EP-119: How DeepSeek Changes the Game for Asian AI Startups

The past week was the most dramatic in the AI land since ChatGPT's launch in November 2022.?

DeepSeek, a Chinese AI company, recently launched DeepSeek-R1, an MIT-licensed large language model (LLM), with performance on par with Open AI’s advanced model OpenAI-o1.

Soon after its release on January 20, this groundbreaking AI model dethroned OpenAI’s ChatGPT as the most downloaded free app on Apple’s App Store in the US. And with that, Liang Wenfeng, the 39-year-old founder of DeepSeek, became the most awe-inspiring personality in the AI field.?

What made DeepSeek an instant global hit??

The DeepSeek team was able to achieve the same results as big AI models using 95% less computing power and at a fraction of the cost of the world’s top LLMs. And that’s ingenious.

DeepSeek R1 was built on slower Nvidia H800 chips at a cost of less than US$6 million, compared to the hundreds of millions spent on other top AI models like ChatGPT, Gemini, Claude, Llama, and Mistral.

But how does DeepSeek do that? Unlike traditional AI models, which use all of their trillions of parameters to solve a problem, DeepSeek uses about 5% of its parameters for every task by routing queries to expert systems.?

Through reasoning-oriented reinforcement learning that rewards the model only if it provides a good solution, DeepSeek trained its models on which experts to use for which tasks. This approach drastically slashed compute costs without compromising accuracy.

Moreover, DeepSeek not only trained its AI model by spending peanuts but also made it open-source, making it practically free for everyone to use.?

It achieved this feat, despite the export restrictions imposed by the US that prevent Chinese AI companies from accessing the advanced Nvidia chips.

In a nutshell, the two-year-old China-based startup has potentially challenged the dominance of Western AI companies.?

In terms of investments, OpenAI has raised US$17.9 billion to date and will receive US$500 billion over the next four years from The Stargate Project to build new AI infrastructure.

Similarly, after spending about US$10 billion on AI in 2024, Meta CEO Mark Zuckerberg has earmarked a budget of US$60 billion for AI infrastructure for 2025.?

With DeepSeek achieving breakthrough results on a modest US$6 million budget, industry experts and investors are questioning the conventional wisdom that training AI models requires billions in investment and expensive advanced Nvidia hardware.

That’s why Nvidia lost almost US$600 billion in its market cap after DeepSeek released its latest model. Even the shares of tech companies like Dell and Oracle which rely on Nvidia chips, saw a significant fall.

According to CB Insights, AI companies captured 37% of global VC funding in 2024. Major investments included Elon Musk's xAI raising US$12 billion, OpenAI securing US$6.6 billion, Anthropic receiving US$4 billion, and China's Zhipu AI attracting over US$800 million.

With China gaining a significant lead in the global AI race, all eyes are now turned toward Asia, particularly Southeast Asia, which is emerging as a data center hub for US tech giants.

Thanks to DeepSeek's efficiency innovations, AI development is no longer limited to companies with billion-dollar budgets. This technological breakthrough has democratized AI access across startups, research institutions, and various industries.?

Being open-source, DeepSeek allows anyone to use and modify their AI technology freely, making it much easier for organizations to get started with AI development without major obstacles.

More importantly, DeepSeek has become a role model for regional AI startups that dream of building their own foundation models.

On that note, let’s dive into this week’s recap.

Buzzing Deals

? Indonesian dental clinic chain Orange Dental has raised US$1.5 million from Singapore-based private equity firm Northstar Group. The company had previously raised two rounds of undisclosed funding from Endeavor Indonesia and Achmad Zachy Foundation in 2023. Founded in 2014, Orange Dental claims to serve over 45,000 patients annually with 20 clinics across Greater Jakarta. The company will use the funds to expand its operations in Indonesia as well as to add new services.

? Singapore-based fintech startup 129Knots has announced its launch with a US$10 million investment led by global energy trading company Sing Fuels. The company was incubated under the Singapore Economic Development Board (EDB) Corporate Venture Launchpad program. 129Knots aims to transform how assets are originated, structured, and distributed in deep-tier industries with its real-world asset origination-to-distribution (OTD) platform. In addition to credit risk assessments and audit trails, the company offers solutions such as asset tokenization, programmable money, and stablecoin-powered transactions.

? Philippines-listed conglomerate Ayala Corporation has raised up to US$100 million in financing from the Asian Development Bank (ADB). The funding included a concessional loan from the Canadian Climate and Nature Fund for the Private Sector in Asia (CANPA). Ayala Corp will utilize the funding to develop a network of electric vehicle (EV) charging stations across the country. It will also purchase EVs for commercial distribution. Ayala Corp. is one of the largest conglomerates in the Philippines with businesses in sectors such as real estate, banking, telecommunications, and renewable energy.

? Chinese medical artificial intelligence (AI) startup Deepwise has raised about US$69 million from an array of investors including Legend Capital. The company didn’t mention other investors who participated in the company’s largest funding round. Founded in 2017, Deepwise works with hospitals and other medical institutions in China and overseas to provide AI-based solutions. It claims to have serviced “a few thousand” clients with its products and services covering personal health management, healthcare screenings, early identification of diseases, AI-assisted medical diagnosis & clinical decision-making, and training for health professionals.

What Stood Out This Week

? Singapore-based cryptocurrency exchange company Crypto.com said its Malta entity has received a ‘Markets in Crypto Assets’ (MiCA) license from the Malta Financial Services Authority (MFSA). This license will allow the company to provide its crypto services across the European Economic Area (EEA). Founded in 2016, Crypto.com is used by more than 100 million customers worldwide.

? Chinese social media giant TikTok has received approval from Thailand’s Board of Investment to invest US$3.8 billion to develop data centers in the country. The investment will come from the Singapore unit of TikTok’s owner, Bytedance. Thailand has become a hot spot for tech companies from around the world looking to set up their data centers. From Amazon Web Services and Microsoft to Nvidia, global tech companies have made a beeline to invest in the country to power their AI models and cloud computing.

? Singapore-based venture capital firm Elev8.vc has successfully closed its US$30 million fund. The early-stage deep-tech fund saw support from YouTube founder Steve Chen, and Abhishek Gupta, founder of Singapore’s Circles.Life, as well as AppWorks. Other institutional investors, corporate partners in related sectors, family offices, and founders invested in Elev8. With the close of its recent funding, it will back deep tech startups in sectors such as artificial intelligence, med tech, robotics, and advanced manufacturing.

? The Securities Commission Malaysia (SC) has announced an alternative financing scheme, SARANA, which will be offered by nine SC-registered peer-to-peer financing (P2P) platform operators. This alternative financing option will address the working capital needs of MSMEs. The participating P2P platform operators are Bay Smart Capital Ventures Sdn Bhd; B2B Finpal Sdn Bhd; Capsphere Services Sdn Bhd; Crowd Sense Sdn Bhd; P2P Nusa Kapital Sdn Bhd; FBM Crowdtech Sdn Bhd; MicroLEAP PLT; Modalku Ventures Sdn Bhd and Moneysave (M) Sdn Bhd.

? Chinese venture capital giant HongShan Group has acquired a majority stake in the Swedish audio equipment manufacturer Marshall Group. The deal, which is subject to regulatory approval, valued Marshall at US$1.15 billion. Swedish telecom group Telia sold its 9.6% stake in Marshall Group to HongShan Group for US$105 million. After the transaction, its founder, the Marshall family, will retain over 20% of the company. Formerly known as Sequoia China, HongShan set up its office in London last year to explore acquisition opportunities in Europe.

? Private credit firm, Ascertis Credit, has raised US$115.6 million as it reached the final close of its Select Short Term Income Fund-I (SSTIF-I). It exceeded its set target of US$90 million. SSTIF-I is a sector-agnostic fund, which was formed after it recognized the need for a short-term investment platform. The fund will make about a dozen investments in Asian startups, with a focus on India and Southeast Asia. Formerly known as BPEA Credit, Ascertis Credit has raised four funds to date and invested over US$1.1 billion.

And that’s the wrap for this edition of#ICYMI, our weekly curated highlights from the Asian tech ecosystem. Subscribe to receive it every Thursday and stay updated on the noteworthy tech developments you might have missed during the week. Like this newsletter? Share it with your friends and colleagues here.