Chinese tech giant Baidu bets on AI and virtual reality

Baidu Ventures takes a bet on holograms
Baidu Ventures takes a bet on holograms

Many tech giants and visionaries have been rallying around artificial intelligence (AI) and augmented and virtual realities (AR/VR) as the next big developments in technology.

The latest to join the call is Chinese internet giant Baidu, whose venture unit announced Tuesday that it had participated in a $27 million Series B funding of 8i, which develops holographic technology for VR and AR. Its technology transforms high-definition videos of people, shot from multiple cameras and angles, into photo-realistic 3D holograms.

Baidu established its venture capital fund, Baidu Ventures, last September to invest in early-stage companies working on AI, AR and VR.

Daisy Cai, partner at Baidu Ventures, explained the investment to CNBC's "Squawk Box" on Thursday.

"It makes 3D models of people that you can view through your VR headsets or you can also play or interact with on your AR application on your smartphone," Cai said of the company.

The start-up is set to launch its Holo app this year, which will bring the imaging technology to mobile devices. Users can create mixed reality content from their phones by adding holograms of their favorite celebrities, characters and bands into their real world environments.

Baidu will provide financial backing, as well as work with 8i on future product development. The tech start-up was founded in 2014 and has offices in Los Angeles and Wellington, New Zealand.

The market for VR technology could be a trillion-dollar industry by 2035, research from Citi predicted last year.

AI is the other big area of focus for Baidu Ventures — and its $200 million first fund — according to Cai.

The term AI covers a broad variety of developments currently taking place — from common applications like face recognition tools to automated cars, connected homes, medical devices and robots. Baidu Ventures is also looking at other uses for AI, she said.

"We are looking at companies (that) use artificial intelligence algorithms in their drug discovery technology, so it can significantly shorten the drug discovery cycle," said Cai, adding it could help to cut down the cost. She did not mention any company by name.

Last month, KPMG said in a report that venture capital investments in China will move increasingly into AI in 2017 as companies attempt to capture, analyse and monetize the vast streams of data generated over the last several years.

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