The rise of generative AI gained immense global traction with the emergence of ChatGPT, a trend that has prompted numerous Chinese tech giants to make substantial investments in related technologiesRecently, Shenshu Technology made headlines by securing financial backing from Huawei Hubble and Baidu to develop a domestic alternative to the Sora model.

Shenshu Technology has garnered significant interest from leading tech firms such as Huawei and Baidu.

On June 26, 2023, Shenshu Technology, based in Beijing, updated its corporate registrationThe changes revealed that Huawei's Shenzhen Hubble Technology Investment Partnership and Baidu were now shareholders in the firm.

Notably, Shenshu Technology had recently completed a financing round worth hundreds of millions, attracting investments from various high-profile institutions

This trend follows the launch of ChatGPT, which has led many investors to seek opportunities in the burgeoning AI sector, including major players such as Huawei and Baidu.

Moreover, due to frequent reports of the U.Sseeking to impose technological restrictions on China, many companies are prioritizing the development of domestic large models as a strategic pivot, creating a pressing need for the acceleration of the Chinese AI market's growth.

As a darling of venture capital

Focused on creating a model comparable to Sora, Shenshu Technology has attracted new investors.

The company recently announced changes to its corporate structure, with new shareholders including Huawei Hubble, Baidu, the Zhongguancun Science City Technology Park, and Zhuo Yuan Xing Tuo

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Its registered capital has also increased from 1.527 million to approximately 1.775 million yuan.

Founded in March 2023, Shenshu Technology's core team comprises members from Tsinghua University's AI Research InstituteThe team also includes top talent from well-known tech firms such as Alibaba, Tencent, and ByteDance, positioning them as a leading research group in deep generative algorithms with innovative research capabilities in diffusion probability models.

Shenshu aims to build a world-class multimodal large model integrating text, images, video, and 3D dataThe company explores commercial applications of generative AI in fields like art design, game production, film post-production, and social content to enhance human creativity and productivity through AI.

In April 2023, Shenshu Technology, in collaboration with Tsinghua University, launched Vidu, China's first long-duration, high-consistency, and high-dynamism video large model, which fully matches the capabilities of Sora.

The company's backing extends beyond Huawei Hubble and Baidu, including giants like Alibaba and Zhihui AI

Noteworthy shareholders include Ant Group’s Shanghai Yunxuan Business Management Consulting Co., Baidu's Sanya Baichuan Zhixin Private Equity Investment Fund, Zhihui AI's affiliated Beijing Zhihui Huazhang Technology Co., and the Beijing AI Industry Investment Fund.

Analyzing Shenshu's financing journey reveals it has received substantial support from numerous prestigious investorsIn June 2023, it completed a nearly 100 million yuan angel round led by Ant Group, with participation from BV Baidu Venture Capital and Zhuo Yuan Capital, raising the company’s valuation to 100 million USD.

In August, Jinqiu Capital exclusively invested tens of millions in Shenshu's angel+ round, primarily for algorithm development, product advancement, and team expansion.

On March 12, 2024, Shenshu secured another funding round led by Qiming Venture Partners, with follow-on investments from Daitai Capital, Hongfu Houde, Zhihui AI, and prior investors BV Baidu Venture Capital and Zhuo Yuan Asia.

Earlier in June, Shenshu Technology publicly disclosed that it had raised several hundred million yuan during a Pre-A financing round, co-led by the Beijing AI Industry Investment Fund and Baidu, with additional participation from Zhongguancun Science City and other existing shareholders.

It is essential to note that this is not the first instance of Huawei and Baidu investing in popular AI companies.

A wave of investment from tech giants

A group of wealthy internet magnates are currently on the hunt for high-quality investment opportunities in the AI landscape.

For instance, BV Baidu Venture Capital, one of Shenshu's key backers, was established in 2017 by the Baidu Group as an independent venture capital institution.

The firm primarily focuses on investing in technology innovation fields centered on artificial intelligence, including AIGC, autonomous driving, new energy, life sciences, enterprise services, semiconductors, and smart industrial sectors

Reports indicate that BV Baidu Venture Capital manages over seven hundred million dollars across three funds in USD/RMB and has invested in nearly 200 companies.

In March of last year, AI content-generating company Xihu Xincheng completed several million dollars in Pre-A round financing, led by Baidu Venture Capital, with follow-on investments from existing backers Kaitei Capital and the Sustainable Development Platform of Xihu Education FoundationJust a few months later, Baidu Venture Capital participated again in Xihu Xincheng's A round financing.

In May, the startup “Morph Studio,” which specializes in text-to-video generation technology and community, successfully raised millions in seed funding exclusively from Baidu Venture Capital to enhance its text-to-video performance

According to Tianyancha, Baidu Venture Capital has made a total of 232 investments to date.

Additionally, on May 31, 2023, Baidu established a 1 billion yuan “Baidu Wenxin Investment Fund,” focusing on investing in and incubating high-quality startups within the large model sector, offering one-stop resources that include funding, technology, and talent.

Moreover, Huawei Hubble is not new to investing in large model companiesOn April 11, it was reported that Mianbi Intelligence raised hundreds of millions in financing, where Huawei Hubble participated alongside Chunhua Venture Capital, the Beijing AI Industry Investment Fund, and strategic investor Zhihu

This marked Huawei Hubble's first investment in a Chinese large model company.

It should be emphasized that the capital backing for Shenshu Technology is greatly attributed to the strength of its research teamThe company's CEO, Tang Jiayu, completed both his undergraduate and master's degrees at Tsinghua University, while the chief scientist, Zhu Jun, serves as the deputy director of the AI Research Institute at TsinghuaThe CTO, Bao Fan, is a doctoral student from Tsinghua University and a long-term researcher in diffusion models within Professor Zhu's research group.

In addition, the recent U.Stechnological crackdowns are likely to further intensify investments in the AI sector, presenting Shenshu Technology and similar companies with new growth opportunities.

The “forced” evolution of China's AI market

On June 25, developers received emails from OpenAI indicating that their API traffic originated from areas currently unsupported by OpenAI

Starting July 9, additional measures would be implemented to prevent API traffic from unsupported countries, including China.

Currently, OpenAI's API is accessible in 161 countries and regions, excluding China, implying the cessation of API services for the nationIn response, domestic large model manufacturers swiftly acted, launching alternatives to capture market share.

By 2 PM that day, Zhihui AI announced a “special migration plan” for users of OpenAI's API to assist them in transitioning to domestically produced large models, offering a generous 150 million tokens and a series of migration training sessions.

Baidu Smart Cloud quickly followed suit, offering “zero-cost switching,” providing free registration services for new enterprise users, including no costs for usage, training, or migration.

Aliyun also announced plans to provide the most cost-effective alternatives to OpenAI's API for Chinese developers, offering 22 million free tokens and exclusive migration support.

While the termination of OpenAI's API services in China may pose challenges, it could also present opportunities for local large model enterprises

In May, several domestic model manufacturers attracted users through discounts or free services.

Zhou Hongyi, a noted figure in the tech community, remarked that OpenAI's decision to suspend services in China might inadvertently accelerate the development of domestic large model industriesThis shift would require Chinese applications to rely solely on locally developed models, indicating that the gap between domestic large models and GPT is gradually narrowing.

The unfolding of these events led to a significant surge in AI-related stocks on June 26, with Sora-related shares rising by over 10%.

For Chinese firms such as Shenshu Technology, navigating this wave of capital frenzy could profoundly influence their future trajectories.