Zhipu AI, one of the leading Chinese startups in the area of generative artificial intelligence, has announced the initial closure of its venture capital vehicle.
It is worth noting that within the framework of the mentioned actions, the company’s goal is to invest in related startups. In this case, Zhipu AI seeks to strengthen its ecosystem.
The Zhipu Ecosystem Fund, also known as the Z Fund, raised 1.5 billion yuan ($211 million) from its parent company and a group of state-backed and private entities. The relevant information is contained in a statement that was published on the official account of the found on the WeChat virtual platform.
In this case, the financing was also received from the Beijing municipal government’s investment unit Shijingshan District Modern Innovation Industry Development Fund, and Fuzuo Capital, which is affiliated with Hangzhou Industrial Investment Group, the investment vehicle of eastern Zhejiang province’s capital city.
Other limited liability partners include private equity fund Yanbei Capital, and Guangdong Aofei Data Tech, a cloud computing infrastructure provider based in southern Guangdong province.
Zhipu is currently building up its investment arsenal as competition intensifies in the Chinese generative artificial intelligence market, which is currently experiencing what can be described as a glut. It is also worth noting separately that numerous virtual products based on machine intelligence and developed by companies from an Asian country do not demonstrate technological diversity. In this case, a wide choice is a quantitative concept, but from the point of view of the content and characteristics of digital products, there is a kind of monotony.
As of today, more than a hundred large language models have already been launched in China. It is worth noting that the corresponding models are a kind of technological core of such digital products in the artificial intelligence market as OpenAI’s ChatGPT, the world’s most popular chatbot.
Zhipu, based in Beijing, is one of the so-called Chinese tigers of machine intelligence. In this case, it means unicorn firms, which many analysts characterize as a driving force potentially capable of catching up with leading US artificial intelligence startups, including OpenAI and Anthropic, backed by Microsoft and Amazon.com, respectively. The symbolic concept of unicorn in the business environment means a startup which market capitalization exceeds the $1 billion mark.
It is worth noting that China is currently making efforts aimed at forming what can be called technological sovereignty or independence of the country in the manufacturing space, including in its most advanced segments. These efforts are largely a vital necessity for Beijing. Against the background of the currently observed increase in tension in the space of geopolitical relations, technological sovereignty is becoming increasingly important and significant. In this context, it is worth mentioning the continuing consistent deterioration of the condition of interaction between Beijing and Washington. The United States has restricted the supply of advanced chips and equipment needed to manufacture microcircuits of the appropriate category to China. At the same time, the functioning and development of artificial intelligence systems are impossible without chips. Access to AI is obviously necessary from the perspective of China as a vast space of various processes, including those with economic and technological dimensions. Artificial intelligence is the most advanced technology of the current historical moment. AI is already being used in many industries as a working tool to improve productivity and optimize processes. This means that scaling up the practice of applying artificial intelligence contains significant economic prospects. At the same time, a country’s ability to independently develop advanced technologies or have access to them largely determines the condition of the economy and its position in the international political arena. Over time, the importance of this factor is likely to increase, since such a tendency corresponds to the logic of digitalization, which is one of the most characteristic processes of the current era. Against the background of the formation of an increasingly less favorable geopolitical environment for Beijing, the development of the homegrown technology sector, including in the context of the evolution of artificial intelligence, is what can be called an existential issue. Also, in this context, it is appropriate to mention the experience of the coronavirus pandemic. Relevant experience has shown that in a period of extreme global situation, international supply chains are disrupted, which has very negative consequences for production processes and slows down the economic dynamic. This circumstance of the coronavirus pandemic period is another example of the importance of technological sovereignty, which at the same time does not negate the benefits of cooperation between countries.
Zhipu specializes in the development of foundational models of artificial intelligence. The startup claims that using these models can improve efficiency in various traditional sectors.
Currently, Zhipu’s market capitalization is about 20 billion yuan. The startup counts several state-backed vehicles, and Alibaba Group Holding, Tencent Holdings, Meituan, GL Ventures, and Legend Capital as investors.
The Z Fund can be called a kind of analog of the OpenAI Startup Fund in the United States, an entity launched at the end of 2021 to raise capital from external partners to back startups in the early stages of existence. OpenAI and its founder and chief executive officer Sam Altman have no financial interest in the mentioned fund, which invests $175 million in startups in the artificial intelligence area that span industries such as healthcare, education, law, infrastructure, and energy.
Zhipu’s entrenched position in the segment of large language models will help the fund, denominated in yuan, take advantage of the opportunities offered by promising early-stage startups. Z Fund intends to focus on both upstream and downstream innovations and apps along the supply chain.
Itjuzi’s public records on market research indicate that from March to today, the mentioned fund has invested in at least ten startups. For example, financial injections were made into SiliconFlow, an artificial intelligence infrastructure provider. The fund also invested in Shengshu AI, which has developed a digital tool based on machine intelligence designed to generate video. Each of the two mentioned companies received investments worth several hundred million yuan.
The Z Fund’s portfolio covers a wide range of industries, including healthcare, medical research, productivity tools to advanced manufacturing.
It’s worth noting that investing in the area of artificial intelligence, in addition to the obvious positive prospects, has some kind of ambiguous aspects. This year, a question was asked in the public plane about when the return from the corresponding financial injections would be received. In this case, the problem is that investors initially expected that the mentioned economic result would materialize faster than the current tendencies suggest. At the same time, artificial intelligence as a kind of financial project turned out to be more long-term. Also, for investors, in a certain sense, the problem is that there is still no unambiguous and definitive answer to the question of where the limit of AI development is and what form of existence this technology will have at the peak of evolving. For example, there is an opinion that artificial intelligence in the course of its technological evolution will surpass the human mind in terms of cognitive abilities. At the same time, this forecast is only an assumption. Making financial injections into a product, the scale of the potential development of which is not known for certain will be perceived by some investors as a risky action. At the same time, given the significant potential of AI, it can be argued that investing in the relevant industry in the long term can generate economic results that justify any costs.
It is worth noting that the mentioned questions and doubts have not yet had a sensitive impact on the volume of investment in the artificial intelligence industry. These volumes continue to be huge. In 2022, the total volume of corporate investments in artificial intelligence in the world was fixed at $92 billion. The relevant data was published by the online platform Statista, which specializes in data collection and visualization.
It is also worth noting separately that during the period of active development and spread of artificial intelligence, the issue of cybersecurity is becoming increasingly relevant. Scammers also have access to AI technologies, which is why their activities are gradually being transformed into more sophisticated ones. To counter the corresponding threat in the cybersecurity area, personal awareness of users is necessary. For example, a query in an Internet search engine, such as how to know if my camera is hacked, will allow anyone to get information about signs of unauthorized access to the device.
