Venture capitalist Lee Kai-fu dismissed rumours that tech unicorn 01.AI , a Chinese artificial intelligence (AI) company he founded in 2023, was negotiating to sell its pre-training team to Alibaba Group Holding 's cloud computing unit amid operational challenges.

In a WeChat post on Tuesday, the start-up denounced as "vicious slander" recent talk that it was looking to sell its pre-training team and other important assets to Alibaba Cloud owing to business difficulties. Hangzhou -based e-commerce giant Alibaba owns the South China Morning Post.

Beijing -headquartered 01.AI, which reached a valuation of more than US$1 billion in 2023 after a funding round that included Alibaba Cloud, posted revenue of more than 100 million yuan (US$13.7 million) in 2024, which is expected to increase this year, according to Lee, who serves as the start-up's chief executive. He is also chairman and chief executive at Sinovation Ventures and formerly president at Google China.

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Lee's denial comes a few days after Alibaba Cloud and 01.AI announced that they will jointly set up a laboratory to develop new AI models for enterprise users.

In the company's post, Lee said 01.AI will prioritise AI applications in 2025, which is expected to be a period of explosive growth amid intense competition among AI companies in China.

Neither 01.AI nor Alibaba Cloud immediately replied to a request for comment on Tuesday.

China is home to a growing number of artificial intelligence start-ups. Photo: Shutterstock alt=China is home to a growing number of artificial intelligence start-ups. Photo: Shutterstock>

The strong denial by Lee reflects the intense competition among start-ups and Big Tech companies in China's nascent generative AI (GenAI) sector, more than two years after OpenAI launched ChatGPT to ignite a new global tech arms race.

The number of GenAI users in China already reached 230 million at the end of June last year, as both start-ups and Big Tech firms rushed to offer new large language models - the technology behind ChatGPT - and related applications to the domestic market, according to government data.

China also became home to 369 unicorns - start-ups valued at more than US$1 billion - with more than a quarter of these companies involved in the nation's AI and semiconductor sectors, according to a report jointly published last April by five institutions - including professional services giant KPMG, the Zhongguancun Unicorn Company Development Alliance and consultancy Great Wall Enterprise Institute.