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

DeepSeek's Normally Boring CEO Is Reportedly Spiraling After Supposed Leak

A planned funding round at Hangzhou, China-based hedge fund and unexpected AI juggernaut DeepSeek has probably been cancelled. According to a very delicately worded Bloomberg report, this comes just on the heels of the supposed leak of a long, off-the-cuff conversation with the company's reclusive founder and CEO, Liang Wenfeng, that went viral. The conversation in question would read as extremely dull to most people, but went viral for being more than a bit impolitic if you're an extremely AI-brained person. The actual viral quotes are sort of lost in the Backrooms, if you will, and can't be officially confirmed to have happened at all. They were apparently posted by a news publication owned by Chinese tech conglomerate Tencent, but there's now a dead link in older articles and blog posts about this incident. The English language version of the transcript purportedly survives as an un-authenticated PDF posted to Github, but don't blindly trust that link. So part of what makes the delay of the funding round so intriguing to DeepSeek watchers is that it's making analysts, like Kyle Chan of Brookings, more confident that the interview was real in the first place. Anyway, the reason the quotes attributed to Liang went viral -- and this is my own analysis -- seems to be that they were a little more hedged and careful about the rise of China as an AI superpower than Chinese AI talk tends to be, and sounded closer to U.S. conventional wisdom. Essentially, Liang reportedly said China's lack of compute resources and reliance on Nvidia explains the gap in model capability between the U.S. and China, and that lack of compute leads to a talent brain drain, even though Chinese talent is perfectly fine overall. However, Liang reportedly implied in the interview that Nvidia was the agent of its own downfall. Chinese companies are being forced to find workarounds, largely via Huawei, that allow them to bypass Nvidia's hardware and software ecosystem, and Liang's supposed remarks sounded confident that a breakthrough would come in a year or so -- a bit of a bold prediction, but not exactly a surprising thing for a Chinese AI CEO to say. Nonetheless, according to Bloomberg, anonymous, knowledgable people say Liang -- who is generally described as shy and nerdy -- is experiencing "frustration" due to the online reaction to what he apparently said in the leaked quotes, which according to Bloomberg were given to investors last month in the lead-up to an earlier funding round. So DeepSeek will reportedly not be signing the paperwork for its second funding round, which apparently had backers ready to go. For now. Bloomberg also writes that its anonymous informants say DeepSeek "might choose to resume the deal process at a later date." The meteoric rise of DeepSeek has made Liang very rich very quickly. Forbes currently rates him as the 50th richest person in the world, well above Anthropic's Dario Amodei, who is ranked 186. DeepSeek models have a reputation for efficiency and rock-bottom prices compared to the frontier models. The company has reportedly begun the process of making an initial public offering. The actual planned date for that IPO is reportedly sometime before the end of this year.

DeepSeek said to tell backers of funding pause after viral posts | Fortune

DeepSeek has told prospective investors in its second fundraising round that it's suspending the deal for now, people familiar with the matter said, days after comments widely attributed to founder Liang Wenfeng about US-Chinese AI competition went viral. The Chinese AI pioneer verbally informed some of its would-be backers that they wouldn't be signing investment agreements in the coming days, as they had expected, people familiar with the matter said. DeepSeek might choose to resume the deal process at a later date, the people said, asking to remain anonymous to talk about private discussions. The suspension stemmed in part from Liang's frustration over online reports about his comments to investors during his first financing deal, which closed in June and raised $7 billion for the AI lab, the people said. Bloomberg hasn't verified the authenticity of those posts, which concerned a transcript of a meeting Liang held with unidentified parties. Chinese media including Yicai reported this week that the billionaire founder talked about a reliance on Nvidia Corp. chips for AI development and China's persistent lag in AI sophistication relative to the US. Deepseek didn't immediately respond to an emailed request for comment about the transcript or the fundraising. Negotiations remain fluid and the company may still choose to proceed. It's unclear if DeepSeek has communicated its intentions to all prospective investors in the current deal. The talks kicked off mere weeks after DeepSeek closed its record first financing round, when it secured big names including Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd. DeepSeek was aiming to raise at least 10 billion yuan of additional funds in a follow-on deal, though the final amount could go higher depending on the number of investors that sign on. The startup had been targeting a pre-money valuation of at least 480 billion yuan, Bloomberg News previously reported. That's an increase from the roughly $50 billion price tag DeepSeek drew in its first round. In addition, the company 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 the country's technology industry. DeepSeek has drawn enormous interest from would-be investors because it's one of a clutch of companies that sit at the heart of China's effort to compete globally on AI. It developed a model last year that stunned the industry, demonstrating the ability to build a cutting-edge yet efficient platform with fewer computing resources. The breakthrough demonstrated that Chinese companies could compete with the best of Silicon Valley despite US export restrictions on advanced hardware. The startup is now chasing more funds to support an ambitious expansion plan, including an increase in computing capacity. AI labs around the world are striking deals to secure the data center infrastructure they need to train and operate AI services. Founded in 2023, DeepSeek is owned by hedge fund Zhejiang High-Flyer Asset Management. Its earlier fundraising set a record for first-time financing by a Chinese tech startup. Apart from Tencent and CATL, it also notably drew the backing of the National Artificial Intelligence Industry Investment Fund, one of the vehicles that spearheads Beijing's over-arching endeavors in the sector. DeepSeek's senior management has told potential investors that the startup will prioritize groundbreaking AI research over short-term commercialization, Bloomberg News has reported. Liang pledged in at least one meeting with investors to keep developing open-source AI models while pursuing the broader goal of achieving artificial general intelligence, underscoring the company's focus on advancing the frontiers of AI rather than monetization. Liang's net worth more than doubled after his firm's most recent fundraising round, making the Chinese entrepreneur the world's richest among creators of AI models. He's now worth $36 billion, up from about $16.7 billion previously, according to the Bloomberg Billionaires Index. That ranks him well above Anthropic PBC co-founder Dario Amodei and OpenAI's Greg Brockman.

DeepSeek reportedly halts funding round after Wenfeng's comments

The Chinese AI start-up is preparing to go public with plans to list as early as this year. DeepSeek has reportedly paused its second funding round after comments associated with founder and CEO Liang Wenfeng talking to investors about the US-China AI rivalry went viral. The Chinese AI start-up verbally informed some of its potential investors that the round wouldn't be going through as expected, Bloomberg reported. The company, though, could still choose to resume the round later. DeepSeek CEO Wenfeng suspended the round after reports began circulating online over comments he had allegedly made to investors during the start-up's first funding round, which raised more than $7.4bn, as per the announcement in June. DeepSeek was aiming to raise at least 10bn yuan in funds in the new deal at a pre-money valuation of at least 480bn yuan (roughly $70bn). According to unverified transcripts, Wenfeng told investors that the US-China gap in AI development mainly rests in resources and funding, and that the gap in talent is minimal. He reportedly said that DeepSeek cannot afford to train its current largest models and that the company would not consider competing with the US at this scale. Transcripts also show Wenfeng commenting on the quality and capability of Huawei's GPU compared to those from Nvidia. Talks with investors for a second funding round began weeks after DeepSeek's last raise which valued the company at more than $50bn. Tencent reportedly pitched in around $1.5bn, and battery giant Contemporary Amperex invested around $735m into the start-up. DeepSeek is preparing to go public with plans to file its initial public offering as early as this year. The company is also reportedly looking to double the size of all of its departments in a push to compete with both domestic rivals and global leaders in the space. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

DeepSeek said to have told backers of funding pause after viral posts

DeepSeek has told prospective investors in its second fundraising round that it's suspending the deal for now, people familiar with the matter said, days after comments widely attributed to founder Liang Wenfeng about U.S.-Chinese AI competition went viral. The Chinese AI pioneer verbally informed some of its would-be backers that they wouldn't be signing investment agreements in the coming days, as they had expected, people familiar with the matter said. DeepSeek might choose to resume the deal process at a later date, the people said, asking to remain anonymous to talk about private discussions. The suspension stemmed in part from Liang's frustration over online reports about his comments to investors during his first financing deal, which closed in June and raised $7 billion for the AI lab, the people said. The authenticity of those posts, which concerned a transcript of a meeting Liang held with unidentified parties, haven't been verified. Chinese media including Yicai reported this week that the billionaire founder talked about a reliance on Nvidia chips for AI development and China's persistent lag in AI sophistication relative to the U.S.. DeepSeek didn't immediately respond to an emailed request for comment about the transcript or the fundraising.

DeepSeek Reportedly Suspends Funding Round Ahead of IPO | PYMNTS.com

That's according to a report Saturday (July 25) from Bloomberg News, which says the decision comes days after viral comments on American-Chinese AI competition, widely attributed to the company's founder. Sources familiar with the matter told Bloomberg that DeepSeek had told some would-be investors they would not be signing investment agreements as planned. According to the report, the sources said the suspension was related in part to founder Liang Wenfeng's frustration over online reports about his comments to investors during the company's first funding deal, which raised $7 billion. The report in question, which Bloomberg said it had not verified, dealt with a transcript of a meeting Liang held with unidentified parties, in which he discussed a reliance on Nvidia chips for AI development and China's ongoing lag in AI sophistication compared to the U.S. DeepSeek, the report added, was targeting a raise of at least 10 billion yuan ($1.4 billion) in new funding in the second round, and had been targeting a pre-money valuation of at least 480 billion yuan, or $70.8 billion. The first round valued DeepSeek at $50 billion. DeepSeek sent shockwaves through the AI world early last year when it debuted an AI model that offered performance comparable to those of American rivals OpenAI and Meta while using substantially fewer Nvidia chips. The company is also preparing for an initial public offering (IPO) that could come as soon as this year, the report added. In other AI news, PYMNTS wrote last week about new research showing that weak AI regulation can lead to worse safety outcomes than no regulation at all. The research, published in the Proceedings of the National Academy of Sciences by researchers from Cornell University and Carnegie Mellon University, found poorly targeted or insufficiently rigid regulation can incentivize companies to lower their own safety investments and move responsibility to others. When downstream companies are expected to make sure that their applications adhere to regulatory standards, general-purpose model creators could potentially "free ride" on those investments by scaling back measures like third-party safety audits, the report said. "There's a free-riding behavior that occurs," principal author Benjamin Laufer said. "The regulation acts as a tool for the general provider to offload the safety burden onto the downstream specialist."

DeepSeek halts follow-on funding weeks after record $7 bln round - report By Investing.com

Investing.com - Chinese artificial intelligence startup DeepSeek has temporarily suspended a secondary fundraising round expected to raise at least 10 billion yuan ($1.4 billion), Bloomberg News reported on Saturday, citing people familiar with the matter. The decision to pause negotiations follows frustration by founder Liang Wenfeng over leaked reports regarding his previous comments on U.S.-China technology competition, Bloomberg reported. DeepSeek verbally informed prospective backers that expected investment agreements would not be signed in the coming days, though the company may resume the process later.