What Happened and Why
This development comes shortly after widely circulated comments attributed to founder Liang Wenfeng - discussing China's technological gap with the US and dependence on Nvidia hardware - surfaced online.
The Chinese AI startup informally told some prospective backers that no investment documents would be signed in the immediate future, the sources said, requesting anonymity because the talks are private. DeepSeek may decide to reactivate the deal pipeline at a later point. Part of the reason for the pause was Liang's irritation with how the media covered his statements to backers in the initial funding round, which closed in June and brought in $7 billion.
DeepSeek was founded in 2023 and quickly became a central player in China's push to compete globally in artificial intelligence. Its breakthrough model, developed with fewer computing resources, showed that Chinese firms can rival Silicon Valley despite U.S. export controls on advanced chips.
The leaked remarks reignited debate over the impact of U.S. export controls on China's AI ambitions, as DeepSeek's earlier achievement had proven that domestic firms can compete under hardware restrictions. Liang's frank assessment underscored the ongoing challenge of securing advanced chips, a critical factor for DeepSeek's expansion plans.
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
Chinese media outlet Yicai reported that the billionaire founder highlighted China's continued reliance on Nvidia chips for AI progress and its persistent lag in AI sophistication compared to the US. DeepSeek did not respond to a request for comment regarding either the transcript or the fundraising status.
The Numbers Behind the Pause
The startup is owned by Zhejiang High-Flyer Asset Management, a hedge fund. The first round boosted Liang Wenfeng's personal fortune from roughly $16.7 billion to $36 billion according to the Bloomberg Billionaires Index, placing his wealth above that of prominent AI figures such as Anthropic's Dario Amodei and OpenAI's Greg Brockman.
The second round was expected to be larger. The startup sought to secure a minimum of 10 billion yuan in extra funding, with the final amount potentially rising depending on investor interest. DeepSeek had set a pre-money valuation floor of 480 billion yuan, according to earlier Bloomberg reporting. That marks a significant jump from the roughly $50 billion valuation in the first round.
Company Context
DeepSeek is a subsidiary of Zhejiang High-Flyer Asset Management, a quantitative hedge fund founded by Liang Wenfeng. Liang, a billionaire with a background in mathematics and computer science, has positioned DeepSeek as a research-driven AI lab rather than a profit-focused enterprise. The startup's ownership structure allows it to prioritize long-term AI research over near-term revenue, a strategy that has attracted investors willing to bet on China's AI ambitions despite hardware constraints.
What's Next
The pause may not be permanent. DeepSeek could restart the fundraising process later this year.
DeepSeek has drawn enormous interest from investors because it is one of the few companies at the center of China's push to compete globally in AI.
The startup now seeks additional funds to support ambitious expansion, particularly increasing computing capacity. AI labs globally are negotiating agreements to obtain the data-center capacity required for training and running AI systems. DeepSeek's top executives have informed prospective backers that the firm plans to focus on pioneering AI research rather than near-term revenue. Liang promised in at least one investor meeting to keep creating open-source AI models while striving for the larger objective of reaching artificial general intelligence, underscoring the firm's focus on advancing AI frontiers rather than monetization.
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets
