BEIJING — Sitting in his new Beijing office, AI2 Robotics founder and CEO Eric Guo reflected on the stark reality of building advanced machines in an uneven global funding landscape.
While US humanoid robotics firm Figure secured a $1 billion round at a $39 billion valuation this year, Guo said Chinese AI startups face tighter fundraising limits despite growing global fascination with their low cost innovation model.
Yet the disparity has not slowed momentum. Investors from Australia to North America are beginning to look again at Chinese AI startups as valuations remain comparatively modest and research costs stay far lower than in the United States.
Guo’s strategy centers on efficiency. His team is developing a robotics AI model that uses less than one tenth the parameters required for Alphabet’s RT-2 system, a method highlighted in one of Guo’s widely cited research papers.
Before launching AI2 Robotics in Shenzhen, Guo earned a doctorate from Purdue University and held roles at Microsoft, Oppo and EV maker Xpeng.
His approach mirrors trends seen across Chinese AI startups such as DeepSeek, which attracted wide attention after sharply reducing the cost of training large scale models.
Analysts say the growing emphasis on frugality has helped Chinese AI startups stay competitive even as US spending reaches historic highs.
Despite that, the funding gap remains severe. U.S. venture deals in AI and robotics have more than quadrupled since 2023 to surpass $160 billion this year, according to a CNBC analysis of PitchBook data.
Comparable transactions in China totaled just over $10 billion, up slightly from $9.24 billion last year.
“This is the largest difference in AI funding we have seen between the US and China,” said Li Shaoming, a Shanghai based tech policy researcher. “But the cost structure in China allows smaller investments to go further.”
Investment managers say the renewed appetite for Chinese AI startups is tied to valuations that remain significantly lower than those in the United States.
Vincent Lu, partner and head of private equity at Australian asset manager Boman Group, said Chinese AI startups typically trade at about one quarter the valuation of US peers.
Lu, who relocated to Shanghai last year to evaluate opportunities, said bubble risks in China are contained compared with the US market.
“We saw what happened in the US with valuations shooting upward,” Lu said. “Chinese AI startups look reasonably priced, and the engineering talent pool is expanding quickly. That combination is drawing global investors back.”
The country’s regulatory environment remains complex, especially following Beijing’s earlier crackdown on internet platforms and Washington’s tightening export controls. But investors argue that clearer government guidelines in the past year have reduced uncertainty.
“Most firms have adapted to the new rules,” said Hong Kong based venture analyst Regina Tam. “Investors want stability, and China is starting to regain that narrative.”
The divide in funding is still wide, reflecting both geopolitical tensions and capital availability.
US AI and robotics venture deals: more than $160 billion this year
China AI and robotics venture deals: just over $10 billion this year
Hang Seng Index 2025 performance: up nearly 30%, trading at 13.61 P/E
Nasdaq Composite: up almost 20%, trading at 33.8 P/E
Industry analysts say the lower valuations in Hong Kong and Shanghai highlight both investor caution and opportunities for outsized returns.
“Investors view Chinese AI startups as undervalued relative to their potential,” said Qi Wen, director at a Beijing based quantitative fund. “What we are seeing now is the early phase of rebalancing.”
Inside China’s robotics hubs, founders describe a scrappy startup culture shaped by limited capital, pandemic disruptions and global supply chain shifts.
“In the past three years we learned how to do more with less,” Guo said. “Most Chinese AI startups have no choice but to innovate efficiently. If we had the funding levels of US companies, the landscape would look very different.”
Engineers working in Shenzhen’s maker districts say the environment encourages rapid prototyping and experimentation.
“People here are used to moving fast and solving problems with few resources,” said Chen Xuyang, a robotics engineer who collaborates with early stage firms.
“It creates a kind of resilience that investors may underestimate.” Meanwhile, foreign founders running labs in China say they are struck by the pace of progress.
“I have worked in Boston and Berlin, and the energy in China’s robotics scene is unmatched,” said Markus Hauser, a Swiss entrepreneur developing autonomous warehouse systems in Guangzhou.
“Funding is the weak link, but innovation is not.” Global fundraising momentum appears to be shifting.
This month, at least three China based funds with an AI focus successfully raised US dollar capital from overseas investors, signaling renewed confidence in Chinese AI startups.
Monolith, one of the largest funds, attracted more than $600 million in interest but kept its round capped at $488 million.
“Inconceivable” a year ago, these fundraising wins mark a slow revival in cross border capital flows, said Johnny Zhu, co-head of Primavera Venture Partners.
Although Chinese companies have not resumed public listings in the United States, many have turned to Hong Kong. The city has emerged as the world’s largest listing venue this year, giving venture firms clearer exit paths.
Still, analysts warn that global conditions could shift quickly. “Geopolitical factors can change overnight, and AI remains a strategic industry,” said Li, the policy researcher. “Investors need to be cautious even as opportunities grow.”
Despite wide funding disparities and regulatory challenges, global interest in Chinese AI startups is rising as investors seek lower valuations and efficient innovation models.
Founders like Guo believe China’s approach building more with less has become a competitive advantage, even as US firms dominate fundraising charts.
For now, the market remains split, but momentum suggests that China’s AI sector is preparing for a new phase of global engagement.
