DeepSeek AI‘s recent breakthrough has sparked renewed interest in Chinese tech investments, potentially reversing three consecutive years of venture capital declines in the region.
“People are rushing just to find the next DeepSeek,” said Annabelle Yu Long, founding partner of BAI Capital, according to CNBC. This surge follows VC investment in China-based companies falling to a record low of $48.86 billion in 2024, according to Pitchbook data.
AI drug discovery firm Insilico Medicine recently closed a $110 million financing round led by Hong Kong’s Value Partners, with CEO Alex Zhavoronkov stating that the last-minute interest from Chinese funds was “like an avalanche.” The company, which uses DeepSeek’s AI to develop drugs, is now planning an additional “E2” raise.
Chinese government support is amplifying the trend. The government announced plans for a fund expected to mobilize 1 trillion yuan ($137.7 billion) for tech investment.
Despite this momentum, U.S.-China tensions remain a significant hurdle for international investors considering Chinese AI opportunities.
DeepSeek’s AI breakthrough in late January led to a significant selloff in U.S. tech stocks, with NVIDIA Corp.’s NVDA market value dropping by $593 billion, as investors feared increased competition.
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