Chinese AI Startup DeepSeek Seeks Billions in First Funding Round

DeepSeek, a Chinese artificial intelligence startup, could achieve a valuation of up to USD 50 billion in its initial fundraising effort. This move marks a significant shift from its long-standing strategy of declining external investment.

Credit: UNSPLASH

China's national artificial intelligence fund, established in January, is in discussions to be a lead investor in DeepSeek's fundraising. The fund was founded with 60 billion yuan (USD 8.8 billion).

The startup aims to raise USD 3 billion to USD 4 billion from the funding round. These funds are intended to fuel its computing capabilities and enhance employee benefits.

Chinese tech giant Tencent Holdings has also been in talks to invest in DeepSeek. All sources involved in these discussions declined to be named due to the confidential nature of the information.

The China Integrated Circuit Industry Investment Fund, the primary backer of the national AI fund, declined to comment. Tencent also declined to comment.

The Financial Times previously reported that the China Integrated Circuit Industry Investment Fund was in talks to lead DeepSeek's first fundraising. This report suggested a potential valuation of about USD 45 billion for the frontier AI laboratory.

This maiden fundraising round occurs as DeepSeek faces increasing competition from domestic rivals. These competitors include tech giants such as ByteDance and Alibaba, alongside emerging startups like MiniMax and Moonshot AI.

These rivals have secured billions from either private or public markets, allowing them deep pockets.

Founder Liang Wenfeng has historically preferred to fund and operate DeepSeek as a research laboratory. Its budget previously came from his quant hedge fund, High-Flyer, rather than a Chinese tech conglomerate or an initial public offering.

Wenfeng is directly involved in the current fundraising talks.

Some of DeepSeek's researchers have been poached by competitors. For example, Luo Fuli departed the startup to lead Xiaomi's artificial intelligence model team MiMo.

The fast-moving AI industry has largely moved beyond and recreated the low-cost, highly efficient open-source chatbot models that contributed to DeepSeek's global breakthrough early last year.

The industry's focus has now shifted to agents capable of more complex tasks with less human intervention. These agents require substantially more computing power to operate.

DeepSeek claimed its next-generation, agent-suited V4 model "redefined the state-of-the-art" for open-source models last month. However, third-party evaluations indicated it lagged behind leading models from some United States and Chinese competitors.

Notably, the release of V4 did not trigger the global tech share selloff observed last year after its predecessors, V3 and R1.

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• DeepSeek, a Chinese artificial intelligence startup, is seeking its first external funding, with a potential valuation of up to USD 50 billion.

• This fundraising effort marks a significant shift from DeepSeek's long-standing strategy of declining outside investment, previously relying on founder Liang Wenfeng's quant hedge fund.

• China's national artificial intelligence fund and Chinese tech giant Tencent Holdings are in discussions to invest, potentially contributing USD 3 billion to USD 4 billion.

Source: REUTERS