SHANGHAI/HONG KONG, Feb 28 (Reuters) – Chinese technology startups are experiencing a surge in fundraising activities, driven by the burgeoning interest in artificial intelligence (AI) following DeepSeek’s innovative advancements, coupled with President Xi Jinping’s recent endorsement of the country’s private enterprises.
Several AI-focused companies are actively seeking fresh funding to capitalize on this momentum.
AI-powered optics startup Rid Vision, brain-computer interface company AI CARE Medical, and Shanghai Qingbao Engine Robotics, a robot manufacturer, are among the Chinese tech start-ups seeking 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, CEO 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’,” Qian added, referencing copycats.
The flurry of roadshows and deal announcements by AI-related businesses—including chipmakers, cloud service providers, and AI apps—has injected fresh vigor into China’s struggling venture capital sector.
The prospects for venture capital and private equity firms to exit their investments, however, remain uncertain because of strict regulatory oversight of initial public offerings (IPOs) in China, and heightened geopolitical friction between China and the United States, a situation that threatens offshore listings.
DeepSeek’s AI breakthrough and a recent meeting between President Xi and tech business leaders have improved investor sentiment in the near term.
New Access Capital has recently invested in a chip startup and a maker of millimeter wave antenna, and is planning to invest in a company focused on rocket recovery technologies, anticipating further innovation akin to DeepSeek’s in these fields, Qian said.
Companies perceived as benefiting from China’s advancements in AI are the primary focus of this latest round of investments.
AI image generation platform LibLib AI reportedly secured several hundred million yuan in a new fundraising round on Monday at a rapid pace, according to the company.
AI-powered medical startup SenseCare announced a 100 million yuan fundraising round last week, while chipmakers Aspiring and Hyseim also recently announced fresh fundraising efforts.
Other startups that have successfully attracted investors in recent days include AI Infrastructure provider Siliconflow, robot-maker Ruichi Smart Technology, and medtech startup Neurodome, according to consultancy Zero2IPO.
This surge in venture capital investment interest arrives after a difficult period for China’s venture capital sector. According to Preqin data, venture fundraising and investments have declined dramatically since their peak in 2021.
In 2024, 67 funds accumulated $12.5 billion, a considerable drop from the $141 billion raised in 2021. Data also indicated that dollar-denominated funds only raised $1 billion last year. Overall venture deals totaled $229 billion last year, representing a 36% year-on-year drop and just over a quarter of 2021’s $816 billion.
The industry, which relies significantly on IPOs to exit investments, has suffered from stricter IPO regulations in China, and Sino-U.S. tensions that have hindered offshore listings by Chinese companies.
Huo Zhongyan, founder of Bonanza Capital, which has invested in an AI-powered garment designing and marketing startup, noted an improvement in sentiment since DeepSeek’s AI model launch.
“People get more sanguine about China’s future … Stock bullishness made entrepreneurs more confident, and investors more willing to place bets,” Huo said.
Morgan Stanley stated on Tuesday that they’re seeing signs of IPO normalization in the A-share market.
Huo, however, is dubious that Chinese regulators will relax IPO criteria anytime soon. He also cautioned that offshore listings, which have shown some improvement, are still vulnerable to geopolitical events and fluctuating market sentiment.
Reporting by Samuel Shen and Kane Wu in Hong Kong; Editing by Sumeet Chatterjee and Lincoln Feast.
