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AI Giant DeepSeek Avoids VC Funding – For Now

AI Giant DeepSeek Avoids VC Funding - For Now AI Giant DeepSeek Avoids VC Funding - For Now
IMAGE CREDITS: BLOOMBERG

DeepSeek, one of the most talked-about AI startups in the world, has yet to take outside investment. Despite growing interest from venture capitalists, founder Liang Wenfeng remains firm in his decision to keep the company self-funded, The Wall Street Journal reported Monday.

The Chinese AI company shook up Silicon Valley earlier this year with its latest model, positioning itself as a major competitor in the AI space. Unlike other AI startups that frequently secure billion-dollar funding rounds, DeepSeek has not announced any external fundraising efforts, despite intense investor interest.

The secrecy surrounding DeepSeek’s financial backers has even sparked unfounded stock rallies in some Chinese companies, based on speculation alone.

Liang Wenfeng’s Reluctance to Cede Control

An analysis of Chinese corporate records by TechCrunch reveals that Liang owns 84% of DeepSeek, while the remainder belongs to individuals connected to his hedge fund, High-Flyer.

This structure makes DeepSeek vastly different from most startups, which typically rely on external investors and, as a result, must accommodate outside influence. However, Liang has historically clashed with VCs, criticizing their focus on monetization over AI research in a 2023 interview.

According to The Wall Street Journal, the main reason Liang is rejecting investors is control—he wants to maintain full autonomy over DeepSeek’s direction.

How DeepSeek Has Avoided Outside Funding

Most startups rely on outside capital from the outset, but DeepSeek has taken a different path.

Instead of VC funding, Liang has financed DeepSeek using profits from High-Flyer, reducing his dependence on external investors.

Money has never been the problem for us; bans on shipments of advanced chips are the problem,” Liang said in 2023, pointing to U.S. export restrictions as the biggest challenge to DeepSeek’s AI development.

As a Chinese AI company, DeepSeek operates under strict domestic laws that grant the Chinese government broad access to data.

These concerns have led to DeepSeek bans in multiple countries, as governments and private companies grow wary of potential national security risks.

If DeepSeek were to accept funding from a Chinese state-affiliated investor, it could further escalate global concerns. The U.S. has previously sanctioned Chinese tech giants, such as Huawei and DJI, over allegations of ties to Beijing.

Despite this, Chinese state entities have approached DeepSeek for investment, The Information reported, though there is no evidence that DeepSeek has accepted any offers.

Liang’s firm stance against outside capital may not last forever.

  • Monetization Shift: Earlier this month, DeepSeek announced its first-ever profit margin, signaling a shift toward commercialization—a factor that could appeal to investors.
  • Chip Shortages: Liang has acknowledged that AI chip shortages remain a major bottleneck. With U.S. restrictions limiting China’s access to advanced chips, DeepSeek may need funding to secure alternative supply chains.
  • Hedge Fund Challenges: High-Flyer, which has sustained DeepSeek until now, has faced underperformance since 2022, according to The Wall Street Journal. Additionally, the Chinese government has been cracking down on quant funds like High-Flyer since 2024.

Tech Giants Eye DeepSeek

Major Chinese firms, including Tencent and Alibaba, have already expressed interest in DeepSeek, according to multiple reports.

If DeepSeek struggles to remain self-sufficient, Liang may have no choice but to reconsider external funding—especially as competition in AI development intensifies.

As of now, DeepSeek has not responded to requests for comment.

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