According to people familiar with the matter who revealed this to CNBC, China's DeepSeek is considering expanding its latest round of financing to a maximum of 100 billion yuan (14.9 billion US dollars), doubling the previous target, with state-backed funds and corporate investors competing for shares.
Two people familiar with the matter said that this AI startup has received strong interest from state-backed funds, investment departments of listed Chinese companies, and venture capital firms. As they are not authorized to discuss such private negotiations, they requested to remain anonymous.
However, DeepSeek is strictly screening potential investors, rejecting private equity funds that raise funds from individual investors, and mainly restricting the investor base to government and corporate funds, according to people familiar with the matter.
The company began accepting external capital for the first time this year, with an initial target of 50 billion yuan for this round of financing.
According to informed sources, the financing process is still subject to change, and the amount of financing may be adjusted before the negotiations are concluded. Earlier on Tuesday, Bloomberg reported that DeepSeek was close to raising at least 80 billion yuan, with Tencent and battery manufacturer CATL being among its largest supporters, with plans to go public in early 2027.
One of the individuals familiar with the matter told CNBC that CATL, Geely Automobile, as well as investment management companies Monolith Management and Loyal Valley Capital, have committed to making contributions in the latest round of financing.
DeepSeek, CATL, Geely Automobile, Monolith Management, and Loyal Valley Capital have not responded to CNBC's request for comments.
According to an informed source, this round of financing was originally expected to be completed by the end of August, but due to some potential investors' hesitation regarding the price, the process has taken longer than planned. However, the negotiations are now nearing their conclusion.
According to informed sources, DeepSeek is seeking a valuation of approximately 500 billion yuan, which is equivalent to 75 billion US dollars. Its first round of external financing was completed in June, with a financing amount of around 50 billion yuan. A document related to the investors for that round of financing indicates that its valuation is about 350 billion yuan.
From laboratory to market launch
After this AI startup released the AI model in January 2025, which was capable of competing with its American counterparts but at a much lower cost, it triggered a sell-off in American tech stocks. The company stated that the latest model, V4.1, released in September, is designed to enhance capabilities and speed up inference times.
DeepSeek has decided to seek external financing, which is seen as a sign of a rapidly expanding capital demand for AI and an increasing pressure to retain talent amidst intensified competition.
At a private meeting in July, founder Leung Man-fung told investors that he gives higher priority to advancing technology towards general artificial intelligence rather than maximizing profits.
It is reported that after Leung Man-fung stated at a private investors' meeting that Chinese company AI is still far behind its American counterparts and is heavily dependent on NVIDIA chips, the current round of financing negotiations was briefly suspended.
Reuters reported in September that DeepSeek has hired CITIC Securities to prepare for a potential listing on the Shanghai Science and Technology Innovation Board.
Bloomberg reported on Tuesday that its domestic competitor, Moon's Dark Side Moonshot AI, is also seeking to go public in early 2027, following a financing round valued at 50 billion yuan.
