BEIJING, March 3 (Reuters) – Chinese artificial intelligence startup Zhipu AI has secured over 1 billion yuan ($137.22 million) in a new funding round, adding to the 3 billion yuan investment it received months earlier.
The funding comes as competition intensifies within China’s AI sector, particularly following the emergence of rival DeepSeek. DeepSeek’s large language models are claiming to match the capabilities of Western competitors while offering lower costs.
State-backed Hangzhou City Investment Group Industrial Fund and Shangcheng Capital are among the investors in the round, Zhipu AI stated in a WeChat announcement on Monday. The Beijing-based startup plans to use the funds to enhance its GLM large language model and expand its AI ecosystem, with a focus on serving businesses in Zhejiang province and the Yangtze River Delta economic zone.
This investment marks a significant move for Hangzhou City Investment Group’s year-old industrial fund, highlighting the eastern Chinese city’s ambition to become a major AI hub. Hangzhou, also home to DeepSeek, has been actively supporting artificial intelligence ventures through state-owned enterprises.
Founded in 2019, Zhipu AI is considered one of China’s “AI tigers” and has now completed 16 funding rounds, according to the business registration platform Qichacha. In December, the company raised 3 billion yuan, with Zhongguancun Science City, backed by the state, among the investors.
The funding push arrives as open-source AI models from competitors, such as DeepSeek, have reshaped market dynamics for second-tier AI firms. DeepSeek’s models have attracted attention for matching the capabilities of leading Western platforms like OpenAI.
In Monday’s WeChat statement, Zhipu AI also announced plans to release a suite of new AI models under an open-source framework. This suite includes foundation models, inference models, multimodal models, and AI agents.
($1 = 7.2877 Chinese yuan renminbi)
