Hot Chinese AI start-up Moonshot in talks for new funding, boosting valuation to US$3 billion

Chinese artificial intelligence (AI) start-up Moonshot AI is in talks with investors for additional financing that would value it at more than US$3 billion, making it the highest valued start-up of China's so-called Four New AI Tigers, according to a person familiar with the matter.

The person, an investor at a local venture capital fund that backs Moonshot AI, declined to be named due to the sensitivity of the matter. Moonshot AI's latest funding was first reported by local news outlet TMTPost.

Chinese social media and video gaming giant Tencent Holdings also joined the round as a new investor, the person added. Moonshot AI and Tencent did not immediately respond to requests for comment on Tuesday.

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If the funding goes through, the new valuation would be half a billion dollars higher than in February, after it raised US$1 billion in a round led by e-commerce giant Alibaba Group Holding. Alibaba owns the South China Morning Post.

Moonshot AI founder Yang Zhilin. Photo: Weibo / @极客公园 alt=Moonshot AI founder Yang Zhilin. Photo: Weibo / @极客公园>

The Beijing-based start-up, known in Chinese as Yuezhi Anmian, is enjoying a rapid appreciation in its valuation amid a funding spree owing to the massive success of its Kimi chatbot. Founded a year ago, Moonshot has seen a surge in interest after it launched its ChatGPT-like product last October.

Kimi chatbot - built on the firm's self-developed Kimi large language model (LLM), the technology underpinning intelligent conversational bots - has gained popularity among local users thanks in large part to its capabilities in handling extremely long text queries and responses.

Upon its debut, Kimi was already able to process as many as 200,000 Chinese characters in a context window - referring to the text that an LLM can process in a single conversation - lending it the ability to comprehend and answer questions on book-length documents.

Moonshot quickly expanded Kimi's capabilities to support up to 2 million Chinese characters in March.

Its founder Yang Zhilin said at an industry event last year that the company believes the ability to process long prompts is critical to future AI development.

The large context window and the fact that it was a free service led to a surge in Kimi's popularity. It is now in league with the likes of Baidu, which has much deeper pockets, rivalling the search giant's Ernie Bot in user traffic.

Kimi was ranked the second most popular Chinese AI chatbot in April, with more than 20 million visits to its website and apps, according to AIcpb.com, which tracks the popularity of AI products worldwide.

That placed it one spot above Ernie Bot, which attracted 16.91 million visits that month. The generative AI service built into Baidu's online document service Wenku, which helps users create slide decks and outlines, was ranked the most popular generative AI service in China for the period.

After announcing a 2 million-character context window in March, interest in Kimi was so high that part of the chatbot was inaccessible for two days at the end of the month. Seeking to deal with the high demand, Moonshot AI announced this week that it would start charging for faster response times.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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