China adds 56 unicorns amid frenzied interest in AI sector
Growth of such start-ups comes as global venture capital investments decline, Hurun report says
China last year bred an average of one new unicorn each week amid frenzied growth in the country’s artificial intelligence (AI) sector, bucking a declining trend in global venture capital investments, according to a new research report.
The nation added 56 unicorns – start-ups valued at more than US$1 billion – in 2023, trailing only the United States, which minted 70 unicorns, according to the Global Unicorn Index 2024 published by the Hurun Research Institute on Tuesday. The rest of the world saw the arrival of 45 new unicorns, the report said.
This was the sixth instalment of Hurun’s annual unicorn report. The institute, founded by former accountant Rupert Hoogewerf, is best known for its annual “rich list”, which tracks the net worth of billionaires in China and abroad.
The US remains the top breeding ground for unicorns, with more than 700 of the global total of 1,453 based there. In second place was China, which had more than 340 as of last year.
AI overtook e-commerce to become one of the top three unicorn-producing sectors, with 115 of them as of the end of last year. The other two were fintech, which had 185 unicorns, and software-as-a-service, which yielded 139, according to the report.
“The US has half of the world’s known unicorns, led by softwareas-a-service, fintech and AI, China a quarter, led by AI, semiconductors and new energy, while the rest of the world has the other quarter, led by fintech and e-commerce,” Hoogewerf said.
The growth in unicorn numbers might have been due to a gloomy initial public offering market, according to Hoogewerf. With some unicorns delaying listing plans, they ended up as “the bridesmaid that never gets to be a bride”, he said.
Beijing-based ByteDance, valued at US$220 billion, remains the world’s largest unicorn, followed by US tech mogul Elon Musk’s rocket and satellite operator SpaceX, with a valuation of US$180 billion, according to Hurun.
Microsoft-backed OpenAI, which launched AI conversational bot ChatGPT in late 2022, saw the fastest valuation increase, surging 14 places to rank third with a valuation of US$100 billion.
Ant Group, which abruptly halted its listing in Shanghai and Hong Kong in 2020, came in at No 4, followed by fast-fashion shopping platform Shein in fifth place. Ant is the fintech affiliate of Alibaba Group Holding, owner of the Post.
Other top Chinese start-ups on the list include Tencent Holdings-backed fintech firm WeBank in 10th place and Shanghai-based video gaming studio miHoYo, which shot up 91 places to rank 12th after its valuation jumped to US$23 billion from US$15.8 billion.
MiHoYo launched in September 2020 its flagship video game Genshin Impact, which had bagged US$4 billion in global revenue by the end of 2022, making it one of the most successful Chinese video games of all time, according to app analytics firm Sensor Tower.
Investors with the most unicorns in their portfolios include US investment firm Tiger Global Management, Japanese tech conglomerate SoftBank Group and venture capital firm HongShan, formerly known as Sequoia Capital China. They had stakes in 205, 169 and 125 unicorns, respectively.
Amid rising geopolitical tensions, most of the top 30 investors in Chinese unicorns are based in the country, including state-backed investment bank China International Capital Corp, big tech companies such as Tencent, Alibaba and Xiaomi, and funds such as HongShan.
A US congressional panel announced last year an investigation into four American venture capital firms over their investments in China’s AI and semiconductor sectors, dealing another blow to potential US investments in the country.