Source: People’s Republic of China – State Council News
In a high-stakes race to pursue next-generation technologies, Chinese startups specializing in artificial intelligence, autonomous driving, and advanced manufacturing are gaining momentum through a novel but supportive financing model called the “fund jungle.”
This ecosystem — a dense network of government-led investment funds, venture capital and corporate backing — is accelerating the rise of so-called “gazelle” firms, unicorns and niche “little giant” enterprises across east China’s Anhui Province and beyond.
Leading the way is HiDream.ai, which rose to the forefront of global generative AI startups in just two years. With its cinematic-quality video generation technology, the fast-growing firm has attracted 10 million individual users and 40,000 corporate clients worldwide.
Founder Mei Tao said that starting an AI company was like “venturing into an uncharted territory” where both the technology and the market are entirely new.
Amid shifting international dynamics that led to a withdrawal of U.S. capital and a relative shortage of RMB venture funding, the company adopted a “move fast with small steps” strategy by demonstrating its value with limited capital to attract follow-up investment.
The turnaround came last year, when it secured a sizable Series A round, with state-owned Hefei Industry Investment Group being the lead investor, joined by the Anhui artificial intelligence fund of funds and other institutional investors.
Beyond financing, establishing base in Hefei, provincial capital of Anhui, has helped the company expand its applications in broadcasting, film and television, and tourism, while the local government is aiming to leverage the AI technologies to empower local industries.
HiDream.ai had good reason to choose Hefei as its base. Anhui Province has set out plans to cultivate a cohort of rapidly growing gazelle companies and a new wave of unicorns, startups valued at over 1 billion U.S. dollars. The province has also pledged support for local “little giant” enterprises, which are specialized small and medium-sized firms that excel in niche markets, drive innovation, tackle frontier technologies, and help strengthen industrial chains.
To empower these “fantastic beast” companies, Anhui has built a “fund jungle” led by state investors and joined by social capital. The cluster of funds aims to ensure sufficient funding for a tech company at all stages of its growth.
As of last October, a total of 124 funds with nearly 50 billion yuan (about 7 billion U.S. dollars) in committed capital had been set up in the fund complex, investing in more than 400 projects. The province is home to 2,191 private funds, including 50 angel funds, 734 venture capital funds and 1,407 industrial investment funds.
“Different industries and different stages of growth have distinct capital needs. A ‘fund jungle’ offers specialized funds for each phase, thus forming a comprehensive matrix that nurtures an industry across its entire lifecycle,” said Tang Zhiqiang, deputy dean of Anhui institute of industry and information technology.
“This lush ecosystem of funds fuels companies’ growth through tailored financial empowerment,” he added.
Funds, patience and ecosystem
Cowa Robot, based in the city of Wuhu in Anhui, is one of the beneficiaries of this funding ecosystem. The unicorn company’s self-driving vehicles, such as street-cleaning robots, have started operation in more than 50 Chinese cities.
Lu Wenjun, the company’s vice general manager, said the Wuhu government has deep expertise in robotics and provides clear development pathways along with strong supportive policies. From establishing initial industry frameworks to continuously building the ecosystem, many firms have reaped the benefits.
“Autonomous driving thrives on high-quality data to refine algorithms, and that data comes from real-world scenarios. Local governments provided critical support, from pilot programs to scaled deployment,” he added.
Home to automaker Chery and 96 little giant firms, Wuhu is known for patiently nurturing emerging industries. In 2024, the share of R&D expenditures in Wuhu’s GDP reached 4.28 percent, far exceeding the nationwide average of 2.68 percent.
The city has also set up a fund of 3 billion yuan to spur tech innovation and to solicit participation of social capital.
Wanzhi District in the city has created a fund jungle totaling 11.1 billion yuan, which has invested in 58 projects and attracted an additional 3.57 billion yuan in non-local capital.
Here, an industrial park consisting of nearly 200 general aviation companies, from propeller making to pilot training, has taken shape, poised to capitalize on the country’s trillion-yuan low-altitude economy boom.
The industry can be traced back to 2013, when CETC Wuhu Diamond Aircraft Manufacture Co., Ltd. was founded here. The company is now a little giant firm that produces both manned aircraft and unmanned aerial vehicles (UAVs), after 12 years of continuous investment in R&D and government support.
General manager Tian Manlin stressed that low-altitude manufacturing is the core of the low-altitude economy, requiring relentless R&D and industry collaboration.
A strong focus on R&D is a shared conviction among entrepreneurs in Anhui’s emerging industries. “R&D must never stop,” emphasized Mei Tao, adding that HiDream.ai continually integrates user feedback to refine its models daily.
“AI demands top talent and heavy funding. A healthy financial ecosystem fuels innovation, helping more tech pioneers break through,” Mei said.
