The race to build the next big language model is on, and now a contender from China has reportedly raised a big round of funding to propel it to the front of the pack.
Moonshot AI, an artificial intelligence startup founded less than a year ago that builds LLMs that can handle large text and data inputs, has raised more than $1 billion in a Series B round, according to multiple Chinese media reports. If accurate, this latest capital injection would value Moonshot AI at $2.5 billion – the largest single funding round for Chinese LLM developers on public record.
The startup – which hails from YueZhiAnMian in China – has focused, like many in AI right now, on developing large language models. In particular, its unique selling point is that it works to be able to process long-form context and response, an area that has long surpassed others in the field.
She moves quickly to make her first attempts to deal with this.
In March last year – to coincide with the 50th anniversary of Pink Floyd’s The Dark Side of the Moon, founder Yang Zhilin’s favorite album and the inspiration for the startup’s name – the startup launched a 100 billion parameter LLM.
Then in October, Moonshot introduced its first chatbot in China, Kimiwhich claims to be able to support the processing of 200,000 Chinese characters in a single conversation – eight times what OpenAI’s GPT-4-32K can achieve.
We have communicated Yang Zhilinthe AI researcher and academic who founded Moonshot with Zhou Xinyu and Wu Yuxin, for comment and will update this post if and when he responds.
Meanwhile, reports say the funding comes from a list of big-name investors that includes a number of potentially interesting strategic partners. The round is co-led by e-commerce giant Alibaba and HongShan – the VC firm formerly known as Sequoia China, according to South China Morning Post. Others in the round included Chinese “super app” Meituan and Xiaohongshu (sometimes called China’s answer to Instagram), according to Chinese tech blog LatePost.
Moonshot previously raised $200 million from HongShan and Zhen Fund in a round that valued it at $300 million, according to PitchBook data.
HongShan, contacted for comment, declined to comment on the reports. Alibaba has not responded to a request for comment. We also approached Moonshot separately.
If accurate, HongShan’s involvement here would be noteworthy. Sequoia Capital formally announced last year that it would split its Asian operations into India and China amid rising geopolitical tensions. This process is expected to be finally completed by March 24.
But in the meantime, China’s business has come under control by the US government over AI deals in the US; and the US company is equally being investigated for continued activity in China. Given all of this, it’s no surprise that the once high-profile investor might be down here.
Notably, the rest of the investor list that has been mentioned is a veritable who’s who of tech household names. This underscores the continued retreat — or at least a pause — among financial investors in promising Chinese startups, especially those from outside the West, and doing deals in US dollars.
But it also points to how – as we’ve seen play out in the US, with the likes of Microsoft, Google and Amazon plowing billions of dollars into LLM startups like OpenAI and Anthropic – big tech companies in China are fighting over what can is big AI play in the coming months and years. Having a financial foothold in a handful of promising hopefuls is a way to shorten or heighten whatever they’re trying to build internally.
OpenAI is currently dominant in the US and arguably everywhere else it has expanded, but in China there is no anointed leader, so a lot of the investment activity seems to be about spreading bets.
Alibaba, to that end, is also an investor in Baichuan — founded by search engine pioneer Xiaochuan Wang, which raised $350 million by the end of last year, passing a $1 billion valuation in the process — as well as at Zhipu AI, another LLM startup, and 01.AI, the LLM company founded by Kai-Fu Lee.
Alibaba’s archrival Tencent, meanwhile, has backed Baichuan, Zhipu, MiniMax and Light Years Beyond. Make no mistake: China’s internet giants have replaced that Western VC money by backing the country’s LLM candidates.
Still, if $1 billion sounds like an incredible amount of money to hand over to a startup that’s less than a year old, one of the reasons big names might be willing to take big bets is because of pedigree.
Pink Floyd fan turned AI pioneer
Yang Zhilin had a long list of accomplishments under his belt even before starting Moonshot.
He holds a PhD in computer science from Carnegie Mellon University, where he was advised by Ruslan Salakhutdinov, who previously headed Apple’s AI research after the iPhone maker quietly acquired a startup he founded called Perceptual Machines – an acquisition that doesn’t appear to have ever been mentioned. but noted at professor’s LinkedIn profile and business schedule.
Before that, he studied at Tsinghua University, advised by Jie Tang. He also worked on Google Brain and Meta AI.
Yang also has another AI startup in the works, Repeatable.AI, which seems to focus specifically on technologies built to help salespeople do their jobs better (with features not unlike Gong.AI). As of 2021, Recurrent had raised about $60 million according to PitchBook. And while there hasn’t been much capital activity since then, the business appears to remain operational.
Importantly for Moonshot, Yang was also a key author of Transformer-XL, a key development in the LLM architecture for enabling natural language understanding beyond a fixed-length framesomething that played an important role in the development of the Moonshot platform and, arguably, the wider mission.
Moonshot’s focus on larger inputs and outputs and producing more accurate results for queries about it lays the groundwork for the company to target text-based use cases that have not been widely exploited by existing LLM and production AI applications, such as legal documents, fiction writing and deeper financial analysis. Kimi Chat is trained on information until January 2024, the chatbot says.
He’s not the only Chinese player working to remove the limitations of the long frame. Baichuan in October announced its model Baichuan2-192K, which is said to process about 350,000 Chinese characters in a context window.
The market for fundraising remains tight globally, but this round speaks to the willingness of those with deep pockets to step in when the right opportunities present themselves. However, even with the wider, global AI frenzy – where some 200 billion dollars to be invested by 2025, Goldman Sachs predicts – landscape finance in China is surprisingly tepid.
In 2023, China recorded about 232 investments in artificial intelligence, a 38% year-on-year decline, according to research firm CBInsight. The total amount raised by Chinese AI companies was about $2 billion, down 70% from the previous year.
