Chinese AI lab DeepSeek has just closed its first-ever external funding round. It raised roughly $7.4 billion, making it China's most valuable artificial intelligence startup. Investors valued the company at more than $50 billion. More interesting than the amount itself, however, is how the entire deal was structured.
The founder who refuses to relinquish control
Who put the most money into the company? Not a major fund or a technology giant. It was founder Liang Wenfeng himself, who invested around $3 billion in the round. That makes him by far the largest investor. Before the funding round, Liang held nearly 90 percent of DeepSeek. And he did everything he could to maintain his position.
Most external investors did not invest directly in DeepSeek. Instead, they channeled their money into a limited partnership controlled by Liang. This allowed the founder to retain control over the company's direction even as he brought in outside capital. He also added another condition. Investors must hold on to their stakes for five years and receive no voting rights. In other words, money is welcome, but influence over decision-making is not.
The only exception? China's National Artificial Intelligence Industry Investment Fund, a government-backed fund established last year. It invested roughly $150 million directly in DeepSeek and was the only investor to retain voting rights and remain exempt from the five-year lockup period. It had originally considered leading the entire round. In the end, it significantly scaled back its participation.
The company that took Silicon Valley by surprise last year
It is worth recalling where DeepSeek came from. It rose to global prominence early last year, when its V3 and R1 models won acclaim in Silicon Valley and challenged American assumptions about how far China had advanced in artificial intelligence.
DeepSeek unveiled a model that matched much more expensive Western systems at a fraction of the training cost. The result briefly rattled US technology stocks and changed thinking about how much computing power a cutting-edge model actually needs. Until then, the company had been virtually unknown outside a small circle of experts.
DeepSeek has since become something of a national champion. Beijing considers it important, the company's talented employees are subject to travel restrictions, and its technical achievements are viewed by the Chinese as a matter of national pride. A funding round centered on the founder and a handful of major domestic companies therefore also comes across as a strategic gesture.
Sources: theinformation.com and thenextweb.com
