This Little-Known Chinese AI Startup Just Raised $200 Million From Alibaba And Others Then Shot To The Top Of The AI Rankings

Chinese artificial intelligence (AI) company 01.AI, backed by the e-commerce giant Alibaba Group Holding Ltd. BABA, is positioning itself to be a leader in the AI space under the leadership of prominent venture capitalist Kai-Fu Lee, the mastermind behind establishing Google and Microsoft Corp. in China. 

01.AI is challenging the norms with its open-source model Yi and has rapidly climbed the ranks on the Hugging Face leaderboard, showcasing the power of its large language models (LLMs).

It recently received $200 million in funding from Alibaba Cloud and Lee's venture firm Sinovation Ventures and soared to a valuation of $1 billion within just eight months. 

Don't Miss:

• Cheddar was acquired for $200 million yielding a return of 370.37% for its investors. This startup aims to replicate and potentially surpass this success.
• This startup is accepting investors for as little as 25 cents – what’s the catch?

01.AI’s Yi-34B, with its superior performance and cost-effectiveness, is positioned as a crucial player in addressing market demand for large-scale language models, especially in China where OpenAI and Google are restricted. 

"Yi-34B outperforms much larger models like LLAMA2-70B and Falcon-180B. Also, Yi-34B's size can support applications cost-effectively, thereby enabling developers to build fantastic projects," according to 01.AI's website. 

Trending: Here is where your most successful angel investment may be hidden.

Lee’s advocacy for open-source extends beyond 01.AI, as seen in his recent post on X.

"An issue with one or a few companies having all the most power and dominating the models is that it creates tremendous inequality," he wrote. He highlights the potential adverse effects on researchers, students, entrepreneurs and hobbyists, stressing the role of open source in fostering innovation.

On the contrary, the pioneer in leading the American AI initiative, Microsoft-backed OpenAI, initially aimed to position itself as an open-source model, but later shifted to a closed-source strategy with a focus on profitability. 

Closed-source models may hinder collaboration, limit the scrutiny of AI systems and contribute to the concentration of power in the hands of a few organizations.

"China's not ahead of the U.S. in LLM, but there's no doubt China can build better applications than American developers mostly because of the phenomenal mobile internet ecosystem that was built over the last 12 years or so," according to Lee.

But America still has time to keep its dominance in the space. 

As the global competition in the AI domain intensifies, the collaborative open-source efforts of leading American AI companies — such as OpenAI, Meta Platforms Inc., Google, Amazon.com Inc. and Anthropic PBC — could demonstrate a shared commitment to maintaining American leadership. This collaborative approach aims to strike a delicate balance between openness and safeguarding sensitive information, recognizing that not all situations warrant complete transparency.

Read Next: 

• What decision made this 20-year-old a millionaire in 1 year?
• Copy and paste Mark Cuban’s startup investment strategy according to his colorful portfolio.