DeepSeek's First Funding Round Sparks Frenzy Among Tech Giants; Tencent and Alibaba May Join, Valuation Soars to $200 Billion

DeepSeek is seeking external funding for the first time, rapidly triggering a scramble among domestic tech giants.

According to a Wednesday report by tech media The Information, four sources familiar with the matter revealed that Tencent and Alibaba are in negotiations to invest in DeepSeek. Driven by intense market interest sparked by initial contacts, DeepSeek's target valuation has been raised from an initial minimum of $10 billion to over $20 billion, and the financing scale may also expand accordingly.

This funding round marks a significant shift from the long-standing stance of DeepSeek founder Liang Wenfeng, who had insisted on not introducing external capital. With AI model training costs continuing to rise, the competitive landscape becoming increasingly fierce, and delays facing the development of its flagship new model, this startup, which transformed from an AI laboratory under the private equity firm High-Flyer Quantum, urgently needs "ammunition" to bolster its computing power reserves and retain core talent.

Valuation Benchmarks and Market Pricing Controversy

The report states that, according to a source directly familiar with the situation, DeepSeek is using Kimi as a partial valuation benchmark—the latter is completing a new round of financing at an $18 billion valuation.

Other data suggests DeepSeek's actual value could be even higher. MiniMax and Zhipu, both competitors in the same track as DeepSeek, went public in Hong Kong in January this year, with valuations then under $10 billion each; however, as of now, Zhipu's market cap has surpassed $50 billion, and MiniMax exceeds $30 billion.

Nevertheless, sources indicated that since DeepSeek has long resembled an AI lab dedicated to open-source technology rather than a profit-driven commercial company, its reasonable valuation has sparked widespread discussion within China's tech and venture capital circles.

Unlike MiniMax and Zhipu, DeepSeek has yet to generate substantial revenue; all its models are open-source, and its consumer-facing chatbot is free to use. Negotiations are ongoing, leaving final valuation and financing scale uncertain.

Strategic Moves by Domestic Giants

Tencent and Alibaba's decision to enter the fray reflects clear strategic considerations.

Both companies have previously invested in several leading Chinese AI startups, including Zhipu, MiniMax, and Moonshot AI. Investing in DeepSeek would not only hedge risks while both parties continue advancing their proprietary AI models but also open a direct channel for deeper collaboration with DeepSeek.

DeepSeek's R1 model stunned the global community early last year by achieving performance levels comparable to top U.S. systems at a significantly lower training cost. At that time, Tencent, Alibaba, and ByteDance all integrated the R1 model into their existing products. Among them, Tencent has lagged relatively behind in independent research and development of frontier foundational models, making the investment in DeepSeek particularly strategically significant for the company.

Competitive Pressure and Technical Challenges

DeepSeek's pursuit of external funding reflects how drastically its competitive environment has changed.

The iteration speed of AI models has accelerated, training and operational costs have risen sharply, and the squeeze on startups by well-funded tech giants in both China and the United States continues to intensify. In recent months, some of DeepSeek's core researchers have moved to domestic giants. Luo Fuli, for instance, has officially joined Xiaomi to lead the MiMo team.

On the product development front, DeepSeek originally planned to launch its next-generation flagship model V4 in February this year, but this timeline has been delayed multiple times due to engineering challenges.

The injection of external capital will directly provide DeepSeek with the financial reserves needed to procure computing power and stabilize its talent workforce.