DeepSeek became China's national AI champion and garnered global fame early last year, when its V3 and R1 models drew widespread praise in Silicon Valley and challenged U.S. assumptions ​about China's AI capabilities.

The funding round marks a reversal of DeepSeek's years-long strategy of not seeking outside capital, a policy enabled by founder Liang Wenfeng's quant hedge fund High-Flyer.

But the fast-moving AI industry has expanded beyond the low-cost, open-source chatbot models that powered DeepSeek's breakthrough. Instead the focus is now on AI agents that can perform more complex tasks with less human intervention than chatbots, while requiring significantly more computing power.

DeepSeek said in April that its next-generation, agent-focused V4 model redefined the ‌state-of-the-art for open-source models, but third-party evaluations suggest it ⁠lags the best models from some U.S. and Chinese competitors.

The funding round ranks among China's largest private tech fundraisings. Even so, it pales in comparison to the $65 billion raised by Anthropic last month and the $122 billion raised by OpenAI in ⁠March - both of which benefit from massive fluid Western capital markets.

DeepSeek faces geopolitical constraints that confine its fundraising largely to China and also dictate its corporate and hardware strategies, said Alfredo Montufar-Helu, a Beijing-based managing director at Ankura China Advisors.

"Western export bans mean DeepSeek cannot access frontier American silicon. Without the ability to buy that hardware, they ​have ​no reason to match the multi-billion-dollar computing budgets of their U.S. rivals," he added.

TENCENT, CATL ​SET TO BE BIGGEST EXTERNAL INVESTORS

Founder Liang has committed 20 ‌billion yuan of his own money in this funding round, the people said. They added that tech conglomerate Tencent is considering 10 billion yuan and battery giant CATL is looking at 5 billion yuan, which would make them the largest external investors.

DeepSeek is also in final talks with China's national artificial intelligence fund, gaming developer NetEase and e-commerce giant JD.com, they said, noting that the planned number of investors was fewer than 10.