Chinese AI company DeepSeek has told potential investors that it is suspending talks on its second round of funding for now. DeepSeek had only completed its first external financing round of around seven billion US dollars last month – and wanted to follow up immediately.
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This is no longer planned, reports The Information, citing a person familiar with the process. The target valuation was 500 billion yuan, which is around $74 billion. That would be a significant jump compared to the valuation from the first round, in which Tencent and the battery manufacturer CATL, among others, took part.
Leaked investor meeting as a trigger
Shortly before, CEO Liang Wenfeng had expressed anger about the leak of information. A transcript of the CEO’s investor call in May circulated on Chinese social media platforms and X last week. In the call, Liang laid out his strategic priorities. The CEO was reportedly upset by the leak.
The decision also comes at a time of increased competition in the Chinese AI market. Moonshot AI, a Chinese competitor, has just caused quite a stir with its open-weight model Kimi K3. The model achieved results in benchmarks that can compete with US frontier models. Demand for K3 was so great that Moonshot AI’s servers were reportedly overwhelmed within 48 hours. According to The Information, some investors asked DeepSeek last week whether the success of Kimi K3 could have an impact on their own plans.
IPO still in sight
In parallel to the financing round, the company, founded in 2023, is preparing a possible IPO. According to Bloomberg, DeepSeek is working with auditors to produce a financial report by the end of December 2026 – a requirement for an IPO application.
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According to the information report, investors expect discussions on the second round of financing to resume at a later date. It remains unclear how long the break will last.
(rie)
