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DeepSeek to Raise Over $12 Billion in Tencent-Backed Funding
Confirmed
In Short: Chinese artificial intelligence startup DeepSeek is close to raising at least $11.93 billion in its latest funding round, backed by Tencent.
Chinese artificial intelligence startup DeepSeek is close to raising at least $11.93 billion in its latest funding round, according to multiple sources. The company, which initially sought around $7.4 billion, has seen interest outstrip expectations following the successful release of its latest AI model.
DeepSeek began its fundraising process in July with an initial target of 50 billion yuan ($7.4 billion) and a valuation target of about 500 billion yuan. However, the reported fundraising suggests that DeepSeek is preparing for its next stage of growth, with the potential to raise up to 100 billion yuan ($14.9 billion).
Tencent, which has already invested heavily in DeepSeek, including a 10 billion yuan ($1.49 billion) investment in an earlier funding round, is expected to be a key investor in this round. For Tencent, a stake in DeepSeek would offer exposure to one of China’s most visible AI labs at a time when large internet groups are trying to avoid being sidelined by independent model builders.
DeepSeek’s founder, Liang Wenfeng, has committed 20 billion yuan ($2.98 billion) of his own money to the funding round, demonstrating his confidence in the company’s future prospects. The round could also bring in CATL, a major Chinese battery manufacturer, as an investor.
DeepSeek became widely known after the launch of its AI models, which attracted attention in China and overseas. The company’s V3 and R1 AI models gained significant recognition early last year, with many in the technology industry viewing DeepSeek as one of China's leading AI challengers.
DeepSeek’s R1 open-source LLM has pushed the Chinese AI startup towards a potential $45 billion valuation, as state-backed investors and Tencent bet on open-source AI to challenge OpenAI and Anthropic. The company’s models are optimized to run on Chinese hardware platforms such as Huawei’s Ascend chips, reducing dependence on US technology stacks.
DeepSeek plans to deploy at least 160,000 of Huawei Technologies’ top accelerators at a massive data center it’s building in Inner Mongolia, which may create one of the largest known clusters of Huawei AI chips. This move underscores the company’s ambition to scale its operations and maintain its position as a leading AI player.
The funding round sets the stage for one of the most highly anticipated Chinese market debuts in years. DeepSeek’s success in raising such a large sum of money could signal a significant shift in the AI landscape, with the company poised to challenge established players both domestically and internationally.
What's confirmed
- Chinese artificial intelligence startup DeepSeek is close to raising at least 80 billion yuan ($11.93 billion) in its latest funding round.
- DeepSeek is reportedly close to raising about 50 billion yuan, or roughly $7.4 billion, in its first external funding round.
What's still developing
- DeepSeek built its name by doing more with less, but its reported first outside funding round shows that even efficient AI now needs serious capital.
- The round could bring in Tencent and CATL while testing whether DeepSeek can preserve the independence that made it stand out.
- DeepSeek is no longer just the lean outsider that embarrassed larger rivals by releasing strong open models with a reputation for capital efficiency.
- As with other AI players, DeepSeek requires huge amounts of capital to bankroll its ambitions in a potentially revolutionary technology.
- Last month, Reuters reported that DeepSeek had secured CITIC Securities to prepare for a possible initial public offering on Shanghai’s STAR Market, a market board for technology companies.
- For Tencent, becoming more closely associated with DeepSeek could enable it to keep up with its domestic competitors.
- Reuters noted that Tencent's Hunyuan model trails some domestic rivals, including ByteDance's Doubao and DeepSeek's own models.
- If completed, the two companies would become the largest external investors in DeepSeek.