Why this VC believes we won’t have one AI model that rules them all

Venture capital veteran Jay Zhao, currently a managing partner at Leonis Capital, discusses DeepSeek’s disruptive entry into the AI landscape and explains why the future of artificial intelligence may not be a winner-take-all scenario.

Market perspective: Venture capital insights suggest that increasingly complex AI models will operate alongside simpler ones in a diverse artificial intelligence ecosystem.

Key industry developments: The emergence of Deepseek as a significant player in the AI landscape signals growing competition in the large language model space.

• Deepseek’s entry into the market demonstrates there is room for new players to compete with established AI companies
• Complex, power-intensive AI models serve different use cases than their lighter counterparts, creating distinct market segments

Technical considerations: More sophisticated AI models, despite their higher power consumption and complexity, fulfill specific needs that justify their existence in the market.

• Power-hungry AI models excel at complex tasks requiring deep analysis and sophisticated reasoning
• Simpler, more efficient models remain valuable for straightforward applications and resource-constrained environments
• The coexistence of various model types reflects the diverse requirements of different AI applications

Market dynamics: The AI landscape is evolving to accommodate multiple players and technologies rather than moving toward a winner-takes-all scenario.

• Different AI models serve distinct market segments and use cases
• Competition in the AI space is driving innovation across the spectrum of model complexity
• Market demand supports the parallel development of both resource-intensive and lightweight AI solutions

Investor’s outlook: Looking ahead to 2024 and beyond, the AI market appears positioned for continued diversification rather than consolidation around a single approach or provider.

• The entrance of new players like Deepseek validates the market’s ability to support multiple competitors
• Investment opportunities exist across the spectrum of AI model complexity
• Market maturation suggests sustained demand for both sophisticated and streamlined AI solutions