Ai / Business | China’s AI-related start-ups raised more than 110 billion yuan in the first quarter, nearly tripling from a year earlier. The funding surge is being driven by large language models, embodied AI and state-backed capital moving into strategic technology sectors.
China’s AI start-up market is heating up again, and this time the money is moving toward large models, robotics and the infrastructure needed to make them useful.
China’s artificial intelligence start-ups pulled in more than 110 billion yuan, about $16.2 billion, in the first quarter of 2026, turning what had looked like a selective funding market into one of the country’s clearest growth stories. The number matters because it is not just another venture capital rebound. It shows investors are again willing to write large checks for companies that can sit inside Beijing’s preferred future: AI models, embodied intelligence, chips, computing power and advanced manufacturing.
According to figures published by Zero2IPO Research and carried by Sina Finance, total investment in the AI sector rose 185.4 percent from a year earlier. That is a sharp move in a market that has spent the past few years dealing with slower exits, tighter regulation and a colder attitude toward consumer internet companies. Money has not disappeared. It has changed direction.
The broader private equity and venture capital picture also improved. China recorded 2,568 investment deals in the March quarter, with disclosed value of 234.4 billion yuan, up 4.9 percent in deal count and 15.4 percent in value from a year earlier. That tells us something useful. AI is not lifting every boat equally, but it is strong enough to pull the headline numbers higher.
China has been trying to steer private capital into strategic sectors for years. Chips, AI, robotics and manufacturing are not just fashionable investment themes, they are policy priorities. That makes the current funding wave different from the old platform economy boom, when investors were mainly chasing user growth, advertising markets and consumer traffic.
The government’s message has been consistent: build the technologies that reduce dependence on foreign suppliers and strengthen industrial competitiveness. For investors, that changes the calculation. A large-model start-up or robotics company may still face difficult economics, but it is operating in an area where regulators, local governments and state-backed funds all have reasons to help.
That support is showing up in the structure of the market. The Business Times reported last month that China’s venture capital fundraising was heading for a strong first quarter, helped by state-led technology investment. In February, the ten largest VC investors in China were all state-backed entities, according to Zero2IPO data cited in that report. That does not mean private investors are standing aside. It means public money is setting the direction of travel, and private capital is following where the road looks clearest.
Large language models remain the obvious magnet. Companies such as Moonshot AI, Z.ai and MiniMax have become symbols of China’s attempt to build domestic alternatives to OpenAI, Google and Anthropic. Moonshot, the company behind Kimi, recently raised about $2 billion at a valuation above $20 billion, according to TechCrunch. Z.ai and MiniMax have already listed in Hong Kong, giving investors a more visible way to price China’s frontier model companies.
Robotics Is Becoming The Next Test
The more interesting part of this funding cycle may be embodied AI, where software intelligence moves into machines. Humanoid robots, robot hands, autonomous systems and industrial automation are getting attention because they connect AI to China’s manufacturing base. That is a practical advantage. A chatbot can be copied quickly. A robot that works reliably in a factory, warehouse or service environment takes engineering depth, supply chains and patient capital.
Reuters reported this month that Linkerbot, a Chinese robotic-hand start-up, is targeting a $6 billion valuation in its next financing round after closing a round backed by investors including Ant Group, HongShan, Zhongguancun Science Park Fund and Bank of China Asset Management. Unitree Robotics has also filed for a Shanghai listing, seeking a valuation of up to $7 billion. These are not small side bets. They show that investors believe China can turn AI from a model race into a hardware and automation race.
That matters for start-ups because robotics funding tends to be less forgiving than software funding. Hardware cycles are slower. Margins can be harder. Production problems are real. But when robotics works, it creates something more defensible than another app wrapped around an existing model. For China, that is the appeal. The country already has the factories, component suppliers and engineering teams needed to bring machines to market at scale.
The risk is that enthusiasm runs ahead of revenue. AI model companies are expensive to train and operate, while robotics companies can burn capital for years before proving repeatable demand. China’s current funding boom will therefore be judged less by how much money was raised in one quarter and more by whether these companies can build products that customers use without subsidies or speculative excitement.
Still, the direction is clear. China’s investors are not simply chasing the latest AI story. They are backing the layers that could define the next industrial cycle: models, compute, chips and machines. The first-quarter numbers show that capital is available again for the right kind of technology company. The next question is whether those companies can turn strategic importance into durable businesses.
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