(Bloomberg) — Calling Chinese artificial intelligence startup DeepSeek a “grave national security threat,” Lux Capital co-founder Josh Wolfe described the company’s development of an AI model at a fraction of the cost of US rivals as a major “wake up call” for America.
Most Read from Bloomberg
“We need to do something,” Wolfe said Friday during an interview with Bloomberg Television. Lux Capital is an investor in weapons maker Anduril Industries Inc. and AI companies including Hugging Face Inc. Wolfe and other Silicon Valley investors are reeling from the implications that DeepSeek’s open-source AI model from China could have on American defense and other industries.
Wolfe said the US should increase funding to younger scientists doing fundamental research and suggested American immigration policies should be structured to ensure the brightest technical minds come and stay in the US.
“We are at war for talent. We need a brain drain coming here,” he said. He pointed to drone maker SZ DJI Technology Co., ByteDance Ltd.’s video app TikTok and DeepSeek as commercial technologies developed in China that either have been used by the government in Beijing for military purposes or could be.
“They are not companies,” Wolfe said. “They are arms of the government — arms of the government designed to erode US competitiveness.”
Wolfe, whose 25-year-old firm has the tag line “We turn sci-fi into sci-fact,” has $5 billion assets under management. He said he expects the next wave in AI startups to focus on applications in robotics, biology and the broader physical world.
–With assistance from Caroline Hyde.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.
