Chinese artificial-intelligence startup DeepSeek is tapping external investors for the first time since it became a household name, looking to raise funds for research and development, people familiar with the matter said.
In recent weeks, DeepSeek has held talks with potential investors, including Chinese technology giants Alibaba and Tencent, seeking to raise at least $300 million, the people said. The funds will be denominated in Chinese yuan, they said.
Beijing-based venture-capital firm Shunwei Capital—backed by Lei Jun, founder of Chinese consumer-electronics maker Xiaomi—has also held talks with the AI startup, some of the people said.
Preliminary discussions value the Chinese AI heavyweight at between $10 billion and $30 billion, the people said. Several prospective investors are benchmarking DeepSeek against another Chinese AI startup, Moonshot AI, which was valued at $18 billion in its latest financing round, some of the people said.
DeepSeek hasn’t raised outside funds from investors even after it turned heads in Silicon Valley and Wall Street with a powerful AI model early last year that rivaled those of titans such as OpenAI. So far, the Hangzhou-based firm has been largely bankrolled by founder Liang Wenfeng’s own cash and profit from High-Flyer, the hedge fund that he co-founded.
Investors have struggled to put a price on DeepSeek, mainly because the startup, derived from an AI lab at High-Flyer, has focused on open-source AI technologies but hasn’t established a proven revenue model, the people said.
Some investors are pegging DeepSeek’s worth to its long-awaited next-generation AI model, some of the people said. If the release disappoints market expectations, that will weigh heavily on the company’s valuation, they said.
In recent months, competition in the AI sector has intensified as computing power and talent costs mount. Founder Liang had turned down prospective investors before, fearing that outsiders would interfere in DeepSeek’s decisions, The Wall Street Journal has reported. Now, DeepSeek has a more urgent need for capital than before to retain top talent and keep advancing its AI capabilities.
Other Chinese startups such as MiniMax and Zhipu AI have gone public after multiple fundraising rounds.
Insatiable investor appetite for companies seen as the future stars of the Chinese AI scene has also significantly lifted the valuation of private firms. Moonshot’s valuation has more than quadrupled in three months, and it is considering a public offering in Hong Kong, the Journal has reported.
Alibaba, Tencent, Shunwei and DeepSeek didn’t immediately respond to requests for comment.
The Information earlier reported on DeepSeek’s fundraising efforts.
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