DeepSeek Set to Raise $7 Billion in First Funding Round from Tencent and Others
Chinese AI startup DeepSeek is preparing to raise approximately $7 billion in its first-ever external funding round, according to multiple sources familiar with the matter. The Hangzhou-based company, which stunned the AI world in early 2025 with its cost-efficient reasoning models that rivaled OpenAI and Google at a fraction of the training cost, has so far been entirely self-funded through its parent hedge fund High-Flyer.
The funding round is expected to be led by Tencent, with participation from several state-backed investment funds and sovereign wealth entities. The $7 billion figure would value DeepSeek at roughly $50–60 billion, making it one of China's most valuable private AI companies overnight. The capital infusion is aimed at scaling compute infrastructure, expanding research headcount, and accelerating international deployment of DeepSeek's models.
From Bootstrapped Research Lab to AI Powerhouse
DeepSeek's trajectory has been unusual. Founded by Liang Wenfeng in 2023 as a side project within quantitative hedge fund High-Flyer, the lab operated with no outside capital. Its breakthrough came with DeepSeek-R1 in January 2025 — a reasoning model that achieved GPT-4-class performance while training costs were reportedly under $6 million. The release sent shockwaves through Silicon Valley and triggered a temporary $600 billion wipeout in Nvidia's market cap.
Since then, DeepSeek has released increasingly capable models including DeepSeek-V3 and a multimodal variant. The company has also open-sourced most of its model weights and training methodologies, building a massive developer following that now rivals Meta's Llama ecosystem. The decision to finally accept external capital signals ambitions that go well beyond research.
What the $7 Billion Will Fund
According to people briefed on the plans, the bulk of the new funding will go toward GPU clusters and custom silicon. Despite U.S. export controls, DeepSeek has managed to build substantial compute capacity using a combination of legally acquired chips and innovative software optimizations. The company is also reportedly exploring its own AI chip design in partnership with Chinese semiconductor firms.
Tencent's lead role in the round is strategic: the tech giant runs WeChat, China's dominant messaging platform with over 1.3 billion users, and is eager to integrate DeepSeek's reasoning capabilities across its product ecosystem. Other investors are expected to include entities linked to China's AI infrastructure push, which Beijing has designated a national priority.
"DeepSeek has demonstrated that world-class AI doesn't require Silicon Valley's billions. Now they're proving the reverse — that with billions, they can compete at a completely different scale." — Industry analyst, speaking on condition of anonymity
The funding round is expected to close by Q3 2026. DeepSeek has not yet publicly commented on the fundraising plans.
Source: The Information, Bloomberg, Reuters reports based on sources familiar with the matter.