China’s New AI Gold Rush: World Models

When Hongyuan Lu finished his doctorate program in AI and engineering a year ago, he reached out to some investors to see if he could raise money for a startup to build world models, AI systems that can understand and simulate the physical world. But the investors, who were focusing on AI agent apps at the time, weren’t interested.

This year, the environment is completely different, he said. “World model” has become a new buzz phrase in China’s startup sector, and Lu, who has co-authored academic papers exploring how to make AI understand a virtual spatial environment, started receiving friend requests on the WeChat messaging app from venture capitalists. His startup—FaceMind, which is based in Shanghai and Hong Kong—has raised $20 million in seed money this year from investors including Chinese cybersecurity firm Qihoo 360’s venture fund.