Alibaba-Backed Baichuan Secures $691 Million, Valued at $2.7 Billion

Beijing-based artificial intelligence startup Baichuan Intelligent Technology has raised approximately 5 billion yuan (about $691 million) in its latest funding round. Major Chinese technology firms, including Alibaba Holding Ltd., Tencent Holdings Ltd., and Xiaomi Corp, led this investment. 

State-backed investment entities such as the Beijing AI Industry Investment Fund, Shanghai AI Industry Investment Fund, and Shenzhen Capital Group also contributed to the funding.

Following this round, Baichuan’s valuation has soared to over 20 billion yuan ($2.7 billion), making it China’s second most valuable AI startup, behind Moonshot AI. As one of China’s prominent AI startups, Baichuan continues to attract significant attention and capital from leading tech giants and government-backed funds. 

Founded in April 2023 by Wang Xiaochuan, the former CEO of Sogou, Baichuan has rapidly ascended in the AI sector. The company focuses on developing large language models and generative AI, with its flagship model, Baichuan-4, reportedly outperforming OpenAI’s GPT-4 in Chinese language proficiency.

Baichuan plans to initiate its Series B funding round based on a valuation of 20 billion yuan ($2.8 billion). The company, which has gained regulatory approval for its large language models in China, has introduced several notable AI products, including Baichuan-7B, Baichuan-13B, and the AI assistant Baixiaoying. Since its launch, Baichuan has been one of the leading players in the competitive AI landscape, challenging major international rivals.

Alibaba, Tencent, and Xiaomi, alongside Beijing, Shanghai, and Shenzhen’s investment funds, have all supported Baichuan’s recent funding round. Alibaba, in particular, has been highly active in the AI sector, holding stakes in all of China’s top four AI startups. 

The recent funding will strengthen Baichuan’s efforts to develop its own large language models, including the Tongyi Qianwen series and an open-source version named Qwen. This investment follows the launch of Baichuan’s new large language model and a dedicated digital assistant, intended to transform its Baixiaoying chatbot into a comprehensive digital platform akin to Tencent’s WeChat.

This latest round of funding comes less than two months after Baichuan introduced its updated AI models, including Baichuan-4 and the Baixiaoying chatbot app. The company is positioning itself to compete with major international players in the AI field, such as OpenAI and Anthropic.

The Chinese tech sector is heavily investing in AI development, with billions being directed towards advancing AI technologies. This includes a new $40 billion state investment fund for the semiconductor industry to support domestic AI initiatives in response to U.S. restrictions on semiconductor exports. These restrictions have impacted China’s ability to acquire advanced chips necessary for AI development.

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