U.S. open-source startups take on China’s low-cost AI… “The biggest problem is fundraising difficulties”

U.S. open-source AI startups are racing to compete with China’s low-cost models such as DeepSeek, Kimi, and Qwen.

Arcee AI, Poolside, and Reflection AI have gained traction with high-performing open-weight models, but funding remains tight.

Venture firms are hesitant because profitability is uncertain and open-model bets may conflict with existing closed-AI investments.

Some backers, including Nvidia, are supporting the open ecosystem, but more stable capital is seen as critical for U.S. competitiveness.