Alibaba Group Holding Ltd revealed on Friday that its overall investment in Chinese artificial intelligence (AI) startup Moonshot AI in the latest fiscal year has reached $800 million.
Alibaba holds about 36% of preferred stocks in Moonshot AI, with its overall investment in the startup in the year ended March 31 totaling approximately $800 million, the Chinese e-commerce giant disclosed in its latest financial results.
Tech giants and venture capital (VC) companies in China are driving a rush of investment in generative AI, the technology that powers OpenAI’s ChatGPT, following a global wave of funding activity that has boosted generative AI investment to a record high of $21.8 billion in 2023. Last year’s total funding in generative AI was more than five times that of the previous year, according to CBInsights.
Alibaba’s disclosure comes as Moonshot AI, one of the most sought-after startups developing generative AI in China, is said to be in the market raising a new round at a valuation of $3 billion.
The startup has been secretive about its fundraising progress, but multiple media outlets reported that China’s Tencent Holdings and VC firm Gaorong Ventures are among the confirmed investors of its new round. Moonshot AI’s latest funding was first reported by TMTPost.
At $3 billion, Moonshot AI’s valuation would increase by another $500 million – just three months after it closed an Alibaba-led, $1-billion investment in mid-February at a valuation of some $2.5 billion. Its existing backer Monolith Management joined the earlier round.
Moonshot AI, founded in March 2023, is one of China’s fastest-rising generative AI unicorns hoping to grow into the likes of Microsoft-backed OpenAI. In October 2023, Moonshot AI launched Kimi chatbot, powered by its self-developed Kimi large language model (LLM) – the technology used to train generative AI services like ChatGPT – and has since introduced a platform to build AI applications.
Its valuation was just $300 million when Moonshot AI closed its angel round at over $200 million in June 2023. HongShan, previously known as Sequoia Capital China, and Beijing-based VC ZhenFund were among its angel investors.
For Alibaba – already a backer of five of China’s leading generative AI startups including Moonshot AI, Minimax, 01.AI, Baichuan, and Zhipu AI – AI is one of the group’s strategic business growth directions where it plans to make further investments.
AI is “the single most powerful element that will change and accelerate the growth of our businesses,” Alibaba’s chairman Joe Tsai and chief executive officer Eddie Wu wrote in a letter to shareholders on Thursday.
They wrote that the development of generative AI is relevant to Alibaba as the group targets to explore the potential of machine intelligence. “As LLMs get bigger and go multimodal to incorporate voice, video and image in addition to text, the level of investment that is required in infrastructure and development can only be taken on by large technology companies that generate substantial free cash flows from their core businesses.”
Tsai and Wu believe that investment in LLMs will drive the growth of Alibaba’s cloud computing business and enable the group to enhance its “user first strategy” through AI applications in everything from shopping recommendations to virtual showrooms to personal assistants.
