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Tuesday, January 9, 2024

China AI Investments Decline in 2023 from High Base, with Generative AI, Chips, and Robotics Still Gaining Strong Interest

As of November 24, 2023, China’s artificial intelligence (AI) sector recorded 531 investment events with a total investment of 66 billion yuan year-to-date, indicating a downward trend in the field’s popularity. This decline in enthusiasm is attributed to increased investor caution due to challenges in technology commercialization, unclear business models, and concerns over investment returns.

From 2018 to 2021, AI investment in China demonstrated strong growth, peaking in 2021 at 248.582 billion yuan. However, 2022 saw a slight decrease in both investment count and total amount, reaching 118.272 billion yuan across 733 events. The data for 2023 suggests a continued decline in both deal volume and value, according to data from the China Business Industry Research Institute.

In 2023, venture investments in the AI field have focused more on sectors such as Large Language Models (LLMs), robotics, machine vision, and AI chips at the foundational layer, which are indispensable for the construction of AI platforms and applications.

As of December 21, there were 158 investment deals globally in the AIGC (Artificial Intelligence Generated Content) field, with 118 deals recorded in China, accounting for over 70%, according to IT Juzi data. This is a significant increase compared to China’s AIGC sector last year, which recorded 43 investments deals in the AIGC space in 2022.

From January to November 2023, the total financing in China’s AIGC industry was about 15.276 billion yuan. Notable AIGC companies with high funding rounds in China include Zhipu AI, which disclosed that it had received over 2.5 billion yuan in financing in 2023, with investors including the Social Security Fund, Alibaba, Tencent, and Gaorong Capital.

Another AIGC startup Baichuan Intelligence announced a 300 million USD Series A1 strategic financing, with Alibaba, Tencent, and Xiaomi participating last October. 01.AI, founded by Kai-Fu Lee, chairman and CEO of Innovation Works, completed a new round of financing ↗ led by Alibaba Cloud at a valuation at over uS$1 billion last November.

Earlier in February 2023, Lan Zhou Technology, a company in the LLM track, completed its Pre-A+ round of financing led by Beijing Zhongguancun Science City Company, with continued participation from Sdo Capital and Innovation Works. Within less than a year, Lan Zhou Technology raised several hundred million yuan.

Robots is another segment that attracted investor enthusiasm as they are becoming the hardware carriers for generative AI. Tech giants like Meituan, Baidu, and BYD actively extended support to robotics startups through investments.

According to incomplete statistics from China’s robotics network, by November 2023, there were approximately 131 financing events in the domestic robotics industry for the year, with 44 events involving over 100 million yuan each, totaling an estimated 11.1 to 12.5 billion yuan.

For instance, Zhiyuan Robotics completed its Series A3 financing in December 2023, likely exceeding 600 million yuan.

The ongoing advancements in deep learning have significantly enhanced the capabilities of machine vision technology. As a result, the overall investments in China’s machine vision industry is showing an upward trend in 2023.

Due to the complicated applications of machine vision, it’s challenging to accurately tally the industry’s investment and financing situations. But according to IT Juzi data, investments in China’s machine vision industry is trending upwards.

In 2021, the segment experienced its highest investment and financing activity, with 95 events totaling 22.074 billion yuan. In 2023, the industry maintained its momentum yet specific statistics are not yet available.

Investors also favored the AI chips sector. One standout company was Suiyuan Technology, which specializes in AI cloud computing power products, raised a 2 billion yuan Series D financing round in September 2023.

Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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