Yuan Hongwei, chair of Shenzhen-based venture capital Z&Y Capital, said she believed that only two to three general-purpose LLMs will end up dominating the market.Z&Y, whose past investments include drone maker DJI and autonomous driving startup Pony.ai, eventually decided to back Baichuan Intelligence, a five-month-old firm looking to build an open-source AI model to rival Meta Platform’s Llama 2.
"We see an opportunity here," Yuan Hongwei said."Wang himself is leading this project. Given his understanding of the digital business, his success with Sogou and how he commands attention industry-wide, we think it is our best bet." Others said that China's largest tech companies Alibaba, Tencent and Baidu ultimately had the biggest headstart and deep pockets to succeed, given their large user bases and wide range of services. For instance, they could easily offer generative AI services as an additional plug-in to their cloud users.
Tung added that some investors regret prematurely investing in LLM firms at the peak of the hype earlier this year with many such startups struggling to build strong business cases and now looking to partner with tech giants to find use cases or be potentially sold to them.