Image credit: Hala AlGhanim/Unsplash

Disclaimer: This story was originally published on June 3

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Prosperity7 Ventures, the $3 billion fund of petroleum and natural gas firm Saudi Aramco’s venture capital arm, reportedly participated in the latest financing round for Zhipu AI — one of China’s earliest and best-funded artificial intelligence startups.

The Saudi venture fund’s involvement in the $400 million raise for the Chinese group marked the first known high-profile foreign investment in a Chinese generative AI initiative, multiple news outlets reported on May 31, including the Financial Times.

The latest raise brings the up-and-coming startup’s valuation to about $3 billion.

While Prosperity7 was only a minor investor in Zhipu’s round, the FT report — which cited “people familiar with the matter” — said that the fund’s investment shows Saudi Arabia’s willingness to support an ecosystem that could guard against United States dominance in AI.

“The Saudis don’t want Silicon Valley dominating this industry,” one source told FT.

US President Joe Biden signed an executive order in August 2023 that prohibited some new US investments in China’s high-tech sector, including AI. The Western superpower also introduced export restrictions on chips and semiconductor equipment to China last year.

According to FT, those US actions have limited Zhipu and its closest rivals — Moonshot AI, MiniMax, and 01.ai — to seek support from government funds and local cloud providers.

China’s answer to OpenAI’s ChatGPT

China, particularly its capital, Beijing, is increasingly supporting a nationwide effort to create a homegrown OpenAI and ChatGPT rival. In recent months, China accelerated approvals for AI services after highlighting AI as a key area in tech.

Unlike some countries, China requires companies to obtain approval before rolling out generative AI services.

State media reported that 117 large AI models have received approvals as of April.

Among those approved AI services is Baidu’s “Ernie Bot,” described as the first locally developed ChatGPT-like chatbot to be announced in China in the country. 

Last month, the CEO of Baidu said its chatbot doubled its number of users from December 2023, racking up over 200 million.