DeepSeek's recent advancements in artificial intelligence have ignited a wave of interest in Chinese technology firms, marking a significant shift in the landscape of venture capital investments. The company's release of an OpenAI rival in late January has been a catalyst for this "avalanche" of attention. Among the beneficiaries of this renewed enthusiasm is Insilico Medicine, which is in the final stages of a $110 million Series E financing round, led by Hong Kong-based Value Partners. Insilico leverages AI technology from DeepSeek and other innovators to develop models for drug creation, and notably, ten of its drugs have already gained approval for clinical trials.
Insilico Medicine maintains research laboratories across China, the United States, and the Middle East, showcasing its global reach and influence. Annabelle Yu Long, the founding and managing partner of BAI Capital, acknowledged the fervor surrounding DeepSeek's innovations.
"People are rushing just to find the next DeepSeek," remarked Long.
The impact of AI extends beyond Insilico, with BAI Capital-backed Black Lake reporting profitability this quarter due to AI-driven reductions in service costs associated with its manufacturing management systems. This success has prompted BAI Capital to enhance its investment in current holdings over the coming months.
While some firms are ramping up investments, others are adopting a more cautious approach. Long indicated that despite the overall trend of increasing investments, her firm is temporarily holding off on new deals to focus on their portfolio's strong AI developments.
"Everybody is making investments, but I am asking my team to hold on new deals, because we see our core portfolio [of around six companies] are gaining very, very meaningful AI traction," she explained.
On a broader scale, Forebright Capital is planning substantial investment activity this year, with at least five to six investments on the horizon. Despite having several billion U.S. dollars under management, Forebright's Executive Director Wang noted that the firm remains focused on investments within the United States and does not partake in Chinese ventures.
The Chinese central government is preparing to launch a fund expected to mobilize around 1 trillion yuan for tech investments. Coupled with an expansion of a loan program for tech innovation to approximately 1 trillion yuan, this initiative represents a major push to invigorate the domestic technology sector. However, venture capital investment into China-based companies has been on a declining trend for the past three years, dropping to $48.86 billion in 2024.
Amidst these developments, some industry insiders anticipate a transformative impact on the sector.
"We have never seen this level of interest before," said Zhavoronkov, reflecting on the global investment interest stirred by DeepSeek's breakthrough.
The sentiment that technological innovation transcends national boundaries was echoed by Xuhui Shao.
"I think competition always pushes the whole sector [to move] forward and technology would not be contained by borders," Shao stated.
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