DeepSeek eyes outside funding, draws interest from Alibaba and Chinese state funds

Beijing, February 19, 2025 – Chinese AI startup DeepSeek is considering its first-ever outside funding round, attracting interest from major investors including Alibaba and leading state funds, according to sources cited by The Information.

DeepSeek, which stunned the tech industry in January with its low-cost AI models capable of matching or even outperforming Western rivals, is now under pressure as a surge in demand has led to outages. The growing need for additional AI chips and servers to support rapid usage and further model development has prompted the small startup to explore external capital.

Sources with knowledge of internal discussions revealed that state-backed investors such as China Investment Corp and the National Social Security Fund have reached out to DeepSeek regarding potential investment. While Alibaba and DeepSeek have not immediately responded to requests for comment, these moves signal a broader interest in supporting cutting-edge AI technologies amid intensifying global competition.

Executives at DeepSeek, along with its hedge fund parent, High-Flyer Capital Management, are reportedly discussing a strategic pivot toward building a business model that generates sustainable revenue and, ultimately, profit from research. This development comes at a time when rival OpenAI is planning to restructure its for-profit arm into a public benefit corporation to ease restrictions imposed by its current non-profit parent, thereby increasing its investment appeal.

The timing of DeepSeek’s funding considerations coincides with recent efforts by China to bolster its technological capabilities. Chinese President Xi Jinping recently met with private sector leaders, including Alibaba co-founder Jack Ma and DeepSeek founder Liang Wenfeng, as part of a broader initiative to strengthen the nation’s economy and advance its innovation agenda.

As DeepSeek navigates this potential transition, industry observers will be watching closely to see how the influx of external capital might accelerate its development and help it compete on the global stage.

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