After Deepsek, Venture Capital Investors faced questions about their AI stakes

Jordan Jacobs, an investor from Venture Capital firm Radical Ventures, has made half a dozen calling from his firm’s investors in the last few days. They all wanted to know about Deepsek, which is a Chinese artificial intelligence app, which was at the top of the app store over the weekend.

Deepsek had created a powerful AI model, in which AI experts with very little money thought that by increasing the development of rapidly developed technology, enhancing many underlying beliefs. To calm the nervousness, Mr. Jacobs said that he explained to his investors that radical undertakings had invested in a long time efficient AI model, similar to the one of the one by Deepsek.

“Let’s focus on companies that are actually building real businesses, rather than pursuing science fiction,” Mr. Jacobs said he told them.

NVIDIA, Google, Meta and other huge technology companies have faced questions about Deepsek since last week, as Chinese start-up has topped the long-term perceptions about AI, but its results to the biggest firms Beyond that is being felt, which is reaching the enterprise capital industry that AI start-up has put a big bet on technology by plowing billions of dollars.

For two years, the venture capital firms are engaged in a funding mania, which according to the pitchbook, put more than $ 155 billion in AI Start-up between 2023 and 2024, which tracks the start-up. Two of the AI ​​companies – Openi and Anthropic – have raised $ 24 billion and 16 billion dollars with the target of manufacturing AI which is intelligent as humans. Openai’s evaluation is $ 157 billion – more than the Fizer or Citragroup – while the evaluation of anthropic has reached $ 20 billion.

Deepsek has now said that funding fever in question. If a Chinese upstart can create an app, which is powerful as an openi chat or anthropic’s cloud chatbot, with barely any money, why did those companies need to raise so much cash?

Matt Turk, an investor at Firstmark Capital, said, “It is not good for some AI companies”. However, he said, AI companies will eventually require money, computing power and infrastructure to serve their customers.

Venture Capitalists have debated the best way to invest in AI, since OpenIA released the chat in late 2022. Some investors have argued that technology that outlines chat and other products – is often referred to as “Foundation Model” as they can power many applications, including chatbots. , Search engine and image generator – is not a good investment because systems are expensive to make competitive and is easy to copy for competitors.

Mark Andresen, an investor of Andresen Horovitz, such a system last year is “called”race to the bottom, And estimated that a business with this type of AI would be like “selling rice” where anyone can compete.

In recent times, with the hubb caused by the lampsac, Venture Capital Investors who have not invested in foundation model companies such as openi and anthropic – either because they have seen the race down or because they did not have money or opportunity – This moment is used. To share their thoughts.

Eric Vishria, an investor from the venture firm benchmark, said on social media on Monday that she It is believed that Foundation model “was the fastest depreciation property in human history.” Anjani Mida, an investor in Andresen Horovitz, wrote The Deepsek showed that “the current AI Foundation model market structure is far from stable.”

Investors who have supported the foundation model companies defended their investment. Gavin Baker, an investor from the Atrides Management, who invested in Elon Musk’s AI Start-Up X.Ai, said that he liked his stakes because AI companies are limited to how much data they can access. X.Aai, he said, was in a strong position as it is its own unique source of data from the social network X, whose Mr. Musk also owns.

“For me, I feel very calm,” said Mr. Baker.

Other technical leaders have Dissected Deepsek claim It only spends $ 6 million to create its AI model, which is a fraction of what other companies spend. Some indicate fingers on regulation including former AI Executive Order of President Biden And California’s unsuccessful attempt to enact a state law on AI, to try to withdraw the progress of the industry.

He also affected export restrictions on powerful AI chips Ineffective In preventing Chinese technical advances. Some people excluded the so -called AI security advocates, who have tried to slow down the development of AI due to the possible risks of humanity. Other people called for patriotism and said that Deepsek was a sign that the United States needed to move faster in AI, yet others saw this moment as an opportunity.

Mr. Turk said that the success of Dipsek could be bad news for some of the biggest AI companies, but it opened possibilities for other firms that were just beginning.

“The nervousness in the last few days is a dramatic outline,” he said in a message.

Nico Bontos, an venture capital investor of General Catalist, said in an interview that Deepsek had activated the start-up. “If you are making anything that is touching AI and you have not been excited, passionate, scared and deprived of sleep in the last four days, then which planet are you living on?” He said.

Mr. Bontos spent on the phone with the founders of the companies on Monday morning, who enthusiastically constructed his own “forcited” versions of Deepsek’s technology, which means that they copied and optimized it.

Many of these start-ups were already constructing software on platforms developed by Openai and Anthropic, he said. Deepsek showed people new techniques to develop AI models that are cheap to train and maintain, he said, which may lead to more competition and possibly some “creative destruction” for incumbents.

“This is capitalism,” said Mr. Bontos.

Hugging Face Chief Executive Officer Clement Delongue, a start-up, which allows AI companies to post projects and work together, said on Tuesday that their site over 600 versions of Deepsek model in a few days Were made on.

Investors are working for more surprise in the coming weeks. AI “is a dynamic place that is something wild that happens almost every day,” Mr. Jacobs said.

Cad Metz Contribution reporting.