Chinese AI Unicorn Zhipu Raises $412 Million for More Firepower

(Bloomberg) — Beijing-based Zhipu raised a further 3 billion yuan ($412 million) to power its artificial intelligence development efforts.

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The company, which last year drew the backing of Chinese internet leaders Alibaba Group Holding Ltd. and Tencent Holdings Ltd., announced the completion of its latest fundraising in a statement on Tuesday. It comes as Zhipu has more than doubled its commercial revenue this year, according to the statement.

Zhipu is one of a half-dozen promising AI startups in China that have earned lofty valuations in the billions of dollars and significant investment from incumbent tech giants in the country. In May, a venture investment arm of Saudi Aramco joined another $400 million funding round, valuing the Beijing startup at about $3 billion.

AI development has quickly escalated into a capital-intensive arms race, as the likes of Meta Platforms Inc. and Microsoft Corp. spend tens of billions of dollars each year to acquire Nvidia Corp.’s most advanced hardware. Their bet is that businesses will start to dedicate a bigger chunk of their budgets for AI services and computation power, which Bloomberg Intelligence analyst Woo Jin Ho sees as one of the bigger trends in AI development of 2025.

What Bloomberg Intelligence Says

Enterprise customers may start to make bigger AI investments in 2025 following the development and proof-of-concept work in 2024, based on our conversations at the weeklong SC24 conference in Atlanta. Unlike hyperscale cloud customers, which have been focused on investing in the infrastructure to train larger language foundation models, enterprises are likely to place greater focus on fine-tuning models and building inference models as customers aim to monetize or drive the productivity gains from AI spending.

— Woo Jin Ho, BI senior analyst

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For Zhipu, the opportunity lies in tailoring its services for the China market, where the government has to approve all generative AI models and keeps a tight grip on the development of the industry. Beijing has also repeatedly expressed its support for advancing homegrown AI technologies.

–With assistance from Jessica Sui.