Alibaba and Tencent have become China’s most formidable investors

SENSETIME, the world’s most valuable artificial-intelligence startup, was not one to “bow and scrape for five pecks of rice”, said Tang Xiaoou, one of its co-founders, last September. Yet within two months the proud firm, which is worth $4.5bn, had buckled and taken investment from Alibaba, a Chinese e-commerce titan. For ambitious entrepreneurs, it was all of a piece with a bleak scene that Mr Tang had described: “Google and Facebook ahead of you; behind you, a gaggle of small companies thinking of copying you. And above you, three big mountains.”

Those three Chinese mountains are Baidu, an online-search giant, Alibaba and Tencent, a social-media and gaming titan, collectively known as BAT. Ever fewer promising young Chinese companies seem able to escape the reach of their insatiable investment teams. The tech triumvirate has already invested, directly or indirectly, in half of the 124 startups counted as “unicorns” (those worth $1bn or more) by IT Juzi, a database of startups in Beijing. By…

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