Venture capitalists have invested over US$300 billion in US AI startups over the past five years, but the release of a new, efficient AI model from Chinese company DeepSeek has raised concerns.

DeepSeek’s breakthrough has caused market turmoil, but US VCs remain optimistic, viewing the competition as a motivation for faster AI adoption.

Investors like Y Combinator’s Garry Tan believe the model will lower AI computing costs, creating more opportunities for startups.

Many expect global AI researchers to replicate DeepSeek’s gains, pushing the industry forward.

While some AI companies may be overvalued, others, like startups focusing on cloud software, could benefit significantly from reduced costs.

DeepSeek’s success signals a need for US companies to adapt, with some calling it the “Sputnik moment” for AI, urging the US to accelerate its AI race.