Chinese AI project DeepSeek has paused its second funding round, which aimed to raise at least $1.5 billion. The decision was partly due to founder Liang Wenfeng’s dissatisfaction with reports about his statements to investors, according to Bloomberg.
The company verbally informed some potential investors that it would not sign agreements in the coming days as expected. However, the process may resume later.
Meeting Details
The meeting took place on May 20 and lasted about four hours. The minutes were obtained by Yicai, which published excerpts on July 23. As of publication, neither DeepSeek nor Liang had confirmed the document’s authenticity.
According to the materials, the project’s founder identified access to computing resources, rather than a lack of talent, as the main reason for China’s lag behind the U.S. in artificial intelligence. He also mentioned restrictions on purchasing advanced graphics processors and lower investment volumes compared to the U.S.
The protocol estimates that DeepSeek is 12-18 months behind leading U.S. developers. However, the startup achieves comparable results using about one-twentieth of their resources. They aim to reduce the gap to three to six months.
The company is also working with Huawei to optimize models for Ascend chips to reduce dependence on Nvidia’s CUDA software environment. According to Liang, the V3 model ran on the American corporation’s chips but used its own TileLang compiler, making it almost independent of CUDA. He added that China’s chip industry has an opportunity for import substitution, though production volumes remain a bottleneck.
Valuation and IPO Preparation
In the second round, DeepSeek aimed to raise at least 10 billion yuan ($1.5 billion). The company’s pre-deal valuation was approximately 480 billion yuan ($71 billion).
The startup’s first-ever external funding round closed at the end of May, raising over 50 billion yuan ($7.4 billion) with a valuation of about 367.5 billion yuan ($54.3 billion). Investors included Tencent, CATL, NetEase, JD.com, IDG Capital, and the National AI Industry Investment Fund. Liang himself made the largest contribution of 20 billion yuan.
Simultaneously, the company began preparing for an initial public offering and may file documents this year. However, in the leaked transcript, the founder stated that the project’s creation was not aimed at going public or maximizing profits. According to him, the first few dozen employees did not view their work in that light.
Earlier in July, sources from Reuters reported that DeepSeek is developing a processor for its models.
