The dark side of the moon, which has received huge financing, does not need to be so urgent in terms of realization, but the commercialization of large-scale model applications is the key for investors to test future investment results.

Author丨Wang Siyuan Editor丨Saike

Following Alibaba, Tencent also became interested in the dark side of the moon.

Recently, according to media reports, the dark side of the domestic large-scale unicorn moon has completed the latest round of financing of more than 300 million US dollars, and new investors in this round of financing include Tencent, Gaorong Venture Capital, etc.

In this regard, a person close to the company said that the news of Tencent's participation in the investment is true. The dark side of the moon responded that it would not comment on the financing news.

If this investment can be implemented, the valuation of the dark side of the moon will exceed 3 billion US dollars, and then reach a higher height, becoming the highest valuation among domestic large-scale model start-ups.

Although the threshold of the science and technology war needs to be paved with funds, and the computing power and talents of the current stage of the competition of large models are inseparable from the support of funds, behind the large amount of financial support and the high valuation, the hidden worries of the dark side of the moon are gradually revealed.

Part.1

The dark side of the moon is temporarily leading the way

In this round of AI wave, the dark side of the moon is undoubtedly the brightest startup, which has won multiple rounds of financing in less than a year and a half since its establishment, and star capital and Internet giants are vying to make a move.

Tianyancha shows that the dark side of the moon will receive more than $200 million in angel round financing for the first time in June 2023, with investment institutions including Zhen Fund and Sequoia China, with a valuation of $300 million at that time; In July of the same year, the company received Series A financing from Meituan Dragon Ball, Lanchi Venture Capital and other investors.

However, the most eye-catching thing in the market is that in February this year, the dark side of the moon won more than $1 billion in Series A+ financing, with investors including Sequoia China, Xiaohongshu, Alibaba, and old shareholders following the investment. This financing is also the largest single round of funding received by a Chinese large-scale model startup since the emergence of ChatGPT, which also jumps the valuation of the dark side of the moon to $2.5 billion.

However, the first round of financing to end is actually 800 million US dollars, and the investor is Alibaba. These do not include the increase in the weight of old shareholders and institutions that have not yet completed the investment process due to the Spring Festival.

In its financial report in May this year, Alibaba disclosed that it would invest a total of about US$800 million in the dark side of the moon in fiscal year 2024, buying about 36% of the shares. The $800 million is not all cash, some of which is settled by the computing power provided by Alibaba Cloud, and the actual amount of capital contributed is less than $600 million.

Since its establishment, the dark side of the moon has gone through 4 rounds of financing, and if this financing lands, its valuation will come to 3.3 billion US dollars, leading the "AI Six Little Dragons" and becoming the highest valuation among domestic large-scale model start-ups. At present, domestic large-scale model unicorns with a valuation of more than 20 billion yuan also include Zhipu AI and Baichuan Intelligence.

According to public information, there have been 107 financing events in the global AIGC field since the beginning of this year, of which 20 have been financed by domestic large-scale model companies with a financing amount of 100 million yuan. In the "New AI Six Little Dragons", five companies, Zero One Everything, Baichuan Intelligence, Zhipu AI, Dark Side of the Moon and Minimax, have all received more than 100 million yuan in financing this year, and another StepLeap Star is also rumored to be in a round of new financing with a valuation of $2 billion in June this year.

It is worth mentioning that not long after the news of financing came out on the dark side of the moon, there were media reports that the AI large model company founded by Kai-Fu Lee, Zero One Everything, has completed a new round of financing, amounting to hundreds of millions of dollars. According to people familiar with the matter, the participants in this round of financing include an international war investment, Southeast Asian consortium and many other institutions.

Capital's renewed favor for AI unicorns also means that a new round of AI financing is coming.

Pan Helin, a well-known economist and member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, said that compared with last year's financing wave, this year's large-scale model investors mainly focus on the application landing, such as the dark side of the moon because of the user growth of Kimi, and Baichuan Intelligence because of its application in vertical fields such as industry. Since the AI model ultimately depends on the application to monetize, investors pay more attention to the possibility of future profitability of the AI model enterprise.

Part.2

Tencent and Ali have their own plans?

Among the AI unicorns, it is not difficult to find that Tencent and Ali have invested in the four leading domestic models, and they have appeared in the shareholders of Zhipu AI, MiniMax, Baichuan Intelligence and the dark side of the moon. This phenomenon of two leading manufacturers investing in both countries was relatively rare in the past period of mobile Internet entrepreneurship.

However, from a strategic point of view, we can also know a thing or two.

As mentioned above, Ali invested in nearly 4% of the shares, and after that, it became a mystery how many shares the founders related to the dark side of the moon still had in their hands. Although there are industries that burn more money in history, when they are finally listed, the company's CEO will not have too many shares.

Of course, there is also the issue of valuation, policy reasons, for domestic AI startups, the only listing market that can be selected is Hong Kong, but there is also uncertainty about how to list and at what valuation. After all, the valuation of SenseTime before was not as high as the current Dark Side of the Moon and Zhipu AI, but the current revenue scale of the latter two is still far from SenseTime.

If the dark side of the moon is not ready to go public, or there is no chance to go public, then it is likely to be acquired, which is also the development path of some foreign unicorns. "After all, in the round of Ali's investment, the dark side of the moon gave up so many shares, and no one knows whether it can go to the acquisition step in the end." A senior investor said.

In fact, in the context of Ali's deeper contact with the dark side of the moon, Tencent's appearance is somewhat unexpected. Choosing one giant often means making another giant hesitate. Compared with Alibaba Cloud and Alibaba, Tencent Cloud is obviously not that important. And not long ago, some AI investors revealed that at the end of last year, after the game version was tightened, Tencent had a review meeting of "tightening unnecessary investment", "If you invest new money out, you have to calculate whether you can buy back Tencent shares." All of this makes Tencent's investment unusual.

But it is reasonable that, after all, among several large manufacturers, Tencent obviously cannot focus on its own large model like ByteDance or Baidu, but hopes to achieve its strategic goals through foreign investment. Long before the dark side of the moon, Tencent had also invested in three companies: Zhipu AI, Baichuan Intelligence and MiniMax. The information, an authoritative Silicon Valley media outlet, said the investment could pave the way for a collaboration between WeChat and the chatbot on the dark side of the moon.

In fact, the explosion of voice assistant Kimi inevitably made Tencent, which is firmly in the top spot of the social track, nervous. After all, Tencent missed Zhang Yiming under his nose back then, and now Tencent obviously doesn't want to repeat yesterday's story.

For the dark side of the moon, choosing to "not take sides" is also the smartest thing to do. Each large manufacturer has its own advantages in its own field or scenario, and startups will choose to have a good relationship with all large manufacturers, and they will not exclude cooperation with various large manufacturers. This is a mature business ecology and an inevitable choice.

However, although the dark side of the moon is completely a misty forest at present, whether there will be a greater financial succession and the commercialization problem of large model companies in the future is a torture that will have to be faced sooner or later.

Part.3

How to make money is still a difficult problem

In terms of revenue, the scale of almost all start-up AI companies, such as the dark side of the moon, is far from enough to support their valuations. But finding a path to commercialization, especially for the dark side of the moon that is firmly betting on the C track, is even more difficult.

The dark side of the moon has a significant feature of C-end commercialization, which is to do "super model" + "super application", that is, the dual-drive route of technology + product.

At the beginning, the dark side of the moon was known as Kimi, a large model with excellent long text capabilities, and based on Kimi, Kimi Chat related applications were launched, through the instant feedback mechanism of direct feedback from C-end users on the experience and functions of the product, so that Kimi Chat can quickly iterate and optimize the product.

According to the data, from December 2023 to February 2024, Kimi's monthly active users will be 508,300, 1,128,500 and 2,984,600, respectively. Especially in February 2024, the number of users is almost 6 times higher than in December 2023. The data on the web and on the app also shows a growing trend. On the web side, the number of daily active users on March 14 was 345,700, a significant increase from 127,900 on March 9. On the app side, the number of daily active users was 50,000 on March 16, compared to less than 20,000 on March 2.

While Kimi's numbers are growing significantly, the reality is that Kimi is still far from being a true super app. The consensus in the industry for super applications is that three conditions must be met, including high application reliability, full understanding of user intent, and DAUs between 30 million ~ 300 million. Kimi still lags in all three.

However, for tool applications such as large models, embedding in other application ecosystems in the form of intelligent assistants is also an important direction. Baidu, Tencent, iFLYTEK, ByteDance, and 360 have all released AI application assistants, and it can be said that major manufacturers are adding C-end applications, and with their own advantages in ecology and users, large manufacturers will be easily accepted by users in the C-end track.

Of course, it's not that Kimi doesn't have the potential to become a super app, but that the big manufacturers that already have super apps and ecosystems have won at the starting line. To give a very realistic example, the monthly analysis report on the market hotspots of China's generative AI industry in May 2024 released by Yuehu Data, a subsidiary of Aurora, disclosed the activity of mainstream generative AI applications on mobile terminals in China in May. Among them, Wenxin Yiyan App ranked first, Doubao relied on bytes to help win the second position, and Kimi ranked fifth.

As for the more specific business model, there are two popular ones at present: one is subscription. Charge according to the number of users, but this model cannot create greater commercial value with the product, and subscription will not be the ultimate business model. The second is the commission. Among them, advertising has been verified by the Internet, and it is more certain, but people's attention and time are limited, and the opportunities for this business model may not be so great.

In essence, the commercialization path of the entire AI large model startup is very straightforward, so everyone will quickly enter the stage of naked bayonet fighting. The expectation of investors or the market for these companies is that they must come up with new products or convincing results every quarter or six months, such as user volume, revenue, influence, etc. This is one of the main reasons why the dark side of the moon keeps Kimi active.

It cannot be denied that in the current business environment, the dark side of the moon has undoubtedly achieved certain results with Kimi's exploration in the C-end market. With the continuous advancement of technology and the gradual maturity of the market, Kimi has shown strong potential and attractiveness as a flagship product. However, the success of commercialization does not happen overnight, it takes time to cultivate the market, optimize the product, and build the ecosystem. In this vast market space and prospects, the dark side of the moon has opportunities and more tests.

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