DeepSeek halts its fundraising efforts following the viral spread of leaked comments from the founder.

DeepSeek halts its fundraising efforts following the viral spread of leaked comments from the founder.

      DeepSeek has put its second fundraising round on hold after comments from founder Liang Wenfeng regarding the company's dependence on Nvidia were leaked online and gained significant traction on Chinese social media, as reported by Bloomberg on Friday. Liang advised potential investors to pause the funding round, which was aiming for a pre-money valuation of about 480 billion yuan, or approximately $71 billion. This decision followed Liang's dissatisfaction that his unguarded comments about China's reliance on Nvidia chips and the nation's AI shortcomings compared to the United States had been disclosed without his consent.

      The company completed its initial funding round in June, securing around $7 billion from backers like Tencent, battery giant CATL, and China's National AI Industry Investment Fund. That round valued the Hangzhou startup between $50 billion and $52 billion, positioning it among the top AI companies globally. DeepSeek is also working on developing its own AI chip to lessen its dependency on Nvidia hardware, which faces US export regulations limiting Chinese access to the latest processors.

      Liang's leaked remarks raised sensitive issues for a Chinese AI firm. He reportedly informed investors that China still lags behind the US in AI advancements, and that DeepSeek continues to rely on Nvidia's chips despite the export limitations. Once these comments became public, they sparked widespread attention on Weibo and other platforms, placing the company in a difficult position amid Beijing’s narrative promoting the rapid progress of Chinese AI companies in closing the gap with their American counterparts.

      Despite the funding setback, DeepSeek seems to be gearing up for a public offering, with potential plans to file for an initial public offering as early as this year, according to sources close to the situation. Liang, who Bloomberg estimates has a net worth of $36 billion, is considered the wealthiest AI model creator globally, surpassing Anthropic co-founder Dario Amodei and former OpenAI president Greg Brockman. DeepSeek is owned by Zhejiang High-Flyer Asset Management, the hedge fund Liang established before moving into AI research.

      The company has indicated a preference for aggressive pricing and open-source development rather than immediate revenue generation, a strategy that has attracted a substantial developer community but raised concerns about its long-term financial sustainability. Liang has committed to the ongoing development of open-source AI models, a stance that sets DeepSeek apart from most Western competitors but creates challenges for capital raising at a $71 billion valuation. Whether this funding pause is merely a temporary setback or indicative of deeper conflicts between DeepSeek's research goals and investor expectations will depend on how swiftly the controversy dissipates.

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DeepSeek halts its fundraising efforts following the viral spread of leaked comments from the founder.

DeepSeek halted its second funding round following viral posts that showed founder Liang Wenfeng talking about the dependence on Nvidia chips and the gap in AI development in China.