Chinese e-commerce giant Alibaba Group has led a $1 billion funding round for AI startup Moonshot AI to boost generative AI in China.
This becomes the latest in a string of sizeable investments by the group. As tech giants the world over, they are also looking at the growth opportunities presented in the generative AI industry.
Pushing generative AI growth in China
Like other tech giants including Microsoft, Google, and Tencent, the e-commerce firm has also taken a big bet on AI, with the funding aimed at pushing Moonshot’s tools to ChatGPT levels for the Chinese market. Despite going viral, OpenAI’s ChatGPT is not officially available in China, although users can still access it through VPN networks.
Chinese tech giants have also taken it upon themselves to establish their own alternative to ChatGPT, with search engine giant Baidu launching Ernie Bot.
Now, Alibaba has led a billion-dollar funding round for the AI startup with its existing backer, Monolith Management. People familiar with the deal say the move has boosted the company’s valuation to $2,5 billion, according to Business Post. They join past backers such as Long-Z and Hongshan, formerly Sequoia China, according to sources who asked not to be identified, discussing a private transaction.
With a $2,5 billion valuation, Moonshot is one of the startups into generative AI in China. But Bloomberg insinuates that the investment is meant to rejuvenate Alibaba’s ailing “internet empire.”
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Hope in generative AI technology
For some time now, Alibaba has been battling tight regulatory scrutiny in China, which has made it difficult for the e-commerce giant to make lots of money.
The struggle, according to Fiminize, is glaring as “investors have pushed the e-commerce company’s stock down three-quarters from its 2021 peak.”
Now, the investment in Moonshot might not just be for acquiring a stake in the AI startup, but for Alibaba’s search for hope in the fast-growing generative AI tech.
Fiminize opines that the cash injection will boost Moonshot’s developments, “potentially creating cutting-edge tools that Alibaba could use to smooth out supply chains and automate parts of its business.”
Fighting for recognition
Launched in March last year, Moonshot AI is one of the AI startups pushing for generative AI growth with the aim of matching the likes of OpenAI or Google. Last year, in November, the one-year-old firm rolled out its chatbot to the public, known as Kiwi.
The company, whose valuation was $300 million when it started initial funding, also debuted a platform for developers to “build AI applications atop its model.”
Alibaba did not respond to requests for comment, while Moonshot also refused to shed more light on the company’s fundraising details. However, Monolith confirmed its participation in the latest round, according to Bloomberg.
Tight situation
According to Fiminize, most big investors disserted the Asian country while investing little amount of money into Chinese deals last year since 2019.
This has opened channels for Saudi Arabian investors to pour hundreds of millions of dollars into Chinese firms like Alibaba and SenseTime.
Apart from financial returns on their investments, Saudi Arabian businesses are reportedly pushing companies they have injected money into to share expertise with Saudi Arabia’s own technical talent.
But it’s not just the Saudi Arabians interested in Chinese firms, as “big short” star Michael Berry has “dunked his whole foot in,” buying enough Alibaba stock to make “it Scion Asset Management’s biggest holding.”
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