The main backer of the biggest ever fundraising round for a major artificial intelligence (AI) project in China is Alibaba Group Holding Ltd.

According to people close to Bloomberg, the e-commerce behemoth led the funding round for Moonshot AI, with a $1 billion investment that boosted the startup’s valuation to $2.5 billion. Long-Z, Hongshan, and Monolith Management—previous backers—also showed up.

Given that the startup is following the lead set by companies like Tencent Holdings and Microsoft in putting their faith in generative AI, Alibaba’s support for it seems to imply the allocation of cash in the quest of growth. Applications like ChatGPT are powered by this cutting-edge technology as businesses shift toward artificial intelligence.

Changing Course

Alibaba hopes to turn things around under the new CEO Eddie Wu and chairman Joseph Tsai, following two years of hardships caused by regulatory scrutiny and a slowdown in the economy. With significant investments, the pair is spearheading the push into new technologies and branching out their business lines into cloud computing and logistics.

According to Tsai, the cloud currently serves about 80% of China’s IT enterprises and is home to half of the nation’s generative AI startups.

Moonshot AI will celebrate its first anniversary next month, and this historic valuation resulting from the finance agreement will give it a much-needed boost as it works to establish itself as a major player in the Chinese AI industry. With the debut of its Kimi chatbot last November and the subsequent release of a platform enabling developers to create AI applications that are integrated with its model, it hopes to someday take on OpenAI and Google.

The parties concerned seem reluctant to react on the news as it has surfaced. As of this writing, Moonshot had not released an official statement, and Alibaba and Monolith had not responded to inquiries about the investment money, which had initially been made public by 36kr in local Chinese media.