Zhipu, a Chinese startup backed by Alibaba, has successfully secured over 1 billion yuan (approximately $140 million) in a funding round led by firms supported by local government, highlighting the increasing interest in domestic AI in the wake of DeepSeek’s rise.
The latest investment round saw participation from Hangzhou Municipal Construction Investment Group Co. and Shangcheng Capital, both of which are government-controlled entities from Hangzhou, the city where DeepSeek is based. They joined existing investors, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Zhipu, which was valued at around $3 billion in a funding round in May 2024, announced the financing and its investors through a WeChat statement, though it did not provide further specifics.
DeepSeek has reignited excitement in China’s AI and tech landscape since its launch in January with an AI model believed to outpace some of the leading offerings from Western companies, all at a significantly lower cost.
In response, AI developers from Alibaba to Baidu Inc. have accelerated their efforts to enhance their large language models, ramping up competition domestically and against US counterparts like OpenAI and Meta Platforms Inc. According to Bloomberg News, Baidu is also planning to issue around 10 billion yuan in offshore bonds.
However, Zhipu’s investment comes amid challenges, as the US Commerce Department added the company to a trade-restrictions blacklist in January, which could hinder its access to essential technology. The startup has refuted claims of any connections to the Chinese military.
