Chinese AI Startup Zhipu AI Attracts $137 Million Investment From State Funds

The Chinese artificial intelligence startup Zhipu AI raised 1 billion yuan—$137.22 million—in its latest funding round. The Beijing-based company shared the update in a post on WeChat today.

According to Reuters, Zhipu AI has gained relevance in the AI race, competing with major contendants in the region like DeepSeek and Alibaba. In December, it raised over 3 billion yuan—around $420 million—and with this latest investment, it has raised a total of $1.16 billion.

The main investors in the AI project are Hangzhou City Investment Group Industrial Fund—which also supports DeepSeek—and Shangcheng Capital, both state-backed firms. The deal shows Hangzhou City’s efforts to become a major AI hub in the region.

With the new investment, Zhipu AI said that it will expand its AI ecosystem and enhance its GLM large language model. The startup will also focus on developing projects in the Yangtze River Delta economic zone and the Zhejiang province.

This new push comes after DeepSeek’s success in the U.S. market, ranking first place on Apple’s App Store in January.

According to CNN, Zhipu AI, founded in 2019, is among the AI companies blacklisted in the U.S. by the Commerce Department’s Bureau of Industry and Security. It was added to the list on January 15, during the final days of Biden’s administration, as it was considered a threat to foreign policy interests and national security.

The AI startup cannot buy American technology, including Nvidia’s popular AI chips. It joined other tech companies with the same restrictions such as ZTE, Huawei, and SMIC. DeepSeek is not listed.

Besides investing in AI companies, the Chinese government and major institutions have made significant progress in adopting advanced local AI technology. China’s ports have been using DeepSeek AI’s customized model to streamline operations, and Chinese universities have begun implementing courses centered around DeepSeek.