Author | Liu Baodan
Editor | Zhou Zhiyu
In just over a year since its establishment, the Dark Side of the Moon has emerged as the hottest star company in China's big model track.
On May 21st, Wall Street News learned that the Dark Side of the Moon is set to raise funds based on a pre-investment valuation of $3 billion (approximately 21.73 billion RMB), making it still the highest valued AI startup in China.
Over the past year, the Dark Side of the Moon has completed three rounds of financing, totaling over a hundred billion. Behind it stand giants like Alibaba, Tencent, and ZhenFund.
Such investment fervor has not been seen for a long time. With the support of industrial capital and venture funds, the Dark Side of the Moon has swiftly risen, gaining favor from all sides due to its self-developed AI technology and promising applications.
However, the reality is that big model technology is still rapidly evolving, players in the field are engaging in price wars, accelerating the process of natural selection. Finding a clear path to commercialization remains a common challenge for big model companies.
When the tide rises, capital rushes in, but it's only when the tide recedes that we see who's swimming naked. In this brutal elimination game, the Dark Side of the Moon, heavily backed by capital, seems to have a better chance of success, but it still needs to prove its worth.
The "Great Capital Adventure" of the Dark Side of the Moon has begun.
Darling
The popularity of the Dark Side of the Moon has exceeded expectations.
Wall Street News learned that the new investors in the Dark Side of the Moon include Tencent and Gaorong Capital. After the investment, the expected valuation is set to surpass Baichuan Intelligence, Zhipu AI, MiniMax, and Zero One Wanwu, leading the pack of Chinese AI unicorn companies.
This has left many industry insiders envious. A head of an AI startup told Wall Street News that the development in the AI field is fast-paced, and companies with unclear positioning like Zhujian Intelligence are under great pressure. Many AI companies serving the B-end are finding it increasingly difficult to secure funding.
On the other hand, the Dark Side of the Moon represents a different extreme. Since the beginning of the year, among the top five big model companies in China, the Dark Side of the Moon, Zhipu, and MiniMax have each completed a new round of financing. In just the past three months, the Dark Side of the Moon has once again received funding, indicating its high popularity.
Since its establishment in March 2023, the Dark Side of the Moon has gone through four rounds of financing, with the cumulative amount from the first three rounds nearing a hundred billion. Behind this funding are bets from industrial capital and venture funds like Alibaba, Tencent, Meituan, ZhenFund, and Gaorong.
After a year of sprinting, domestic big model companies are gradually entering the market validation phase, with the Dark Side of the Moon becoming a target of capital pursuit.
Focusing on general artificial intelligence, the Dark Side of the Moon, led by founder Yang Zhilin, is the most cited researcher in the NLP field among Chinese researchers under 35. He leads a high-density team of talents experienced in both algorithms and engineering.
In March, the Dark Side of the Moon's intelligent assistant Kimi upgraded its long-text capability from 200,000 words to 2 million words, quickly gaining attention. Giants like Alibaba, Baidu, and 360 are following suit, and the concept of Kimi is making waves in the capital market.
By March 2024, the AIGC APP industry users had exceeded 73.8 million, an eightfold increase year-on-year, with Kimi's monthly active users approaching 6 million. Despite Kimi being launched on the APP side only in March, its ability to break into the industry's top 5 indicates its potential.
Kimi has become another standout AIGC product after Miaoya, the first AI application to attract user attention based on its product features, which is one of the core reasons why investors are bullish on the Dark Side of the Moon.
However, while the Dark Side of the Moon is being lavished with capital, the intensive investments have raised concerns about its financial pressure. A source close to the Dark Side of the Moon mentioned that the rapid fundraising is not due to financial constraints but because big models are inherently capital-intensive. When the timing is right for fundraising, they seize the opportunity.
In fact, the Dark Side of the Moon has set a high investment threshold, with some small and medium-sized investment institutions finding it challenging to enter. The same source mentioned that the Dark Side of the Moon carefully selects its investors, requiring a strong alignment in ideas to come on board.
With the completion of a new round of financing, the Dark Side of the Moon has gained more chips in the big model competition, opening up more possibilities.
Race
The current Chinese big model market is filled with anxiety. Big models are transitioning from a technological battle to an application battle, and the Dark Side of the Moon is not exempt.
As the most favored AI startup by capital, the Dark Side of the Moon also faces the question of commercialization. Especially after the last round of financing, Yang Zhilin was reported to have cashed out tens of millions of dollars, raising doubts about whether this startup can persevere.
Zhu Xiaohu previously stated, "Yang Zhilin is good at research, but I don't know how he will commercialize it." In his view, Yang Zhilin and the Dark Side of the Moon still need to prove their value.
Yang Zhilin is evidently aware of this. At a forum on May 18th, he mentioned balancing technology and commercialization. While prioritizing climbing stairs (technical research and development), there might be some focus on commercialization and products.
Compared to his earlier emphasis on long-termism, envisioning "how to change the world in the next ten to twenty years," Yang Zhilin has actively started exploring commercialization.
Recently, Kimi began testing a reward feature in a small-scale grayscale test. This signifies Kimi's move towards cultivating a user mindset for payments.
The aforementioned source close to the Dark Side of the Moon mentioned that the company has an open mindset, focusing on serving customers well while also exploring ways for C-end payment methods. The path to commercializing AI is still in its early stages. As user value continues to grow and models keep iterating, the capabilities of AI to assist humans are expanding. Charging for these services is a natural progression as AI becomes more commercialized.
Moreover, in addition to financial support, funding for the dark side of the moon also brings resource advantages, laying the groundwork for its commercialization. This is particularly crucial as computational power is currently a scarce resource, and the involvement of companies like Alibaba helps fill this gap significantly.
It is understood that out of Alibaba's $800 million investment in the dark side of the moon, the actual contribution is less than $600 million, with some of it being settled in computational power provided by Alibaba Cloud. Tencent's participation is also driven by the desire to deepen cooperation with Kimi.
Yao Cheng, Co-Director of Morgan Stanley's Asian TMT Industry Research, believes that large tech companies evaluate the strategic value of a company in the long term, assessing synergies in products and technologies, and are willing to pay a premium for it.
This enables the dark side of the moon to have the confidence to further explore commercialization or form synergies with major players, regardless of whether it is to engage in further commercialization or to create synergies with major companies.
The challenge lies in the fact that a "killer app" like WeChat has not yet emerged in the current market. Companies like ByteDance, Tencent, Alibaba, and Baidu are joining the battle of large model pricing wars, aiming to accelerate the commercialization of large models by lowering the development threshold and nurturing the application ecosystem.
An analyst in the TMT industry also points out that the biggest pain point for developers at this stage is not pricing but rather the technology bottleneck in large model applications. Only when a product emerges that can surpass existing solutions and provide a far superior experience can the industry undergo a qualitative change.
Yang Zhilin understands this well. A source close to Yang Zhilin revealed that the latest round of financing for the dark side of the moon will be used to strengthen resources and talent. The current focus of the dark side of the moon is on developing the next generation of cross-modal large models (multi-modal), which is likely to be released in June.
Yang Zhilin's ambition is to transform the dark side of the moon into a platform similar to the Apple App Store through continuous improvement in technological capabilities. Starting from a few official applications to third-party developers and then leveraging developers' creativity to create interesting applications like WeChat.
If successful, the dark side of the moon could emerge like the iPhone did, triggering an "iPhone moment" in the AI era. It will also need to attract more capital and establish deep ties with major companies to venture further into the unknown.
This will be a thrilling yet endlessly exciting adventure. Yang Zhilin and his dark side of the moon, recognized by capital, can only sprint ahead in this race.
