deepseek is in talks with a small group of strategic investors about a funding round that could push its valuation above us$20 billion. according to insiders, although the company’s free cash flow is not as robust as some of its competitors’, it currently has no urgent need for large-scale external financing. the primary goal of this round is to establish a clearer valuation for employees’ stock options, thereby retaining key researchers and preventing them from being poached by rivals.
over the past year, several competitors have seen their valuations rise rapidly, and deepseek has already lost some of its key researchers. for example, guo daya, one of the lead authors of the r1 paper, has joined bytedance, while wang bingxuan, a veteran member of the training team, has moved to tencent. insiders say that deepseek’s cash compensation is actually competitive, but the lack of a clear valuation puts the company at a disadvantage in the talent war. it is expected that this round will raise only a few hundred million dollars—a relatively modest amount that amounts more to a symbolic gesture than to a major fundraising effort, far below the multi-billion-dollar rounds typical in the industry. if terms cannot be agreed upon, founder liang wenfeng is also considering other options, such as share buybacks or performance-based valuations.
after deepseek unveiled its r1 model last year, it sent shockwaves around the globe. at the time, liang wenfeng still declined outside investment, choosing instead to fund the company using capital from his own quantitative trading firm. however, deepseek’s lack of a clear business model may limit its appeal to traditional financial institutions; moreover, strategic investors typically seek synergies with the business, yet liang wenfeng is reluctant to disclose any information beyond basic financial data. those familiar with the negotiations believe the most sensible approach would be to bring on board a cloud-service partner with strong computing capabilities, or a state-backed fund that does not face pressure to deliver short-term results. despite some attrition, most employees continue to support liang wenfeng’s idealistic vision—a flexible work environment and a flat organizational structure that are hard to replicate elsewhere. an insider remarked: “if valuation certainty improves, deepseek can keep doing what it does best: staying undisturbed by external noise and pursuing the ultimate goal of artificial intelligence.”
