DeepSeek suspends second funding round after Liang Wenfeng's viral comments on AI rivalry

DeepSeek Halts Second Fundraising Round Amid Founder's Frustration

DeepSeek has suspended its second fundraising round just weeks after closing a record $7 billion first financing deal, with founder Liang Wenfeng reportedly frustrated over viral posts attributed to him discussing US-China AI competition 1

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. The Chinese AI startup verbally informed prospective investors that they would not be signing investment agreements as expected, though the company might resume the deal process at a later date [2](https://fortune.com/2026/07/25/deepseek-liang-wenfeng-backers-fundraising-pause-viral- ακόμα/)4

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. The funding pause stems in part from Liang Wenfeng's reaction to online reports about his comments made during an investor meeting for the first financing deal, which closed in June 2

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Viral Posts Spark Controversy Over Unverified Transcript

The viral posts in question concerned an unverified transcript of a meeting Liang held with unidentified parties, where he allegedly discussed China's reliance on Nvidia chips for AI development and China's lag in AI sophistication relative to the U.S. 3

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. According to unverified transcripts, Liang told investors that the US-China gap in AI development mainly rests in resources and funding, while talent gaps are minimal 3

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. The comments were reportedly more hedged and careful about China's rise as an AI superpower than typical Chinese AI talk, sounding closer to U.S. conventional wisdom 1

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. The transcript was allegedly posted by a Tencent-owned news publication but has since become a dead link, with an English version purportedly surviving as an unauthenticated PDF on Github 1

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Second Fundraising Round Targets Higher Valuation

DeepSeek was aiming to raise at least 10 billion yuan of additional funds in the follow-on deal, with the final amount potentially going higher depending on investor participation 2

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. The startup had been targeting a pre-money valuation of at least 480 billion yuan, representing an increase from the roughly $50 billion price tag DeepSeek drew in its first round 2

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. The talks for this second fundraising round kicked off mere weeks after DeepSeek closed its record first financing, which secured backing from major players including Tencent Holdings and Contemporary Amperex Technology 2

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. Tencent reportedly pitched in around $1.5 billion, while battery giant Contemporary Amperex invested approximately $735 million into the startup 3

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IPO Plans Remain on Track Despite Funding Pause

Despite the funding pause, DeepSeek has begun preparations for an initial public offering and may file as soon as this year, setting the stage for what could be a landmark debut for China's technology industry 2

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. The company is also reportedly looking to double the size of all its departments in a push to compete with both domestic rivals and global leaders in the space 3

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. Founded in 2023, the Chinese AI startup is owned by hedge fund Zhejiang High-Flyer Asset Management and has drawn enormous interest from would-be investors because it sits at the heart of China's effort to compete globally on AI 2

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Cost-Effective Models Challenge Silicon Valley Giants

DeepSeek sent shockwaves through the AI world when it debuted an AI model that offered AI model performance comparable to those of American rivals OpenAI and Meta while using substantially fewer Nvidia chips 5

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. The breakthrough demonstrated that Chinese companies could compete with the best of Silicon Valley despite U.S. export restrictions on advanced hardware, with cost-effective models gaining a reputation for efficiency and rock-bottom prices compared to frontier models 1

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. The startup's senior management has told potential investors that DeepSeek will prioritize groundbreaking AI research over short-term commercialization, with Liang pledging to keep developing open-source AI models while pursuing the broader goal of achieving artificial general intelligence 2

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Liang Wenfeng's Rising Fortune Amid Controversy

The meteoric rise of DeepSeek has made Liang Wenfeng very rich very quickly, with his net worth more than doubling after the company's most recent fundraising round 1

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. Forbes currently rates him as the 50th richest person in the world, with a net worth of $36 billion, up from about $16.7 billion previously—well above Anthropic's Dario Amodei, who is ranked 186th 1

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. The fact that analysts like Kyle Chan of Brookings are becoming more confident the investor meeting transcript was real based on the funding pause adds another layer of intrigue to this developing story 1

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. What remains unclear is whether DeepSeek has communicated its intentions to all prospective investors in the current deal, and whether the company will address compute shortages and AI rivalry concerns that reportedly dominated the controversial investor meeting 2

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