DeepSeek’s artificial intelligence breakthrough is sparking a surge in interest from Chinese tech firms, with venture capital investment into China-based companies showing signs of rebounding after three years of decline.
According to data from Pitchbook, VC investment into China-based companies fell to $48.86 billion in 2024, the lowest on record since at least 2016. However, with regulatory clarity emerging and sentiment changing, investors are now taking a different approach.
“Everybody is making investments,” said Annabelle Yu Long, founding and managing partner of BAI Capital in Beijing. “I am asking my team to hold on new deals, because we see our core portfolio gaining very meaningful AI traction.”
Long’s firm plans to increase its investments in existing holdings in coming months, citing the need for targeted approaches given Chinese funds have less capital than US ones to invest in AI.
Other recent investment rounds also reflect this trend. Insilico Medicine, which uses AI from DeepSeek and other companies, recently secured funding alongside Unitree and Forebright Capital.
Beijing is signaling clear support for AI investment, with President Xi Jinping giving the green light for generative AI at scale during a closed-door symposium last month.
“We should expect a massive number of DeepSeek-like clones popping out,” said Zhong Zhong, founder of DeepSeek. “The fact that President Xi gave us his backing is a clear signal of support for AI innovation in China.”
Foreign investors remain cautious due to tensions with the US and sensitivities around AI and data. However, experts say innovative breakthroughs like DeepSeek shouldn’t be a surprise given China’s large pool of talented engineers and data scientists.
“Competition always pushes the sector forward,” said Xuhui Shao, managing partner at Foothill Ventures. “Technology will not be contained by borders.”
Source: https://www.cnbc.com/2025/03/12/deepseek-ai-cranks-open-the-spigots-on-chinese-venture-capital.html