Spirit AI, aged 15 months, already ranks among China’s most valuable embodied artificial intelligence (AI) companies, having closed a CNY 600m (USD 84m) funding round – led by JD.com – at a CNY 3bn valuation.

Jinjian Zhang, a founding partner at Vitalbridge Capital, which joined Spirit AI’s seed round, doesn’t regard this as unusual. In his view, AI companies can easily achieve valuations of CNY 3bn-CNY 4bn once they demonstrate products with solid real-world applications. For Spirit AI, also known as Qianxun Intelligence Technology, it’s robotics, but VC investors must make that call early on.

“Only if you are focused on a specific sector do you have the time and energy to conduct truly deep research and develop understanding. This is our fundamental strategy – we want to be there before market consensus forms,” Zhang said. “It’s very difficult, but the great moat for VC is built on time.”

The seed round in which Vitalbridge participated, which closed last year and was led by Shunwei Capital, valued Spirit AI at CNY 250m. Several more tranches followed, featuring the likes of HighLight Capital, Prosperity7 Ventures, the VC arm of China Merchants Group, and TH Capital. Vitalbridge re-upped in some of these and retains a board seat.

The AI pivot

The VC firm, formed through a spin-out from Trustbridge Partners in 2019, is currently deploying its second US dollar-denominated fund, which closed on USD 275m in 2021. Originally focused on digitalisation of services, Vitalbridge pivoted to AI in 2022 after the release of Stable Diffusion, an open-source text-to-image model, which confirmed the potential of generative artificial neural networks.

The firm focuses on three core domains: AI models and agent applications; embodied AI, which combines machine learning and computer vision to facilitate machine collaboration with humans; and AI-for-science, which focuses on biology and materials science applications.

By April 2023, Vitalbridge had backed more than 10 AI companies. These include large language model developer MiniMax, which has reportedly made a confidential IPO filing in Hong Kong and is targeting a valuation of USD 4bn-USD 5bn.

“At that time, we realised that if AI represents a new era, software and hardware must develop synergistically. Just as Microsoft’s growth would have been impossible without IBM’s foundation, iOS could never have achieved its current dominance without Apple’s iPhone hardware,” Zhang said, adding that embodied AI is the hardware solution for the AI era.

Vitalbridge didn’t come across Spirit AI fortuitously. It split robotics into two categories, quadrupeds and bipeds; the former is built to work in natural environments like jungles and deserts, while the latter is designed for human-built social environments. For bipeds, locomotion systems, manipulation capabilities, critical components, and exoskeleton applications are the key areas.

“Our decision to invest in Spirit AI stems directly from our portfolio construction framework across four defined sectors,” Zhang explained. “After establishing these four specialised segments, we conduct exhaustive market mapping and in-depth research to identify China’s most exceptional company in each category.”

LimX Dynamic, Encos, and Hypershell were Vitalbridge’s early-stage bets across three of these categories. Spirit AI emerged as the standout candidate for manipulation capabilities.

The right fit

According to Zhang, manipulation requires both advanced dexterity and precise locomotion – a rare dual challenge demanding equally strong industrial and algorithmic capabilities. Spirit AI was seen as well-positioned to address this thanks to its team’s background in manufacturing and AI research.

One founder, Fengtao Han, has over 12 years of experience in industrial robotics, having co-founded and served as CTO of Shunwei-backed Rokae Robotics. In this role, he led the delivery of over 20,000 robot units across 20-plus industries. The other, Yang Gao, is known for his AI research at Tsinghua University and UC Berkeley.

The company recently launched its first humanoid robot Moz1, which is powered by a proprietary vision-language-action (VLA) model called Spirit V1.

Moz1 is configured with 26 degrees of freedom, the number of independent movement axes enabling a robot’s full-body mobility. It is engineered for both commercial and residential applications, including customer service, guided tours, social companionship, interactive functions, and household automation tasks.

The proceeds of the new funding will be used to upgrade VLA models and hardware. Spirit AI has said it wants to play a role in giving 10% of the world’s population their own robots in 10 years. Zhang believes the company has the right founder-market fit to contribute to this goal.

“There is no absolutely good founder, nor is there an absolutely good market. In the end of the day, it comes back to research. You first need to understand what this market is all about,” Zhang added.