DeepSeek funding pause follows viral posts on founder’s AI comments

DeepSeek funding pause discussions have reached some prospective backers of the Chinese AI company’s second financing round, Bloomberg reported, citing people familiar with the matter. The pause matters because DeepSeek had been seeking fresh capital soon after closing a record first round and while preparing for a possible public listing.

The company verbally told some would-be investors that investment agreements would not be signed in the coming days as they had expected, according to Bloomberg’s report. The people, who asked not to be named because the talks are private, said DeepSeek could restart the process later.

Why did DeepSeek pause funding talks?

Bloomberg reported that the suspension was partly tied to founder Liang Wenfeng’s frustration over online reports about comments he made to investors during DeepSeek’s first financing round. That round closed in June and raised $7 billion for the AI lab, according to Bloomberg.

The online posts included what was described as a transcript of a meeting Liang held with unidentified parties. Bloomberg said it has not verified the authenticity of the posts.

Chinese outlets including Yicai reported this week that Liang discussed China’s continued gap with the United States in AI sophistication and the role of Nvidia chips in AI development. DeepSeek did not immediately respond to Bloomberg’s emailed request for comment on either the transcript or the fundraising.

How large was the planned DeepSeek funding round?

DeepSeek had been aiming to raise at least 10 billion yuan in a follow-on deal, Bloomberg previously reported. The final amount could have been higher depending on investor demand.

The startup was targeting a pre-money valuation of at least 480 billion yuan, according to Bloomberg. That would mark an increase from the roughly $50 billion valuation attached to its first round.

The latest negotiations are still described as fluid. Bloomberg reported that DeepSeek may decide to proceed, and it is not clear whether the company has told all prospective investors in the current round about its intentions.

What is DeepSeek’s broader plan?

DeepSeek has also begun work toward an initial public offering and may file as soon as this year, Bloomberg reported. Such a listing could become a major event for China’s technology sector, given the company’s prominence in the country’s AI push.

Founded in 2023, DeepSeek is owned by hedge fund Zhejiang High-Flyer Asset Management. Its first financing round set a record for first-time funding by a Chinese technology startup, according to Bloomberg.

That round drew investors including Tencent Holdings Ltd., Contemporary Amperex Technology Co. Ltd. and the National Artificial Intelligence Industry Investment Fund, a vehicle tied to Beijing’s AI-sector efforts. DeepSeek has attracted strong interest because it is viewed as one of the companies central to China’s bid to compete globally in artificial intelligence.

The company gained wider attention after developing a model last year that showed it could build an advanced and efficient AI platform with fewer computing resources. Bloomberg reported that the breakthrough suggested Chinese companies could remain competitive with Silicon Valley even under U.S. export restrictions on advanced hardware.

Bloomberg has reported that DeepSeek’s management told potential investors it would prioritize AI research over near-term commercialization. Liang also pledged in at least one investor meeting to keep developing open-source AI models while working toward artificial general intelligence.

Liang’s wealth rose after the recent fundraising, according to the Bloomberg Billionaires Index. Bloomberg said his net worth increased to $36 billion from about $16.7 billion, putting him ahead of Anthropic co-founder Dario Amodei and OpenAI’s Greg Brockman among AI model creators.

This story draws on original reporting from Fortune.