According to incomplete statistics, Sequoia China and Hillhouse Capital collectively completed over 60 investments in the first quarter, primarily targeting embodied intelligence, AI hardware, and vertical industry applications. Unlike the past two years' focus on large model parameters and general-purpose platforms, this round of funding is accelerating towards technological entities that can "act," "perceive," and "enter production lines."
Mass production capability has become a prerequisite for securing financing. Embodied intelligence emerged as a popular investment sector in the first quarter, while the investment logic of PE/VC firms is quietly shifting. The emphasis from some investors has moved away from merely impressive prototype demonstrations towards requiring companies to possess mass-production capabilities, real customer orders, and a complete supply chain闭环.
For instance, in January, one robotics company completed a 10 billion yuan A++ round of financing, with prominent institutions like Sequoia China participating. This is not an isolated case. In March, Sequoia China joined a several-hundred-million-yuan Series B round for another robotics firm, which has now entered a "ten-thousand-unit mass production" phase. Some companies have already demonstrated commercial success. In February, an AI company completed a nearly 2 billion yuan Series A round, with its global first embodied intelligence production line already operational.
Beyond embodied intelligence, which addresses "how machines can replace human labor," Sequoia and Hillhouse made several investments in consumer hardware during the quarter, exploring how "AI can become an extension of the person." Investments included an AI health hardware company and a startup focusing on AI-native products designed to solve everyday problems, such as a dynamic ergonomic chair.
Outside the hotspots of embodied intelligence and AI hardware, Sequoia and Hillhouse continued to invest in long-cycle, high-barrier industries, albeit with more selective targets. In the low-altitude economy sector, a flying car company secured nearly $200 million in funding in March. Additionally, both firms participated in an angel round for a company aiming to achieve net energy gain from nuclear fusion over approximately 12 years, a sector with an extremely long commercialization cycle that attracts only a few long-term investors.
As one venture capital managing partner noted, valuable opportunities often exist in relatively overlooked "non-consensus" areas. The first-quarter investment strategies of Sequoia and Hillhouse reflect a search for such opportunities, not necessarily by pursuing novel technological concepts, but by positioning themselves in phases where technological breakthroughs have occurred but the market has not yet reached a consensus on pricing.
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