Foreign investors are excited about China’s cheap AI valuation

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Sitting in his new Beijing office, AI2 Robotics founder and CEO Eric Guo reflected wistfully on the challenges of fundraising in China — and noted that US-based humanoid rival Figure recently raised $1 billion in a round. $39 billion valuation.

That’s far more than a Chinese robotics company can typically raise, he said.

Their strategy for growth? Do more with less.

That means, for instance, developing a robotics AI model that uses less than 10% of the parameters needed to train the alphabet. RT-2 AI models, as outlined in Guo’s widely cited one papers. Guo, who received his Ph.D. from Purdue University, previously worked at Microsoft, smartphone maker Oppo and electric vehicle company Xpeng.

It reflects how Dipsic and other Chinese players hold Reduce AI costs for users, and allowed them to claim much lower AI development budgets than OpenAI The estimated cost, which has exceeded $100 billion. That strategy is enough to make AI2 robotics one of China’s hottest investment targets.

The Shenzhen-based startup was valued at $1 billion this fall, reaching unicorn status just two years after launch — the most thanks to nine fundraising rounds so far this year, according to a person familiar with the matter.

This Hot US AI trade has shifted to Alphabet Following this week Rave reviews From his new AI model – a few weeks after Warren Buffett Berkshire Hathaway declared a Rare technical condition Michael Burry, known for calling the US housing crash before 2008 in stocks, was the latest voice to warn. Bubble risks in US AI names That has driven recent market gains on Monday.

But whatever is emerging in China’s tech sector pales in comparison to the US

US venture deals in AI and robotics are set to more than quadruple from 2023 to exceed $160 billion this year, according to a CNBC analysis of Pitchbook data.

Comparable deals in China That’s just over $10 billion this year — up slightly from the $9.24 billion reported in 2023, the data shows.

It is a confluence regulatory pressure In China, the US Export restrictions and an inhospitable startup environment where locals have overcome strict pandemic lockdowns to remain competitive.

Global investors are increasingly interested.

Vincent Lu, partner and head of private equity at Australian asset manager Bowman Group, said the bubble risks for Chinese AI companies in the US. contains more than The Melbourne-based firm oversees AU$910 million ($591.26 million), which is largely allocated to Australia and North America, and has participated in a funding round for the US-based. Anthropic earlier this year And OpenAI last year.

Lu was “so intrigued” by China’s AI and robotics scene that he flew back to Shanghai from Melbourne last year to scout deals, and has only just started getting serious about a few. Chinese companies’ AI valuations are about a quarter of their American peers, while benefiting from lower research and development costs, he added.

It marks Continued recovery in foreign investor interest Beijing’s crackdown on big internet tech companies in China in recent years, along with Washington’s scrutiny of China-related investments.

This month alone, at least three China-based funds with an AI focus have raised capital in US dollars from foreign investors:

• Monolith Capital, which backed DeepSeek’s rival Moonshot AI, raised $488 million For two funds – one in Chinese yuan and the other in US dollars – without disclosing the breakdown. Foreign participants in the US dollar fund include institutions in the US, Singapore, Europe and the Middle East, a company representative told CNBC.
• Source Code Capital, the VC firm behind ByteDance and Metuan, Raised even more – $600 million.
• Blue Pool Capital is backed by Alibaba co-founder Joe Tsai A target of $750 million For its first fund to use external capital for direct investment, according to the Financial Times.

Venture firms raise capital from outside investors, known as limited partners, earning annual fees as they put that money to work in startups. Once a startup goes public or sells at a higher valuation, VC firms can “exit” and share the returns with their limited partners.

Even if the numbers don’t seem big yet, the pace is picking up. Monolith claimed Investors sought to commit more than $600 million in its latest fundraising round, but it kept the original cap of $488 million.

A fund of this size would have been “unthinkable” just a year ago, said Johnny Zhou, co-head of Primavera Venture Partners, adding that American investor sentiment toward China is seeing a “clear recovery,” helped by relatively visible exit routes.

While Chinese companies have not yet resumed IPOs in the US, they have reached Hong Kong, making its stock exchange one of the world’s largest. The largest listing destination this year.

Still, stock investors are relatively more cautious on China than the US

This Hang Seng IndexIncluding AI heavyweights Alibaba And TencentUp nearly 30% so far this year, but trades at a 13.61 price-to-earnings ratio, according to FactSet data. The Nasdaq Composite, by contrast, trades at a ratio of 33.8, with the index up nearly 20% so far this year.

The Trump-Xi call. The presidents of the US and China indicated on Monday night that a A one-year trade truce Tensions continue to flare between Beijing and Tokyo over Taiwan.

The Japanese concert is cancelled. There were at least two demonstrations in Beijing Canceled suddenly last week Amid China’s expanding pushback against Japan’s high-profile Taiwan comments.

Alibaba AI app downloads have increased. Reports more than the company’s new Quen app 10 million downloads As in a week AI Pivot gains momentum.

of Hong Kong Hang Seng Index It rose 0.25% for the week and is up 2.9%, recovering from last week’s decline amid a global tech sell-off. The main stock gauge is up 29.4% year to date.

The offshore yuan last traded at 7.077 against the dollar, its strongest level since October 2024.

– Noor Hikmah Mohammad Ali

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