Sam Altman's OpenAI And Amazon-Backed Anthropic Face Serious Competition From These Chinese Startups Backed By Alibaba, Xiaomi And More

Four Chinese artificial intelligence (AI) start-ups have achieved ‘unicorn’ status, with valuations exceeding $1 billion. The companies, namely Zhipu AI, Moonshot AI, MiniMax, and 01.ai, are now set to compete with U.S. giants like Microsoft-backed MSFT OpenAI and Amazon-backed AMZN Anthropic.

What Happened: These four AI start-ups have seen their valuations surge in the past three months, the Financial Times reported on Friday. They have received significant backing from mostly domestic investors and are aggressively recruiting top-tier talent to develop popular AI products.

Zhipu AI, a start-up born out of Beijing’s Tsinghua University, has become China’s largest AI start-up in terms of employee count. The company, which now boasts a valuation of $2.5 billion, has received support from major firms like Alibaba Cloud, Tencent, and Xiaomi.

Moonshot AI, founded by a former student of a Zhipu founder, was valued at $2.5 billion in a $1 billion investment round announced in February. Alibaba BABA, Meituan, and Monolith Management are among Moonshot’s backers.

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01.ai, established by AI pioneer Kai-Fu Lee, has rolled out a series of open-source models tailored for the Chinese market. The company has also launched a productivity chatbot named “Wanzhi.”

Minimax, founded by Yan Junjie, is currently valued at $2.5 billion and develops AI avatar chatbots. It has received backing from Alibaba, Tencent, and Future Capital among others.

However, the investor pool for these start-ups is smaller than before, with global tech funds not playing as significant a role as they did with earlier AI surveillance start-ups.

Why It Matters: Alibaba has also announced significant price reductions for its cloud services, extending aggressive discounts from China to international markets.

Despite U.S. restrictions on advanced chip exports, Chinese AI start-ups have secured both the necessary engineering talent and sufficient computing resources to train existing models. In response to these restrictions, the Chinese government has offered “computing vouchers” to these companies. At least 17 city governments, including Shanghai, have promised to provide these vouchers to help these companies deal with the rising costs of data centers.

Moreover, the U.S. and China have agreed to hold their first high-level talks on AI, where they will discuss potential risks and safety concerns associated with AI. U.S. Secretary of State Antony Blinken confirmed this during a press conference in Beijing.

This development is noteworthy, especially considering the Destiny Tech100 DXYZ fund DXYZ, which focuses on investing in private high-growth tech companies, has fallen by 51.15% in the past month, according to Benzinga Pro.

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