Chinese technology startups are actively seeking new funding to take advantage of the excitement surrounding artificial intelligence, fueled by DeepSeek’s advancements and President Xi Jinping’s recent support for private enterprises.
AI-powered optics startup Rid Vision, brain-computer interface company AI CARE Medical, and robot manufacturer Shanghai Qingbao Engine Robotics are among those looking for fresh onshore financing, according to venture capitalist Andrew Qian.
“Many people are knocking at the doors of these AI companies, half discussing business cooperation, the other half talking about investment,” said Qian, the CEO of New Access Capital, which has invested in the three firms.
He noted, “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’.”
The recent surge in roadshows and deal announcements from AI-related businesses—including chipmakers, cloud service providers, and AI applications—has revitalized China’s struggling venture capital sector.
However, the outlook for exits from investments by venture capital and private equity firms remains uncertain due to stringent regulatory vetting of IPOs at home and increased Sino-U.S. geopolitical tensions that threaten offshore listings.
In the near term, DeepSeek’s AI breakthrough and this month’s rare meeting between President Xi and tech business leaders have improved investor sentiment.
New Access Capital has recently invested in a chip startup and a company that makes millimeter wave antennas. They are also planning to invest in a firm focused on rocket recovery technologies, aiming to find the next DeepSeek in these fields, Qian said.
Investors are particularly interested in companies benefiting from China’s advancements in AI.
For instance, AI image generation platform LibLib AI announced a new funding round worth several hundred million yuan, claiming it was at a “record-breaking pace of financing.”
AI-powered medical startup SenseCare raised 100 million yuan last week, while chipmakers Aspiring and Hyseim also announced fresh fundraising efforts.
GLOOMY OUTLOOK
Other startups attracting investor interest include AI infrastructure provider Siliconflow, robot manufacturer Ruichi Smart Technology, and medtech startup Neurodome, according to consultancy Zero2IPO.
This renewed interest in venture capital investment comes after a period of poor performance in recent years. China’s venture fundraising and investments have plummeted since a peak in 2021, as Preqin data indicates.
In 2024, 67 funds raised $12.5 billion, a significant decline from the $141 billion raised in 2021. Last year, dollar-denominated funds managed to raise only $1 billion. Venture deals totaled $229 billion last year, reflecting a 36% drop year-on-year and just over a quarter of 2021’s $816 billion total.
The industry, which primarily relies on IPOs for exiting investments, faced challenges due to China’s strict IPO regulations and Sino-U.S. tensions that hindered offshore listings.
Since DeepSeek launched its breakthrough AI model, “the sentiment has improved a lot,” said Huo Zhongyan, founder of Bonanza Capital, which has invested in an AI-powered garment designing and marketing startup.
He observed, “People get more sanguine about China’s future … Stock bullishness made entrepreneurs more confident, and investors more willing to place bets.”
Morgan Stanley reported on Tuesday that it sees signs of normalizing IPOs in the A-share market.
However, Huo expressed skepticism about whether Chinese regulators will relax IPO criteria anytime soon. He also warned that offshore listings, which have shown signs of recovery, remain vulnerable to geopolitical shifts and changing market sentiments.
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