DeepSeek told investors it's suspending its second fundraising round after Liang Wenfeng's comments about Nvidia and China's AI lag went viral. The startup is also preparing for an IPO.
DeepSeek has told prospective investors it is suspending its second fundraising round, several people familiar with the matter said. The decision came days after comments widely attributed to founder Liang Wenfeng about US-Chinese AI competition spread across Chinese social media.
Liang was frustrated by online reports that reproduced a transcript of his remarks during the first financing deal, the people said. That round closed in June and raised $7 billion. Bloomberg has not verified the authenticity of the posts. Chinese media outlet Yicai reported that Liang discussed a reliance on NVIDIA chips for AI development and said China still lags the US in AI sophistication.
The startup verbally informed some would-be backers that they would not sign investment agreements in the coming days as they had expected, the people said. DeepSeek might resume the deal process later. Negotiations remain fluid, and the company has not communicated its intentions to all prospective investors.
DeepSeek was aiming to raise at least 10 billion yuan ($1.4 billion) in the follow-on round, though the final amount could go higher depending on how many investors sign on. The startup had targeted a pre-money valuation of at least 480 billion yuan, Bloomberg News previously reported. That is up from the roughly $50 billion price tag in the first round.
Existing backers include Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd., as well as the National Artificial Intelligence Industry Investment Fund, a vehicle that carries out Beijing's strategic goals in the sector.
In addition to the financing pause, DeepSeek has begun preparations for an initial public offering and may file as soon as this year, people familiar with the matter said. That could be a landmark debut for China's technology industry.
DeepSeek developed a model last year that stunned the industry by showing high performance with fewer computing resources, despite US export restrictions on advanced hardware. The startup is now chasing more funds to expand computing capacity, as AI labs globally race to secure data center infrastructure.
Liang's net worth more than doubled after the first fundraising round, making him the world's richest AI founder at $36 billion, according to the Bloomberg Billionaires Index. That ranks him above Anthropic co-founder Dario Amodei and OpenAI's Greg Brockman.
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