(Bloomberg) -- Learnable.ai is seeking to raise as much as $70 million to bankroll its goal of using AI to revamp the backbreaking ordeal that is China’s annual college entrance exams.

The Ningbo-based startup is in talks with investors and targeting a fundraise of up to 500 million yuan ($70 million), Chairman Guan Wang told Bloomberg News on the sidelines of the World Economic Forum this month. It aims to develop AI to automate the grading of the “gaokao” — the nationwide test that determines which of millions of annual aspirants get into top universities.

The little-known startup, backed by Hong Kong broadband billionaire Richard Li, is trying to overhaul a system that’s remained largely unchanged since its 1950s inception. Every year, as many as 10 million youths sit through the days-long handwritten exams, then wait weeks to hear the outcome while thousands of human evaluators pore over every single paper. 

Wang thinks AI can cut that down to under a day. His model can help generate grading standards after sifting through papers in an instant, then pull assessments together within hours, said Wang, who oversees AI research at a state-affiliated institute.

“We passed rigorous reviews from various government departments, as gaokao is such a highly sensitive exam in China,” said Wang, a Brown University computer science PhD who frequents Davos. “Reviews by experts have found that accuracy of using AI models is actually higher than humans, because students’ handwriting could be messy and hard for teachers to discern.”

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Learnable.ai joins a growing crop of tech firms exploring breakthrough applications for AI since ChatGPT laid bare its potential. Education is considered a field ripe for disruption. While schools worldwide are banning the use of tools like ChatGPT in homework or student papers, AI is expected to help personalize education for different learners, lightening the load on tutors and colleges. 

Wang, also the director of the Ningbo Artificial Intelligence Research Institute at Shanghai’s prestigious Jiaotong University, in 2022 secured roughly $14 million for his startup at a valuation of $200 million.

The stakes are high. Even more so than elsewhere, Chinese students deem the gaokao critical to career success. Since the exam was revived after the Cultural Revolution, many who sat through it have recounted changing their fates merely by excelling.

But it’s an exacting endeavor, requiring months or even years of preparation. Roughly 1% of students get into the top 20 universities, Bloomberg calculations have revealed. Some resort to fraud to gain a leg up. Schools in densely populated provinces, such as Henan and Shandong, have developed approaches where students prep by taking mock tests round the clock.

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China’s Ministry of Education started to test Learnable.ai’s model in 2019, Wang said. Since 2021, it’s been used as an auxiliary tool in high school and college entrance examinations in more than a dozen provinces or regions including Hunan, Sichuan, Guangxi and Jiangxi, the founder said. The ministry didn’t respond to a faxed request for comment.

Among its investors is the family office of Li, the tycoon whose Pacific Century Group controls Hong Kong’s leading carrier. The startup also hopes to develop a consumer app it calls Dakaotong, which hinges on an exam paper database for K-12 students. Wang said that app can grade mock exams, identify mistakes and also provide personalized feedback and follow-up exercises. It’s now in testing mode with thousands of users, and Wang hopes to roll it out publicly after securing Chinese government approval.

There’s real potential for AI to lessen student and parental burdens, Wang argued.

“China’s best education resources concentrate in places like Beijing, Shanghai and Shenzhen, but there is a shortage of good teachers in vast rural areas,” he said. “The cost of using AI models for inclusive education will be really low, because most parents have at least a mobile phone.”

--With assistance from Saritha Rai and Shirley Zhao.

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