Zhipu AI, a Chinese AI startup, has secured 500 million yuan ($69.04 million) in funding from Huafa Group, a state-owned conglomerate based in Zhuhai, Guangdong province. This follows the company’s earlier announcement in January of a separate 1 billion yuan capital raise. Huafa Group’s investment comes amid competition between Chinese cities to back promising AI startups, as Beijing views this sector as vital to its technological rivalry with the United States, according to Zhuhai Special Economic Zone Daily.
Earlier this month, Hangzhou City Investment Group Industrial Fund, a state-backed entity from Hangzhou, also participated in a major funding round for DeepSeek, a competitor of Zhipu AI, securing 1 billion yuan. This aligns with China’s push to strengthen its AI capabilities, as DeepSeek‘s large language models have gained attention for allegedly matching the performance of Western counterparts at lower development costs.
Founded in 2019, Zhipu AI is widely recognized as one of China’s “AI tigers”. The startup has drawn investments from prominent tech giants such as Tencent, Meituan, and Xiaomi, across over 15 funding rounds, according to business registration platform Qichacha. In July 2024, Zhipu AI was valued at 20 billion yuan.
The latest funds will be directed toward advancing the development of its GLM foundation model and furthering the company’s technological innovation and ecosystem expansion. However, this investment comes after Zhipu AI and its subsidiaries were added to the U.S. Commerce Department’s export control entity list in January, which prevents the company from procuring U.S.-made components.
