For much of the past decade, American technology companies like OpenAI and Google have dominated the artificial intelligence industry. Then came DeepSeek, the Chinese start-up whose A.I. model was nearly as powerful as competing Western ones — and it was free to use.
Now, Reflection AI, a year-old American start-up, is betting that it can create a Western equivalent of DeepSeek. And it has raised billions to do so.
Reflection AI plans to announce on Thursday that it has raised $2 billion in new funding, in a round led by Nvidia, the chipmaker at the heart of the A.I. boom. The deal values Reflection AI at $8 billion, including the new money, significantly more than the roughly $545 million the company was valued at in March, according to the data provider PitchBook.
The fund-raising is yet another sign of the investor fervor for all things A.I., as companies across the industry continue to collect eye-popping sums. Companies that build A.I. foundation models have raised $71.9 billion worldwide so far this year, according to PitchBook; by comparison, the sector collected $34.9 billion last year.
But the move also shows that investors are willing to invest not only in the proprietary software sold by OpenAI and Google, but also in open-source models, which are free to share and modify. Skeptics of open-source A.I. say the approach could cause significant harm.
Yet Reflection AI argues that the United States needs an equivalent to DeepSeek — an open-source model developer whose software can compete with top closed-source models — to maintain technological superiority around the world.
Existing Western open-source A.I. models are underperforming DeepSeek and other Chinese rivals, which may lead to greater adoption of Chinese-created models, according to Misha Laskin, Reflection AI’s co-founder and chief executive. (Among the Western companies making open-source models are Meta, Mistral AI of France and even OpenAI, though that company is primarily focused on proprietary software.)
“There’s a DeepSeek-shaped hole in the U.S., which I think is what makes it critical for a lab like ours to exist,” Mr. Laskin said in an interview, comparing the situation to the Cold War space race.
But developing any A.I. model, open-source or not, requires ever-higher amounts of computing power and research talent — in short, money. That is why Reflection AI raised $2 billion just seven months after raising $130 million in March.
In recent months, Reflection AI held talks with potential investors, and closed the round within a matter of weeks, Mr. Laskin said. Nvidia wrote the biggest check — $800 million — and had several engineers work with Reflection AI to optimize its most recent generation of A.I. chips, according to a person with knowledge of the matter, who spoke on the condition of anonymity because they were not authorized to discuss the deal’s details.
Other participants in the round included existing backers like Lightspeed Venture Partners and Sequoia Capital. New investors included DST, the former Google chief executive Eric Schmidt and 1789 Capital, the investment firm that counts Donald Trump Jr. as a partner.
Mr. Laskin conceded that Reflection AI would need more money to keep competing, especially as rivals are also rushing to raise money: OpenAI alone secured an investment commitment of up to $100 billion last month from Nvidia.
But he argued that demand for open-source models — including from big companies and governments that want greater control over their A.I. applications — will eventually lead to a sustainable business.
The hope, he added, is that smaller A.I. companies eventually end up being the Amazons and Metas of the future: “I anticipate us to be potentially a bigger company than the hyperscalers of today,” he said.