Yi Wang will never forget Thursday, September 27, 2018. That’s the day that Liulishuo, the AI-driven English tutoring startup he founded in 2012, went public on the New York Stock Exchange (NYSE:LAIX). Liulishuo raised US$72 million under an estimated market cap of US$600 million — the latest among a growing number of privately-owned Chinese AI companies that are rewarding their investors with an IPO.

Billed as China’s first AI English teacher, Liulishuo’s flagship mobile app “English Liulishuo” (Mandarin for “speak English fluently”) uses AI techniques such as deep learning and speech recognition to assess learner proficiency, provide real-time feedback on performance, and curate and deliver educational content in a personalized manner. As of June 2018 some 84 million cumulative registered users in 175 countries are working on their English skills with Liulishuo.

At the IPO press conference, Liulishuo Founder and CEO Wang outlined his company’s aggressive global marketing strategy: “We came to the US market to build an international corporation. We have a very clear plan for overseas expansion and are now implementing it.” Wang said the funding will be applied to advancing technologies and products.

Liulishuo Founder and CEO Yi Wang speaks at the NYSE

Also announcing an IPO on the New York Stock Exchange last week was Shanghai-based CooTek (NYSE: CTK), a mobile software company known for its AI-powered mobile keyboard TouchPal, which boasts highly accurate autocorrect and word prediction capabilities. CooTek frames itself as an artificial intelligence company and has built AI research labs in Silicon Valley and Shanghai.

Beijing-based Bitmain, the world’s largest designer of Bitcoin mining machines, filed an IPO with the Hong Kong Stock Exchange last week. Motivated perhaps by a nine-month cryptocurrency market slump, Bitmain revealed in its prospectus that its IPO funding will be largely used for AI chip development.

According to a Dealogic report, 26 Chinese tech companies offered US$8.5 billion worth of new shares in the first half of 2018, accounting for nine percent of global IPO volume.

More IPOs are expected from leading Chinese AI companies later this year and early next, including Alibaba Group fintech affiliate Ant Financial, the world’s most valuable AI company SenseTime, and China’s biggest robotic unicorn UBTECH. In June Ant Financial announced a staggering US$14 billion financing round in advance of its anticipated IPO, raising company value to US$150 billion. SenseTime and UBTECH have raised US$1.22 billion and US$820 million respectively this year on their path toward IPOs.

CooTek Executives at the NYSE

SenseTime and Liulishuo represent China’s first wave of successful AI companies: They were founded between 2012 and 2014 by Chinese AI experts who had PhDs from top universities or had worked for Silicon Valley tech giants; they adopted cutting-edge AI algorithms from academia to revamp traditional industries; and they leveraged the massive amounts of data available thanks to China’s huge population.

Driving this IPO wave is the burgeoning AI market. China’s total AI market size grew from CN¥6.2 billion in 2013 to CN¥36.5 billion in 2017 — a CAGR of 55.7 percent. It is projected to hit CN¥814.0 billion (US$120 billion) in 2022.

Tsinghua University’s June 2018 China Artificial Intelligence Development Reportestimated that investment and financing in Chinese AI companies over the last five years accounted for 60 percent of the global total. As of June 2018 China had more than 1,100 AI companies, about half the US total.

“Article intelligence represents the future, from an industry perspective. It is also a general trend, so that industry leaders will get financing support,” says Hong Yin, a principal at Beijing-based Huaxing Growth Capital.

SenseTime’s fundraising to date totals a staggering US$1.6 billion, establishing the company as the world’s most valuable AI startup with an estimated worth of US$4.5 billion.

Despite all the funding they’re receiving, some Chinese AI companies still manage to run out of money. High-stakes and fierce competition have pushed R&D investments and marketing strategies etc., which has plagued profitability. Liulishuo for example suffered a net loss of CN¥243 million (US$35.48 million) last year, and in the first half of 2018 has already lost CN¥182 million (US$26.5 million). Wang explains that short-term profitability is not a priority for Liulishuo at this stage.

Startups are also turning to public markets for financing because Chinese venture funding has fallen off this year. Many Chinese venture capitalists and private equities have encountered obstacles in raising funds, due in part to new government capital regulations imposing additional restrictions on private funding. In 2018 Q1, Chinese VC/PE institutions announced a total of 425 new funds, a 20 percent year-on-year decline. The total amount of funding was US$34.1 billion, down 75 percent from 2017, according to the China Venture Capital Research Institute.

Says Yin, “There will be a ‘Matthew effect’ in Chinese venture funding wherein the rich get richer and the poor get poorer. That means the total amount of investors who are able to pour money out of their pocket will shrink.”

The Matthew effect also applies to AI companies, suggests Yuan Gong, a China Growth Capital venture investor eyeing AI and big data. “Only one or two companies in each vertical market will eventually go public. After raising their Series B and C rounds, the top three companies in each industry can be expected to receive 70 to 80 percent of the money, or even more.”

For global investors unaware or doubtful of China’s growing AI might, IPOs provide an ideal showcase for the top companies in the field. All In Consulting Vice President Stanley Chao specializes in assisting companies in their Asian business strategies. He told Synced that “going public makes these Chinese companies more transparent. Westerners have always been weary of Chinese high-tech companies. Who owns them? What secrets do they have? Now, everything will be spelled out in the IPO and quarterly SEC filings.”

In a conversation with Synced, Wang said the IPO is just the beginning, and he envisions Liulishuo becoming a global leader in education in the next 10 years.