Chinese AI sensation DeepSeek has told prospective investors it is suspending its second fundraising round, according to people familiar with the matter — a stunning reversal for a startup that just weeks ago closed a record $7 billion first round.
The decision stemmed in part from founder Liang Wenfeng's frustration over online reports about comments he made to investors during the first financing deal, which went viral. A transcript of a meeting Liang held with unidentified parties reportedly touched on China's reliance on Nvidia chips for AI development and the country's persistent lag in AI sophistication relative to the United States.
DeepSeek was targeting a pre-money valuation of at least 480 billion yuan (approximately $74 billion) — nearly 50% higher than the roughly $50 billion valuation it commanded in its first round just months ago. The startup had aimed to raise at least 10 billion yuan of additional funds, though the final amount could have gone higher.
The company might resume the deal process at a later date, sources said. Negotiations remain fluid and DeepSeek may still choose to proceed with some investors.
Founded in 2023 and owned by hedge fund Zhejiang High-Flyer Asset Management, DeepSeek stunned the AI industry last year by demonstrating cutting-edge capabilities built with fewer computing resources than Western competitors — proving that Chinese firms could compete despite US export restrictions on advanced hardware.
The startup has also begun early preparations for an initial public offering on Shanghai's Nasdaq-style STAR Market, potentially as soon as this year.
Liang Wenfeng's net worth more than doubled after the first fundraising round, reaching $36 billion, making him the world's richest AI model founder — ahead of Anthropic's Dario Amodei and OpenAI's Greg Brockman.
The pause highlights the high-stakes and often personal nature of the AI funding race, where founder temperament, geopolitical currents, and market dynamics collide in real time.
