Good day. Many venture investors hailed the release of DeepSeek’s open-source technology as a sea change that would slash costs and fatten margins for app startups built on generative AI foundation models.

“From an investor standpoint, this could be a huge unlock for the future of AI applications. We may be on the verge of an explosion of AI applications,” said Pete Soderling, founder and general partner at early-stage venture firm Zero Prime Ventures.

But even before DeepSeek, some future cost reduction from AI had already been baked into business projections and valuations at those startups.

“The idea that models will get cheaper and faster was pretty obvious. The question is when and by whom,” said Ron Nachum, chief executive and co-founder of early-stage AI startup Sapien.

Sapien, which raised an $8.7 million seed round last year led by General Catalyst, is building autonomous financial analysts for business customers. “From our angle, this DeepSeek launch isn’t really a departure from the norm,” he said.

Sapien plans to evaluate DeepSeek, but Nachum said he doesn’t expect the company’s business trajectory to change drastically because of it. Sapien deploys various foundation models from companies such as OpenAI and Anthropic in its software. When evaluating which model to use, price is not the top priority, the CEO said: The main goal is to provide accurate results to customers quickly, using whichever generative AI models help in that task.

Nachum said he envisions pinging models more often as costs decline in order to sharpen their accuracy. “Maybe you run everything a few times, maybe you have a call verify itself,” he said. “You might have done one LLM [large language model] call, now you can do three,” he said. The goal would be to get more reliable results that customers could trust.

But there’s another trust issue that will likely inform whether Sapien turns to DeepSeek, Nachum said.

“The biggest thing for us is getting customer sentiment on it,” Nachum said. “People are comfortable with OpenAI, with Google,” he said. It’s less clear if customers would support Sapien’s use of a Chinese model, he said.

Downloading the DeepSeek model and running it locally would ensure that no data or information gets sent to Chinese servers, he said. But explaining that nuance to customers may not be easy.

“It’ll be a very difficult educational challenge,” he said.

And now on to the news...

Cloudy path for electric trucks. Heavy-duty truck manufacturers and dealers are caught in a swirl of shifting and conflicting rules over zero-emissions big rigs as the changing regulatory landscape undercuts the commercial prospects of the vehicles, according to WSJ's Logistics Report.

• Trucking industry executives say the road to electric trucks has become particularly cloudy in California, which has led the nation in moves away from conventional fuels and served as a model for other states looking at tightening truck rules. California has rolled back some of its rules because of the new administration in Washington even as some of the state’s zero-emissions demands remain in place.
• The changes have left truck manufacturers and dealers in a limbo as they contend with a requirement to sell zero-emissions electric trucks to fleets that have little regulatory incentive to buy the new rigs.

BP Energy Partners led a $65 million investment in Smart Wires in a bet that the provider of power-flow control systems will benefit from utilities’ desperate need to increase grid capacity, WSJ Pro's Luis Garcia reports.

• Durham, N.C.-based Smart Wires develops technologies that help utilities expand the amount of electricity carried on their grids by diverting power from congested transmission lines into less used ones. Customers include Central Hudson Gas & Electric in New York and U.K.-based National Grid Electricity Transmission, as well as Latin American power companies such as Colombia’s Isa Transelca.

People

SE Ventures, an investor focused on energy management, sustainability and industrial automation, said Carlos (CK) Kokron joined the firm as general partner. He was previously at Qualcomm Ventures.

Bridger Photonics, an aerial methane detection provider, appointed Ben Little as its new chief executive officer. He replaces Pete Roos, who will transition to chief innovation officer.

WndrCo promoted Justin Wexler to general partner, where he leads the firm’s investments in enterprise AI.

Helion, an Everett, Wash.-based fusion energy company focused on generating zero-carbon electricity from fusion, scored $425 million in Series F funding from investors including Lightspeed Venture Partners. This latest round gives Helion a $5.4 billion post-money valuation.

UVeye, a vehicle inspection technology provider, secured $191 million in equity and debt financing led by Woven Capital.

Alice & Bob, a Paris-based quantum computing startup, collected more than €100 million in Series B funding from investors including Future French Champions and AVP.

VEIR, a Woburn, Mass.-based developer of advanced power delivery systems for data centers, renewables and utilities, landed $75 million in Series B funding led by Munich Re Ventures.

Onebrief, a Honolulu-based platform for military planning and operations, completed a $50 million Series C round led by General Catalyst and Insight Partners.

Conifers.ai, an agentic AI cybersecurity startup based in Tel Aviv and Dallas, picked up $25 million in funding from investors including SYN Ventures.

Qsic, an AI-powered audio platform for retail media, closed a $25 million Series B round led by Hedosophia. The company has offices in Dallas and Australia.

Nue, a San Francisco-based omni-channel revenue lifecycle platform, raised $20 million in Series A funding led by Inovia Capital.

OneVest, a Canada-headquartered wealth management technology platform, fetched $20 million in Series B funding led by Salesforce Ventures.

Token Security, a non-human identity security startup based in Tel Aviv and New York, grabbed $20 million in Series A funding led by Notable Capital.

• DeepSeek chief’s journey from math geek to global disruptor
   
• How DeepSeek’s AI stacks up against OpenAI’s model
   
• DeepSeek is upending Wall Street’s big AI power trade
   
• How China’s DeepSeek outsmarted America
   
• Microsoft, AWS could face U.K. watchdog probe into cloud services market
   
• Google to fight $4.33 billion EU antitrust fine over Android 

• Waymo begins testing robotaxis on L.A. freeways (TechCrunch)

This newsletter was compiled by Zachary Cole and Yuliya Chernova.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley, Angus Loten and Marc Vartabedian.

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