DeepSeek seeks first funding round at over $20bn valuation

In short: DeepSeek is raising outside money for the first time, aiming for a valuation above $20bn to help stop competitors from hiring away its researchers.

What happened

DeepSeek, a Chinese company that builds AI models (software that can generate text and answers, like a very advanced autocomplete), is in talks with a small group of strategic investors about a first funding round. People familiar with the discussions said the round could value DeepSeek at more than $20bn.

The company has not previously taken outside investment. It has relied on funding from its founder, Liang Wenfeng, and his quantitative trading firm (a firm that uses math and computers to trade in financial markets).

The people said the fundraise may be relatively small, in the low hundreds of millions of dollars. The goal is less about immediate cash needs and more about giving employees clearer value for their stock options, which are promises of company shares that can pay off if the company’s value rises (like being paid partly in lottery tickets tied to your employer’s future price).

DeepSeek has recently lost some researchers to rivals, including ByteDance and Tencent, according to people familiar with the moves. The Financial Times reported that a lack of a clear valuation can make it harder to compete on pay, especially when other AI companies have recent fundraising valuations to point to.

Why it matters

AI companies compete heavily for skilled researchers. When pay is tied to stock options, a clear valuation can affect whether employees feel they are being rewarded fairly. If DeepSeek succeeds, it may help it keep staff and continue developing models, but investors may also push for clearer plans on how the company will make money.

Source: Financial Times