation, rather than simply raising large sums or unveiling robot prototypes. On the 11th of the same month, The Wall Street Journal reported that Galaxea AI, a humanoid robot maker pursuing a Hong Kong listing, had seen its timetable disrupted after failing to meet the tougher standards.
Behind the regulatory clampdown is overheated competition among more than 150 robot companies. China's National Development and Reform Commission has publicly warned against a situation in which overly similar products flood the market and squeeze research and development capacity. The volatile share price of Unitree, a humanoid robot maker that listed on the Shanghai Stock Exchange's STAR Market in August, is also cited as a factor behind the tighter rules. Unitree shares surged to about five times their offering price shortly after listing before falling by half from their peak. Even as China's largest player in the field, the company drew bubble warnings before its listing because it relies on government bodies and research institutions for much of its revenue and because its revenue growth has been slowing.
Appetite for the sector's leaders, however, remains strong. Bloomberg reported on the 22nd that Noetix Robotics, a Beijing-based humanoid robot maker, had filed confidentially for a Hong Kong listing. AgiBot, regarded alongside Unitree as one of the industry's two heavyweights, has begun raising roughly 1 billion to 1.5 billion yuan in new funding and was recently valued at about 50 billion yuan. Ruiying Zhao, a senior research analyst at S&P Global Market Intelligence, said investor sentiment is shifting from across-the-board enthusiasm to selective rationality, with investors scrutinizing more closely whether companies have commercialized successfully enough to justify high valuations.
