China tech start-ups race to capitalise on DeepSeek fever, Xi’s meeting

SHANGHAI/HONG KONG - Chinese technology start-ups are racing for fresh fund raising to capitalise on the DeepSeek-induced fervour over artificial intelligence (AI), as well as President Xi Jinping’s recent show of support to the country’s private enterprises.

AI-powered optics start-up Rid Vision, brain-computer interface company AI Care Medical and robot-maker Shanghai Qingbao Engine Robotics are among Chinese tech start-ups seeking fresh onshore financing, venture capitalist Andrew Qian said.

“Many people are knocking at the doors of these AI companies, half discussing business cooperation, the other half talking about investment,” said Mr Qian, the chief executive officer of New Access Capital, which has invested in the three firms.

“You can see from the DeepSeek case, that a batch of Chinese innovators with disruptive technologies is emerging... Previously, Chinese start-ups were nearly all ‘me too’,” Mr Qian said, referring to copycats.

The flurry of roadshows and deal announcements by AI-related businesses – including chipmakers, cloud service providers and AI apps – has breathed new life into the country’s moribund venture capital sector.

The outlook for exits from investments by venture capital and private equity firms, however, remains clouded by a stringent regulatory vetting of initial public offerings (IPOs) at home and heightened Sino-US geopolitical tensions that threaten offshore listings.

In the near term, however, DeepSeek’s AI breakthrough and February’s rare

meeting between President Xi and tech business leaders

have boosted investor sentiment.

New Access Capital has recently invested in a chip start-up and a maker of millimetre wave antennae, and is planning to invest in a company focused on rocket recovery technologies, betting on the next DeepSeek in these fields, Mr Qian said.

Companies that are seen as benefiting from China’s AI advancement are the main focus of the latest round of investments.

AI image generation platform LibLib AI, for example, announced several hundred million yuan in a new funding round on Feb 24 at what the company called a “record-breaking pace of financing”.

AI-powered medical start-up SenseCare said last week it had raised 100 million yuan (S$18.5 million), while chipmakers Aspiring and Hyseim also announced fresh fund raising recently.

Bleak picture

Other start-ups that have tapped investors in recent days include AI infrastructure provider Siliconflow, robot-maker Ruichi Smart Technology and medtech start-up Neurodome, according to consultancy Zero2IPO.

The pickup in venture capital investment interest comes after bleak performance over the last few years – China venture fund raising and investments have fallen off the cliff since a 2021 peak, Preqin data showed.

In 2024, 67 funds raised US$12.5 billion (S$16.8 billion), a far cry from 2021’s US$141 billion. Dollar-denominated funds raised a meagre US$1 billion in 2024, the data showed.

Venture deals totalled US$229 billion in 2024, down 36 per cent year on year and just over a quarter of 2021’s US$816 billion.

The industry, which relies mainly on IPOs to exit from their investments, suffered from China’s introduction of stringent IPO rules and Sino-US tensions that had hampered offshore listings by Chinese companies.

Since the launch of

DeepSeek’s breakthrough AI model,

“the sentiment has improved a lot”, said Mr Huo Zhongyan, founder of Bonanza Capital, which has invested in an AI-powered garment designing and marketing start-up.

“People get more sanguine about China’s future... Stock bullishness made entrepreneurs more confident, and investors more willing to place bets.”

Morgan Stanley said on Feb 25 that it sees signals of normalising IPOs in the A-share market.

But Mr Huo doubts Chinese regulators will loosen IPO criteria any time soon, also cautioning that offshore listings, which have shown signs of recovery, are vulnerable to geopolitical winds and fluid market mood. REUTERS