DeepSeek Pauses Its Second Funding Round After Founder’s Comments Go Viral
DeepSeek told prospective backers it is suspending its second fundraising, days after remarks attributed to founder Liang Wenfeng on US-China AI competition went viral.
In Brief
- DeepSeek verbally told would-be investors they would not be signing agreements as expected, suspending a second round that sought at least 10 billion yuan at a pre-money valuation of at least 480 billion yuan
- The pause stems in part from founder Liang Wenfeng’s frustration over viral online posts about comments he made to investors during the first round, which closed in June and raised $7 billion
- DeepSeek has begun preparing for an initial public offering and may file as soon as this year, backed by Tencent, CATL and China’s National Artificial Intelligence Industry Investment Fund
DeepSeek has told prospective investors in its second fundraising round that it is suspending the deal for now, people familiar with the matter told Bloomberg, days after comments widely attributed to founder Liang Wenfeng about US-Chinese AI competition went viral.
The Chinese AI pioneer verbally informed some of its would-be backers that they would not be signing investment agreements in the coming days, as they had expected, the people said. DeepSeek might choose to resume the process at a later date. The suspension stemmed in part from Liang’s frustration over online reports about his comments to investors during his first financing deal, which closed in June and raised $7 billion for the AI lab.
Bloomberg has not verified the authenticity of those posts, which concerned a transcript of a meeting Liang held with unidentified parties. Chinese media including Yicai reported this week that the billionaire founder talked about a reliance on Nvidia chips for AI development and China’s persistent lag in AI sophistication relative to the US. DeepSeek did not immediately respond to a request for comment about the transcript or the fundraising.
What the DeepSeek funding round was targeting
Negotiations remain fluid and the company may still choose to proceed; it is unclear whether DeepSeek has communicated its intentions to all prospective investors. The talks kicked off mere weeks after the company closed its record first round, when it secured big names including Tencent Holdings and Contemporary Amperex Technology (CATL).
DeepSeek was aiming to raise at least 10 billion yuan of additional funds in a follow-on deal, though the final amount could go higher depending on how many investors sign on. The startup had been targeting a pre-money valuation of at least 480 billion yuan — a sharp increase from the roughly $50 billion price tag it drew in its first round.
In addition, the company has begun preparations for an initial public offering and may file as soon as this year, setting the stage for what could be a landmark debut for China’s technology industry.
Why investors keep chasing DeepSeek
DeepSeek has drawn enormous interest because it sits at the heart of China’s effort to compete globally on AI. It developed a model last year that stunned the industry, demonstrating the ability to build a cutting-edge yet efficient platform with fewer computing resources — proof that Chinese companies could compete with Silicon Valley despite US export restrictions on advanced hardware.
The startup is now chasing more funds to support an ambitious expansion, including an increase in computing capacity, as AI labs worldwide strike deals to secure the data-center infrastructure they need to train and operate their services.
Founded in 2023 and owned by hedge fund Zhejiang High-Flyer Asset Management, DeepSeek also drew backing from the National Artificial Intelligence Industry Investment Fund, one of the vehicles spearheading Beijing’s efforts in the sector. Senior management has told potential investors the startup will prioritize groundbreaking AI research over short-term commercialization, and Liang pledged in at least one meeting to keep developing open-source AI models while pursuing artificial general intelligence.
FAQ
Why did DeepSeek pause its second funding round?
DeepSeek verbally told prospective investors they would not be signing agreements as expected. Bloomberg reports the pause stems in part from founder Liang Wenfeng’s frustration over viral online posts about comments he made to investors during the company’s first financing round.
How much was DeepSeek trying to raise?
The company was aiming for at least 10 billion yuan in a follow-on deal at a pre-money valuation of at least 480 billion yuan, up sharply from the roughly $50 billion valuation in its first round, which raised $7 billion and closed in June.
Is DeepSeek planning an IPO?
Yes. The company has begun preparing for an initial public offering and may file as soon as this year, which would be a landmark debut for China’s technology industry.
