(Yicai) April 23 -- China’s embodied intelligence sector continues to attract strong investor interest and there are now at least 13 unicorns valued at over CNY10 billion (USD1.4 billion) each. However, several investors speaking at a recent industry conference warned that the rapid expansion of companies in this space is significantly outpacing actual revenue and that this raises concerns about potential overheating.

China's embodied intelligence sector raised more than CNY50 billion (USD7.3 billion) in the primary market in the first 10 months of last year, Chen Liguang, chief executive officer and managing partner of Oceanpine Capital, said at the conference held earlier this week. However, the combined revenue of leading companies in the sector for the full year was less than CNY10 billion.

"Hard tech has become a prerequisite for attracting funding, making it difficult for startups to secure financing and for institutions to raise funds," he said. However, there is a disconnect between the explosive growth in the number of embodied intelligence companies and their commercialization, resulting in a significant gap between capital investment and actual revenue generation.

Amid a surge in market enthusiasm and an influx of hot money, smaller investment firms should remain disciplined and not get “carried away," said Shi Anping, chief partner and chairman of Shenzhen Guozhong Venture Capital Management. Instead of chasing every hot trend, they should focus on in-depth research of the industrial chain itself.

The current boom reminds Wang Lin, founding partner of CDH Investments, of the earlier rise of the electric vehicle sector. "When a new industry emerges, it stimulates the imagination. Some NEV companies achieved very high valuations in the past, but these have since contracted sharply,” Wang said.

Whether firms in areas such as large language models or embodied intelligence can sustain high valuations ultimately depends on the real value they create for society, he added.

Editor: Kim Taylor