Alibaba Group Holding Ltd. has taken the lead in the largest financing round for a Chinese artificial intelligence startup, signalling a strategic deployment of capital in pursuit of further growth. This move aligns Alibaba with major players such as Tencent Holdings Ltd. and Microsoft Corp., emphasising significant investments in generative AI, the technology behind ChatGPT.Â
Photographer: Qilai Shen/Bloomberg
The e-commerce giant spearheaded a remarkable $1 billion funding round for Moonshot AI, in collaboration with existing supporter Monolith Management. This substantial investment propelled the one-year-old Moonshot AI's valuation eight-fold to approximately $2.5 billion, attracting backing from notable entities like Meituan’s investment arm Long-Z and Hongshan, formerly known as Sequoia China.
Established in March 2023, Moonshot AI has quickly become a notable player in China's generative artificial intelligence landscape, aspiring to compete with industry leaders such as OpenAI and Google. The startup introduced its Kimi chatbot to the public in November and has since launched a developer platform for building AI applications on its model. Notably, Moonshot AI's valuation surged from an initial $300 million when it secured its first funding.
Under the leadership of Alibaba's new executives, Joseph Tsai and Eddie Wu, the company is navigating a strategic turnaround amid two years of regulatory scrutiny and economic challenges. Committing to significant investments in transformative technologies like AI, Alibaba aims to revitalise its business lines, spanning from cloud to logistics. Tsai highlights the cloud unit's hosting of half of China’s generative AI firms, serving approximately 80% of the country’s technology companies.
However, Alibaba ventures into a competitive field saturated with venture capital and tech leaders investing billions in AI services, reflecting a broader trend observed in Silicon Valley and Europe. Noteworthy Chinese AI startups, including Baichuan and Zhipu, have secured substantial funding, despite lingering concerns about US sanctions restricting access to powerful Nvidia Corp. chips. The geopolitical and military implications of AI have added complexities to China-US relations, yet Alibaba remains undeterred in its pursuit of innovation.