In ten months, Sand.ai has transformed from an early-stage project into one of the most discussed artificial intelligence startups in China. The company raised $200 million in a Series A+ round, aiming to become a unicorn valued at over $1 billion. Cornerstone Capital and Wangsu Science & Technology led this round. New investors include Times Capital, Panlin Capital, Orient Securities Capital, Pudong Venture Capital, and Shanghai Guofang.
Sand.ai has raised approximately $300 million in funding and is now targeting competition with video generation giants—Kling and Seedance. The company was founded in 2024 by Chao Yue, who previously worked as a senior research scientist at Microsoft Research Asia. His prominence stems from the joint development of the Swin Transformer model, which won the best paper award at the ICCV conference.
This experience shaped the company's strategic decision: Sand.ai chose an autoregressive approach to video, while most of the industry favored diffusion models. Chao later admitted that the team underestimated the complexity of the chosen path.
In May 2025, Sand.ai released the open-source project MAGI-1, which won the Physics-IQ video continuation benchmark. Then, in August 2026, a preliminary version of MAGI-2 was presented—a mixture-of-experts model with 114 billion parameters. Because it is only active about 6 billion times per pass, its cost remains low. The distilled MAGI-2 model can generate a 10-second video in 1080p resolution for approximately 0.5 yuan.
According to BigGo Finance data, the cost per second of video is about one-tenth the cost of mainstream models. Developers also point to the MagiAttention library, used by Tencent's Hunyuan team and supported via NVIDIA's NeMo AutoModel. This is a quiet but significant endorsement. Furthermore, there is a product side: the AI video creation application VidMuse generated $10 million in annual recurring revenue within two months.
It is important to note that many AI labs demonstrate impressive examples but struggle with product sales. Sand.ai demonstrates the ability to do both, which is exactly what investors are currently looking for.
Wangsu is not just providing financial support; 300 million yuan ($45 million) of capital from this company, a giant in CDN and edge computing, is directed toward this project. Wangsu is interested in collaborating with Sand.ai on low-latency edge video inference. Given clients such as ByteDance, Tencent, and JD.com, this partnership could provide Sand.ai's models access to very large customers.
The raised funds will be used for model research, training, inference infrastructure, product improvement, and expansion into overseas markets. In a broader context, the AI video race in China is accelerating as major players already have their own platforms. Kuaishou recently raised about $2.9 billion, valuing the company at $18 billion. ByteDance's Seedance reportedly generates over 1 billion yuan in monthly revenue.
Sand.ai is choosing a different path: it is independent, open-source, and operationally economical. This is attractive to developers and brands that do not want to depend on competitors' platforms. Nevertheless, risks exist: foundational models continuously consume capital, and early successes can quickly fade. However, if MAGI-2 meets expectations, Sand.ai could become a neutral choice in the AI video sphere, which warrants close monitoring.


