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DeepSeek, a Chinese AI startup that previously declined multiple funding offers, is now reportedly seeking external investment for the first time. Industry insiders suggest the move is likely motivated by a desire to retain key talent amid growing industry competition.
This shift in funding strategy appears to be aimed at establishing a market-based valuation and providing liquidity for employee stock options. However, sources indicate that the timing may be too late to be effective, and the terms of such funding could be highly restrictive, making it unattractive to many investors.
On April 17, a report revealed that the company plans to raise at least $300 million at a valuation exceeding $10 billion. This marks a significant departure from its long-standing stance of rejecting outside capital and emphasizing independence.
What sets DeepSeek apart is that its employee stock options are tied entirely to internal valuations due to its consistent refusal to seek external funding. Industry insiders say that until outside institutions confirm a valuation with actual capital, the company’s paper wealth remains illiquid and less attractive to top talent.
The competition for AI professionals is fierce. DeepSeek’s core R&D team has become a prime target for headhunters from major tech companies and unicorn startups. While the company offers competitive salaries, rivals are reportedly offering packages that can be double or more.
Several key team members have already left the company, including Luo Fuli, a prominent contributor to the DeepSeek-V2 architecture, who joined Xiaomi last November; Guo Daya, reportedly recently moved to ByteDance’s Seed; and Ruan Chong, a former multimodal researcher, who joined DeepRoute.ai, a provider of smart driving solutions. Rumors also suggest Wei Haoran, a principal author of the DeepSeek-OCR series, may be heading to a major tech firm.
Industry insiders believe the funding strategy change also aims to introduce market-based pricing for stock options and address immediate financial needs. Funding from outside sources could expand computational resources for developing new models and allow the company to offer more competitive salaries to retain top talent. It is believed that potential investors would mostly include Chinese yuan funds, as US venture capital firms might be hesitant.
One AI entrepreneur mentioned that “Founder Liang Wenfeng can’t keep subsidizing DeepSeek from High-Flyer forever. Splitting off and raising capital independently based on a market valuation is a more rational business approach.”
The company has not issued an official comment on the matter yet. Earlier this year, it swiftly denied rumors that Alibaba Group Holdings was considering investing in the company.
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