Published on Feb. 06, 2026

StepFun's latest funding round not only set a record among the "six tigers" of China's large-model startups, but also signals validation of the Shanghai-based company's "AI + terminal" strategy, which tries to emulate Elon Musk's approach with xAI and Tesla.

An impressive lineup of state-run investment funds, such as the Shanghai SDIC Leading Fund and Pudong Venture Capital, as well as industrial investors including Huaqin Technology and Tencent Holdings, agreed to finance StepFun with more than RMB 5 billion (around US$700 million), reported China Star Market's news portal (in Chinese).

Estimates put the valuation of the unicorn, which was not publicly disclosed, at several billion US dollars. Among the "six tigers" of large model startups in China, StepFun now definitely belongs to an elite group of four companies with sufficient funding to pursue both AI model development and their monetisation strategies. The other three are Zhipu AI, MiniMax, and Moonshot.

StepFun, founded in 2023 by Jiang Daxin, a former Vice President at Microsoft, implements a distinctly different strategy from other Chinese startups trying to emulate OpenAI or Anthropic.

"StepFun is closer to being China's xAI plus Tesla," the Chinese tech portal 36Kr recently quoted one of the company's executives.

The newly appointed chairman of StepFun, Yin Qi, has repeatedly praised Elon Musk's business logic. Large-model companies such as xAI explore the frontiers of artificial intelligence and aim for AGI, while terminal companies such as Tesla help collect real-world physical data and provide a pathway for monetisation.

Where Elon Musk has built Tesla, StepFun develops vertical models for Qianli Technology, an AI platform backed by China's leading car manufacturer, Geely.

Qianli Technology in Chongqing was recently given the English name Afari after the Geely Group designated it as the main subsidiary for all its artificial intelligence projects.

Yin Qi now serves as chairman of both Afari, where he leads the Geely Group's "AI plus Vehicle" strategy, and StepFun. He is also a co-founder and former CEO of Megvii, one of China's first computer vision startups.

The founder of Geely, Li Shufu, has given high praise to Yin Qi, saying that he had been searching for "brilliant minds" when he finally placed his car company's AI bet on Afari. "I wish I had met him earlier," the billionaire founder of Geely reportedly said.

StepFun and Afari have already co-developed the Chinese automobile industry's first Agent OS smart cockpit, which is equipped with an end-to-end voice model. The Shanghai startup is also partnering with the leading Chinese smartphone manufacturer Oppo and other companies.

The strategy pursued by StepFun can therefore be described as developing multimodal models and B2B monetisation through hardware integrations.

This is essentially a huge bet on the industrialisation of AI in China, and the investors of the recent blockbuster funding round have endorsed it.

With most industrial robots still of the programmed type, suitable only for clearly defined and repeatable tasks, and most smart robots relatively feeble, the startup Galbot from Beijing is now trying to shake things up with its new model, Galbot S1, according to the Chinese finance portal aastocks.com.

The industrial robot falls into the category of "dual-arm mobile manipulators," with an upper body resembling a humanoid and a lower body made of a sturdy metal base.

With a continuous dual-arm payload of 50 kg, its makers claim that it breaks long-standing payload limits in the industry, and it operates autonomously.

There is a certain fatigue among observers watching all those dancing humanoids, while cobots and other workhorses of manufacturing still await smart AI features.

The Galbot S1 promises to bring embodied AI to production lines. First models are already deployed in a battery factory operated by CATL.

Baichuan Intelligence, a Beijing-based startup, unveiled a new medical large language model, Baichuan-M3 Plus.

The company, which reportedly received around US$691 million in funding in 2024, claims that this "Plus version" offers improved accuracy over its previous M3 model, according to a report by TMTPOST(in Chinese).

The hallucination rate is said to have dropped from 3.5% in the previous M3 model to 2.6%. This would reportedly be lower than that of OpenEvidence and more than 30% lower than that of GPT-5.2.

The new vertical AI model also introduces "evidence anchoring," linking every AI-generated medical conclusion to a corresponding paragraph in a medical research paper.

Medical AI is a field where the fear of hallucinations is particularly acute, as errors based on false or fabricated findings can affect patients' lives.

Doctors and hospitals are likely to adopt such AI tools only once they become more accurate and more transparent.

Moonshot AI, another Chinese startup developing large AI models, has released an updated version of its flagship multimodal model Kimi.

The open-source model is called Kimi K2.5, was trained on 15 trillion mixed text and image tokens, and can process text, images and videos as well as agentic workflows with multiple agents working in parallel (an "agent swarm”).

Initial tests reportedly show that Kimi K2.5 beats GPT-5.2 and Gemini 3 Pro in some benchmarks when it comes to coding, such as the "SWE Bench Multilingual.”

When handling agents, it reportedly even outperforms Claude Opus 4.5 and GPT-5.2 in some benchmarks, according to Caixin.

Mirroring a worldwide fascination with agentic AI, there is now an arms race between Chinese AI companies to launch agents for everything from coding to copywriting and video creation with as little human intervention as possible. Moonshot AI is backed by Alibaba, among others, which holds around 36% of its shares.

With Qwen3-Max-Thinking, Alibaba Cloud released its latest flagship reasoning model on January 26, 2026. Chinese media call it the foundational model that comes closest to international top models to date, for example Kuaikeji (in Chinese).

Chinese tech media outlets report that it has achieved top scores in 19 benchmark tests, including in the areas of complex reasoning, factual knowledge, and agent capabilities. Its overall performance is said to be comparable to GPT-5.2, Claude Opus 4.5, and Gemini 3 Pro.

With more than one trillion parameters, 36 trillion pretraining tokens, and a context window of 262,000 tokens, Alibaba calls it "China's strongest AI model.”

Should the touted benchmark records be confirmed, this "Ferrari" among China's large models would create new competitive pressure on US rivals such as Anthropic, Google, and OpenAI.