US-Backed VCs Are Funding China's Answer To OpenAI

A boom in artificial intelligence startup funding sparked by OpenAI has spilled over to China, the world's second-biggest venture capital market. Now American institutional investors are indirectly financing a rash of Chinese AI startups aspiring to be China's answer to OpenAI. From a report: The American investors, including U.S. endowments, back key Chinese VC firms such as Sequoia Capital China, Matrix Partners China, Qiming Venture Partners and Hillhouse Capital Management that are striking local AI startup deals, which haven't been previously reported. U.S. government officials have grown increasingly wary of such investments in Chinese AI as well as semiconductors because they could aid a geopolitical rival. For instance, Sequoia China, the Chinese affiliate of the Silicon Valley VC stalwart, recently made a U.S.-dollar investment in a brand-new AI venture created by Yang Zhilin, a young assistant professor at Beijing's prestigious Tsinghua University, which is sometimes described as China's equivalent of the Massachusetts Institute of Technology, according to a person with direct knowledge of the deal. Yang, who got his doctorate from the School of Computer Science, Carnegie Mellon University, in 2019, is considered one of China's top AI researchers. He previously co-founded another startup Sequoia China backed, Recurrent AI, which develops tools for salespeople, according to the company's website. Matrix and Qiming, meanwhile, recently funded another Beijing-based AI startup, Frontis, which has compared its product to ChatGPT. It was founded in 2021 by Zhou Bowen, a Tsinghua professor who once led JD.com's AI research lab, according to the company's website. The deal gave the startup a paper valuation of hundreds of millions of U.S. dollars, the company said.

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