DeepSeek frenzy leaves China’s venture capitalists on the AI sidelines

SCMP | Feb. 10, 2025, 8 p.m. | Original

DeepSeek’s surprising rise has left China’s top venture capital firms without a stake in the country’s hottest AI start-up. Photo: Shutterstock

China’s venture capital (VC) firms have been sidelined in the frenzy surrounding DeepSeek , with none of them known to have invested in the open-source large AI model developer.

Baidu Venture, an independent AI-focused investment arm initiated by its namesake Chinese internet giant, did not invest in DeepSeek even though the venture company sits just one floor above the start-up’s Beijing office.

DeepSeek, spun off from one of China’s top hedge funds High-Flyer Quant in 2023, did not say it was in need of external funding, according to Baidu Venture’s chief executive and managing partner Gao Xue.

“High-Flyer’s AI large model business has no plans to raise capital, so like other VCs, we haven’t had the good fortune of becoming a DeepSeek investor,” Gao told a local news outlet.

The two firms had established contact and maintained “friendly interactions” since DeepSeek moved into the same building last May, he said.

05:00

Does the arrival of China’s low-cost DeepSeek mean the end of Nvidia’s chip dominance?

Does the arrival of China’s low-cost DeepSeek mean the end of Nvidia’s chip dominance?
Alibaba Group Holding , an active investor in Chinese AI start-ups from Moonshot AI to Minimax, also did not invest in DeepSeek, although both companies are based in Hangzhou, capital of eastern Zhejiang province.

Tibetan tree rings highlight link between climate change and fall of major Chinese dynasties Hong Kong’s pearl will shine brighter under ‘one country, two systems’