Open-source AI developer Moonshot AI raises $2B at $20B+ valuation

Chinese artificial intelligence lab Moonshot AI has raised $2 billion in funding at a valuation exceeding $20 billion.

TechCrunch reported the deal today, citing a social media post from an investment advisory firm that was involved in the deal. The funding round was led by the venture capital arm of Meituan, China’s largest food delivery company. Several other investors participated as well.

The investment comes a few weeks after Moonshot AI released its newest AI model. Kimi-K2.6 is an open-source large language model with about 1 trillion parameters. It comprises 384 experts, miniature neural networks that are each optimized for a different set of tasks.

When an LLM receives a prompt, it uses a so-called attention mechanism to identify and prioritize the most important parts of the request. The attention mechanism stores its findings in a data structure known as a KV cache. One of Kimi-K2.6’s flagship features is a module that compresses its KV cache into a latent space, an abstract mathematical representation with a smaller memory footprint.

Moonshot AI offers its LLMs alongside more specialized algorithms. One of them is Kimi-VL, an open-source vision-language model optimized to process visual data. It’s particularly adept at extracting information from videos. 

The company invests in not only open-source model development but also foundational AI research. Last year, it released an improved version of Muon, a software tool that reduces the amount of hardware needed to train hidden layers. Those are the parts of an LLM that perform most of the calculations involved in processing prompts.

The original version of Muon only supports relatively small AI models. Moonshot AI’s implementation, in contrast, can optimize LLMs with upwards of 10 billion parameters.

A few months after releasing the Muon upgrade, the company open-sourced another research project called Kimi Delta Attention. It enables LLMs to more quickly process large prompts that contain up to 1 million tokens. Furthermore, the technology reduces the amount of memory needed for the task.

Moonshot AI monetizes its open-source technologies with a paid chatbot service called Kimi. It’s available in five subscription tiers with different usage limits. Customers also receive access to Kimi Code, an AI agent designed to speed up programming tasks. The annualized revenue generated by Moonshot AI’s paid products reportedly topped $200 million ahead of its newly announced capital raise.

One of the company’s main rivals may soon close a large funding round of its own. DeepSeek, the Chinese startup behind the popular LLM series of the same name, is reportedly in talks to raise its first outside investment. The deal is expected to value it at $45 billion.

Image: Moonshot AI