Following a series of major investments, Alibaba Group Holding Ltd. led the largest single financing round for a Chinese artificial intelligence startup. This indicates that the e-commerce company is once again allocating cash in the pursuit of growth.
Alibaba has made significant investments in generative AI, the technology that underpins ChatGPT, alongside Tencent Holdings Ltd. and other Silicon Valley heavyweights like Microsoft Corp. According to people familiar with the deal, it spearheaded a $1 billion fundraising round in Moonshot AI with current supporter Monolith Management, increasing the year-old company’s valuation eight-fold to almost $2.5 billion. They joined previous backers including food delivery giant Meituan’s investment arm Long-Z and Hongshan, formerly Sequoia China, the people said, asking not to be identified discussing a private transaction.
Established in March 2023, Moonshot AI is one of the more well-known Chinese businesses focused on generative AI, with aspirations to someday compete with OpenAI and Google. Since releasing its Kimi chatbot to the general public in November of last year, it has introduced a platform that allows developers to create AI apps on top of its model. The company was only worth $300 million when it first obtained investment.
Regarding the company’s funding information, which were initially made public by local media, including 36kr, Moonshot AI declined to comment. Without providing any specifics, Monolith declared its involvement in the most recent round. Requests for comments from Alibaba representatives were met with silence.
Joseph Tsai and Eddie Wu, the company’s new CEOs, have promised to turn around a struggling business that has been severely damaged by two years of regulatory scrutiny and a downturn in the economy. It’s promoting fresh investment in disruptive technologies like artificial intelligence (AI) and coordinating a convoluted multi-way split that will elevate business lines from cloud to logistics. According to Tsai, the cloud division currently services roughly 80% of China’s IT companies and is home to half of the nation’s generative AI startups.
However, they are entering a competitive industry as tech giants and venture capital firms invest billions in AI service development and training, following a surge of activity in Silicon Valley and Europe. Other Chinese AI businesses, like Baichuan and Zhipu, raised substantial sums from investors.
That’s in spite of persistent worries about US sanctions that prevent Chinese companies from purchasing the most potent Nvidia Corp. chips, which are needed to develop and execute AI models. Due to the technology’s potential for military and geopolitical use, which might strain already strained relations, Washington has targeted China’s AI initiatives.
Alibaba and longstanding competitor Tencent previously participated in a $300 million+ funding round for Zhipu in 2023. The company is attempting to bring back the cloud industry and include AI with its proprietary model, Tongyi Qianwen, into a broad business that includes entertainment.