DeepSeek: Rising from Hedge Fund Failure to AI Innovation

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DeepSeek is a Chinese AI startup founded in 2023 by Liang Wenfeng, who also co-founded the hedge fund High-Flyer. The hedge fund, which focused on AI-driven quantitative trading, faced significant losses, leading to its dissolution. This setback, however, did not deter Liang. Instead, it spurred the creation of DeepSeek, an AI company aimed at developing artificial general intelligence (AGI).

DeepSeek has quickly gained attention and popularity. The company released its flagship model, R1, on January 20, 2025, which is designed for complex problem-solving. Despite using fewer and less powerful AI chips than its U.S. counterparts, R1's performance is on par with OpenAI's latest models. DeepSeek's app has been downloaded 1.6 million times globally by January 25, 2025, and ranks first in iPhone app stores in several countries, including the U.S..

One of DeepSeek's unique features is its ability to explain its reasoning before delivering a response, setting it apart from other chatbots like OpenAI's ChatGPT. Additionally, DeepSeek is open-source, allowing developers to contribute and improve the software.

The rise of DeepSeek has had significant implications for the global AI supply chain and the tech industry. Experts believe that DeepSeek's technology, despite being slightly behind that of OpenAI and Google, poses a competitive threat due to its efficiency and cost-effectiveness. This has led to a market frenzy, with some investors worried about the potential impact on established players in the AI sector.

In summary, DeepSeek emerged from the ashes of a hedge fund rout to become a significant player in the AI industry, leveraging its innovative technology and open-source model to challenge existing giants.