The tech giant has led the latest funding round for AI video startup Aishi Technology, underscoring its strategy of backing multiple winners in the next major AI market.
By Zhang Nan
Alibaba (BABA.US) (9988.HK) has led a new funding round for Chinese AI video startup Aishi Technology, reinforcing its strategy of investing across the country’s leading artificial intelligence model developers as competition in generative video intensifies.
Aishi, best known for its PixVerse video generation platform, completed its overall Series C financing at close to 3 billion yuan ($443 million), according to people familiar with the transaction. The latest C+ round included more than a dozen domestic and international investors, including Lollapalooza Capital, the family office of former Meituan executive Wang Huiwen, as well as Mirae Asset of South Korea and Singapore-based iGlobe Partners.
The fundraising follows a separate Series C round completed in March that included investors such as 37 Interactive Entertainment, Yizhuang State Investment, Ruyi Holdings and CDH Investments. The proceeds will be used to develop video generation foundation models, real-time world models, expand overseas products and accelerate commercial applications.
The deal comes just weeks after rival Kuaishou (1024.HK) announced that its Kling AI video model had raised nearly $3 billion at a post-money valuation of $18 billion, highlighting growing investor confidence that AI-generated video is emerging as one of the first AI application sectors capable of generating meaningful commercial revenue.
Alibaba broadens AI video bets
Alibaba’s latest investment also extends a playbook it first adopted in large language models: developing its own foundation models while simultaneously backing many of China’s leading AI startups.
The company previously led Aishi’s $60 million Series B financing and has now increased its stake through the latest round. Alibaba Cloud has also backed video AI startup Shengshu Technology, while Ant Group has invested in Yanyu Technology. Alibaba also participated in Kling’s latest fundraising.
The strategy mirrors Alibaba’s investments in China’s leading large language model developers, including Knowledge Atlas Technology, formerly known as Zhipu AI (2513.HK), MiniMax (0100.HK), Moonshot AI, Baichuan AI and 01.AI, alongside its in-house Qwen models.
Unlike the LLM market, however, China’s AI video sector has become increasingly concentrated. While several technology groups compete in language models, only a handful of companies remain at the forefront of video generation, with ByteDance‘s Seedance model widely regarded by industry observers as the market leader.
That leaves Alibaba facing a familiar strategic challenge: ensuring it has exposure to multiple potential winners while competing with ByteDance in one of China’s fastest-moving AI markets.
A bet on commercial applications
Aishi was founded in early 2023 by former Source Code Capital executive Xie Xuzhang and Wang Changhu, formerly head of visual technology at ByteDance, where he helped develop computer vision technologies used by its Douyin and TikTok subsidiaries.
The company says PixVerse has accumulated more than 150 million users globally. It recently launched PixVerse R1, a real-time interactive video model that allows users to create and interact with AI-generated virtual environments, followed by PixVerse Game, which is designed to enable AI-native game creation.
Xie said gaming represents one of the most demanding tests for real-time video models because it requires not only image generation but also consistent rules, character behavior, interaction and feedback. He believes AI-native games, where users simultaneously create and play content, could become one of the technology’s biggest commercial opportunities.
Overseas markets drive revenue
Despite a strong domestic presence in AI video through its Paiwo AI platform, Aishi has generated most of its revenue overseas.
The company reported annual recurring revenue (ARR) of more than $40 million in the second half of last year and expects that figure to increase several-fold by the end of this year. More than 90% of revenue currently comes from international markets.
Xie attributed that to an early strategic decision to prioritize overseas users, where willingness to pay for AI software was stronger. The company first launched an English-language website before expanding into German, Japanese and French, choosing markets largely according to the size of their economies and user demand.
“We would launch a product, observe where users came from, then localize accordingly,” he said. “Brazil generated significant traffic even before we offered Portuguese.”
He added that AI companies could not rely on the user acquisition strategies developed during the mobile internet era because there were few precedents for browser-based AI products when PixVerse launched in 2024.
Just getting started
Xie dismissed concerns that enthusiasm surrounding generative AI has reached bubble territory following recent questions over whether scaling laws for foundation models are slowing.
“I think AI video is only just getting started,” he said. “Coding and video already have real commercial use cases, and many more AI applications are only beginning.”
He argued that AI video has already demonstrated commercial viability through large-scale revenue generation, making it one of the few AI application categories with proven business models.
While ARR has become a widely cited metric across the AI industry, Xie said comparisons can be misleading because many companies report platform transaction volumes alongside subscription revenue. Companies developing and operating their own foundation models, he said, generate significantly higher gross margins than marketplace businesses.
As global AI video competition narrows to a small group of Chinese companies, investors appear increasingly willing to commit large sums to the sector, betting that video generation could follow coding assistants as the next major commercial breakthrough in artificial intelligence.
Source:
ChinaVenture
