DeepSeek: China's AI Startup Prioritizes Research Over Revenue, Challenging Silicon Valley Norms

Deepseek 'clearly not interested' in scaling up -- 160-person team focused on developing new models

China-based AI company Deepseek is reportedly focusing on development and research, instead of chasing revenue, unlike many of its western AI rivals like OpenAI, Google and Anthropic. According to the Financial Times, the Hangzhou-based company is focused on developing two new models, R2 and V4, with the intention to hit their goal of achieving Artificial General Intelligence (AGI). Deepseek garnered significant attention in January 2025, triggering a stock market shakeup that resulted in Nvidia losing $589 billion in market cap in a single day, following the launch of Deepseek R1. Despite the newfound attention, the billionaire founder and CEO of Deepseek, Liang Wenfeng, is allegedly taking a different approach when compared to the company's western competitors. Speaking to the Financial Times, sources close to Deepseek said that there is "little intention to capitalize on Deepseek's sudden fame to commercialize its technology in the near term". Instead, the company is instead focusing on "model development" and developing towards AGI. Deepseek's revenues are also reported to be covering ongoing costs, likely thanks to interest garnered thanks to the release of the Deepseek R1 model in January. Wenfeng is also notoriously difficult to contact, with the Deepseek CEO outright declining interest in any further investment from "venture and state-backed funds", the report continues. But, Wenfeng clearly has enough resources to fund further development. He's also the founder of one of China's leading hedge-funds, High Flyer. According to sources speaking to the Financial Times, he purchased 10,000 Nvidia H800 GPUs, and 10,000 A100s. Though, the chips were purchased before they were banned for sale in China. Deepseek has already incurred over $1.6 billion in hardware costs, and has total fleet of over 50,000 Nvidia GPUs. However, the company might find it difficult to access more advanced Nvidia chips in the future, and could "consider future partnerships" to resolve the issue. In late February, a Singapore-based smuggling ring was busted for alleged illegal re-export of high-performance GPUs, destined for Deepseek, bypassing trade restrictions. It's also alleged that if Deepseek's future demand exceeds their current data center capacity, that the company will rely on "third-party providers", instead of procuring more for themselves. The Chinese government has also thrown support behind Deepseek, with the company gaining access to state-funded datacenters. Deepseek has also invested over $500 million into its technology, and will remain self-funded. "They clearly are not interested in scaling up right now. It's a rare situation where the founder is wealthy and committed enough to keep it lean in a Navy Seal-style for his pursuit of AGI", one industry insider told the Financial Times. Deepseek has "about 160" employees, which is significantly fewer than OpenAI's gargantuan headcount of around 2000 employees (as of December 2024), according to sources speaking to the Financial Times. This makes the company much leaner than many of its rivals. The team is focused on development of the next-generation R2 and V4 models, which are currently slated for release in May. However development "may be accelerated to keep its momentum going" according to Financial Times sources. With Deepseek's next move just a short few months away, another Chinese AI company named Manus AI, which is developing autonomous AI agents, has enjoyed heightened interest. But, it has yet to come within spitting distance of the impact that Deepseek has had on the AI industry. Whether Deepseek's next release can trigger another shock moment for stock markets is also yet to be seen, as the company hones in its focuses on rapid development of advanced AI technologies.

DeepSeek focuses on research over revenue in contrast to Silicon Valley

Chinese artificial intelligence start-up DeepSeek is choosing to focus on research over chasing revenues, as its billionaire founder decides not to follow Silicon Valley rivals by taking advantage of a sudden jump in sales. The Hangzhou-based company, led by hedge fund billionaire Liang Wenfeng, has seen a surge for its services through its free website and app, but also from paid business clients. Last month, revenues were enough to cover ongoing costs for the first time, according to two people with knowledge of its development. Interest in DeepSeek has grown since January after the release of its low-cost R1 reasoning model which has comparable performance to US and Chinese competitors but built on a much smaller budget. Customers, mainly from sectors such as healthcare and finance, bought application programming interface, or API, access to DeepSeek's R1 and V3 models, with demand so strong that the start-up had to suspend such services temporarily due to lack of resources it allocated to non-research purposes, according to the people. Industry insiders said Liang has shown little intention to capitalise on DeepSeek's sudden fame to further commercialise its technology in the near term. The company is instead focusing the majority of its resources on model development and the quest to build artificial general intelligence -- machines with humanlike cognitive capabilities. These people added the independently wealthy founder has also declined to entertain interest from China's tech giants as well as venture and state-backed funds to invest in the group for the time being. Many have found it difficult to even arrange a meeting with the secluded founder. "We pulled top-level government connections and only got to sit down with someone from their finance department, who said 'sorry we are not raising'," said one investor at a multibillion-dollar Chinese tech fund. "They clearly are not interested in scaling up right now. It's a rare situation where the founder is wealthy and committed enough to keep it lean in a Navy Seal-style for his pursuit of AGI." DeepSeek's emergence upset markets over doubts whether US tech groups such as Google and OpenAI could maintain their technical edge, as well as the wisdom of huge AI infrastructure spending plans of Big Tech groups. Its approach is also in significant contrast to many Silicon Valley start-ups. OpenAI has taken advantage of its early lead in AI model development to build a formidable consumer business around ChatGPT, generating significant revenues from selling its API. The San Francisco-based company has raised around $20bn in multiple rounds of financing since 2019, and is in talks with investors led by SoftBank to raise $40bn more at a valuation of $260bn. The company burned $5bn last year, much of that on training new models, and made about $4bn of revenue. It charges both corporate customers and individual consumers who use its various closed models. DeepSeek currently has about 160 employees, according to a person familiar with the matter. OpenAI has just over 2,000. "DeepSeek has been super focused from the beginning on the direction it's going," said Yusen Dai, a partner at venture capital Zhen Fund, who has invested in several Chinese AI start-ups. "It didn't even have any consumer product until the launch of R1 [the company's reasoning large language model]" said Dai in a Chinese podcast this week. DeepSeek's lack of commercial ambition has helped tech companies such as Alibaba and Tencent to win over corporate clients in China with their more mature infrastructure and services, raising questions about whether the start-up's revenue streams are sustainable. Apple, for example, chose Alibaba's Qwen over DeepSeek to roll out AI functions on its iPhones in China later this year. Tencent saw its API sales multiply after it started to embrace DeepSeek's open-sourced models, according to another person with direct knowledge of the matter. About half of its cloud clients, mainly from government and finance, have tried to use DeepSeek's models and 20 per cent of them are requesting to customise their localised versions with Tencent's support, they added. DeepSeek's lack of focus on promoting its own mass-market product like OpenAI's ChatGPT contributed to Tencent's decision to embrace the start-up's models, not only on its cloud platform but also on its popular consumer-facing applications, according to the person. Tencent declined to comment. Liang, a billionaire who founded one of China's leading quants funds High Flyer, bought about 10,000 H800 and 10,000 A100 chips in the past few years, according to a person with knowledge of the matter. Both are Nvidia's watered-down version of its bestselling AI chips and designed to meet US export controls on sales to China. Liang obtained the H800 chips before they were later banned for China. Nvidia declined to comment. DeepSeek will rely mainly on third-party providers for future demand exceeding their existing capacity, said the person with knowledge of the plans. DeepSeek has won support from Beijing, where the government is counting on AI to spur growth in its slowing economy. The start up has gained access to state-funded data centres, easing its computing constraints. In the long run, DeepSeek may find limited access to Nvidia's new generation of more advanced chips a potential bottleneck and consider future partnerships that can help solve this issue, according to industry insiders. It may also have to be open to state-backed funds at some point, to win further political support, they said. Engineers at the start-up are working full steam towards the release of their R2 and V4 models, which was initially scheduled for May but may be accelerated to keep its momentum going, said a person with knowledge of the move. "We are at the early stage of a revolution where the technology improvement curve is steep," said Zhen Fund's Dai. He added that companies should focus on breakthroughs instead of monetisation because "a high school student can't make much money, while if you train him to become PhD, he can make a lot more." DeepSeek did not respond to requests for comment.

DeepSeek to focus on research over revenue in contrast to Silicon Valley, FT reports

March 13 (Reuters) - Chinese AI chatbot DeepSeek is choosing to focus on research over revenue, as its billionaire founder has decided not to follow Silicon Valley rivals by taking advantage of a sudden jump in sales, the Financial Times reported on Thursday. Last month, revenues were enough to cover ongoing costs for the first time, the report said, citing two people with knowledge of its development. Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

DeepSeek AI cranks open the spigots on Chinese venture capital

BEIJING -- DeepSeek's artificial intelligence breakthrough is stirring up China's venture capital world after three straight years of decline. As DeepSeek released its OpenAI rival in late January, AI drug discovery company Insilico Medicine was finalizing a $110 million series E financing round led by Hong Kong-based Value Partners, the startup's CEO and founder Alex Zhavoronkov told CNBC in an exclusive interview. The deal closed last month. But so many Chinese funds wanted to participate at the last minute -- "like an avalanche" -- that Insilico is planning a series "E2" raise, Zhavoronkov said. "We have never seen this level of interest before." Qiming Ventures-backed Insilico uses AI from DeepSeek and other companies to create models for developing drugs. Ten of the startup's drugs have already received approval for clinical tests, according to Insilico, which lists research labs in China, the U.S. and the Middle East. Zhavoronkov added that during his U.S. travels in the last few weeks, many U.S. and other global investors have asked him about ways to invest in Chinese AI companies. "It looks like the DeepSeek moment, it created a lot of interest from global investors to invest in China," he said Monday. "I think the funding is going to come back."

DeepSeek's founder isn't interested in investors for now

Artificial intelligence startup DeepSeek rattled the industry earlier this year -- but its founder is reportedly not interested in bringing in outside capital just yet. DeepSeek's founder Liang Wenfeng isn't rushing to find investors who would interfere with his control and the company's decisions, the Wall Street Journal (NWSA-0.91%) reported, citing unnamed people familiar with the matter. Liang reportedly also is wary of stakeholders involved with the government due to fears that it could hamper DeepSeek's global efforts. Since its AI models sent shockwaves through Silicon Valley and Wall Street in January, DeepSeek has received interest from China's tech giants, including Tencent (TCEHY+1.94%) and Alibaba (BABA+4.08%), over potential collaborations, according to the Wall Street Journal. The company has also reportedly been offered a low-interest loan from the state-owned Bank of China (BACHY+0.76%). After DeepSeek released results in January demonstrating that its open-source reasoning models, DeepSeek-R1, can perform comparably to those from OpenAI on several industry benchmarks, it sparked a global sell-off of tech stocks. In December, the company released its DeepSeek-V3 models, which it said cost just $5.6 million to train and develop on Nvidia (NVDA+1.56%) H800 chips -- a reduced-capability version of the more powerful chips that U.S. firms have touted spending tens of billions of dollars on. Amid the hype over R1, the mobile app for DeepSeek's AI chatbot, also called DeepSeek, surged to the top of Apple's (AAPL-2.88%) App Store downloads. The DeepSeek site experienced outages due to the influx of new users, and the company had to issue a temporary limit on registrations after "large-scale malicious attacks." Since then, DeepSeek has continued to experience service outages from an overabundance of users, and has come under scrutiny by the U.S. and other countries over data security risks. Last month, DeepSeek published its techniques for training its AI models with the H800 chips, and is planning an April release for its next reasoning model, the Wall Street Journal reported. DeepSeek's AI models are currently mostly available for free. Before its success, DeepSeek had sought venture capital funding, but was turned down, the Wall Street Journal reported. Now, the company is reportedly looking to work with larger tech firms to develop commercial AI applications.

Why DeepSeek's CEO is turning down millions in funding

DeepSeek's founder Liang Wenfeng is delaying outside investment as the AI startup navigates its rapid growth and the complexities of funding, according to a Wall Street Journal report. Liang Wenfeng maintains 84% ownership of DeepSeek, with the remaining shares held by individuals tied to his hedge fund, High-Flyer, making it a largely self-funded operation. Unlike many startups dependent on outside capital and investor influence, Liang's strong control over the company limits external pressure. Previously, Liang expressed discomfort with venture capitalists' focus on quick monetization, which contrasts with his commitment to fundamental research in AI. In a 2023 interview with Chinese media, he stated, "I don't want to share control of my company," highlighting his reluctance to engage with investors pushing for rapid returns. DeepSeek has successfully funded its initiatives through profits generated by High-Flyer, alleviating financial constraints. Liang emphasized the importance of technological limitations rather than funding, stating, "Money has never been the problem for us; bans on shipments of advanced chips are the problem," underscoring the challenges posed by U.S. export controls. As a Chinese company, DeepSeek faces increasing scrutiny due to data privacy concerns, resulting in bans from several governments and companies. Accepting funding from Chinese investors could exacerbate these issues, as such investors may share similar worries regarding government access to data. The U.S. government has historically sanctioned Chinese tech firms perceived as closely aligned with Beijing, exemplified by actions against Huawei and DJI. While state entities have approached DeepSeek for potential investment, there is no indication that these offers have been accepted. DeepSeek rocked the market once and here's why it could happen again Despite Liang's current stance, circumstances may evolve. Recently, DeepSeek reported a profit margin, marking its first indication of moving towards monetization, an area typically favored by investors. Moreover, to remain competitive with other leading AI developers, DeepSeek may require more advanced AI chips, which are heavily restricted in China. DeepSeek may also be facing diminishing self-sustainability as High-Flyer's performance has declined, with several of its flagship funds underperforming since 2022. Additionally, the Chinese government has tightened regulations on quantitative funds like High-Flyer since 2024. Reports indicate interest from major tech players like Tencent and Alibaba, although Liang's focus remains on maintaining a science project ethos rather than pursuing immediate financial gains. DeepSeek's chatbot has attracted millions of users but often experiences service interruptions. This high usage has led the company to offer discounts during off-peak hours to alleviate server strain. Some major Chinese tech firms are testing DeepSeek's capabilities to enhance their platforms without direct cost, using the free code provided by DeepSeek. Liang has approached various venture capital firms, including international entities, but has faced challenges in securing investment, primarily due to concerns over the lack of a clear monetization strategy. Despite this, increasing interest remains, yet Liang continues to prioritize a long-term vision, stating, "We don't do applications, we just do research and exploration," reinforcing his desire to uphold the foundational integrity of DeepSeek's operations.

DeepSeek to focus on research over revenue in contrast to Silicon Valley: Reports

Chinese AI chatbot DeepSeek is prioritising research over profits, despite a recent revenue surge. Its billionaire founder is resisting the Silicon Valley trend of capitalising on booming sales. For the first time last month, revenue covered ongoing costs, insiders told the Financial Times, highlighting a long-term commitment to innovation over earnings.Chinese AI chatbot DeepSeek is choosing to focus on research over revenue, as its billionaire founder has decided not to follow Silicon Valley rivals by taking advantage of a sudden jump in sales, the Financial Times reported on Thursday. Last month, revenues were enough to cover ongoing costs for the first time, the report said, citing two people with knowledge of its development.

DeepSeek Wants To Stay Free As Of Now, Founder Rejects Monetization - Alibaba Gr Hldgs (NYSE:BABA), NVIDIA (NASDAQ:NVDA)

The new Benzinga Rankings show you exactly how stocks stack up -- scoring them across five key factors that matter most to investors. Every day, one stock rises to the top. Which one is leading today? DeepSeek founder Liang Wenfeng has rejected investor proposals to monetize his programs. Liang did not want to charge for DeepSeek's core AI models, which the company has open-sourced, the Wall Street Journal reported, citing unnamed sources familiar with the matter. DeepSeek aims to release its next reasoning, designed for solving complex problems by April, the report said. Also Read: Alibaba Unveils New AI Chip To Power China's Open-Source Tech Push, Challenge US Chip Giants Liang joined Chinese executives who met leader Xi Jinping on February 17. According to sources, the state-owned Bank of China has offered to grant the company a low-interest loan. The sources indicated that executives from China's Tencent Holding TCEHY and Alibaba Group Holding BABA have recently met Liang to discuss potential cooperation. The Chinese artificial intelligence startup founder snubbed prospective investors, citing his preference for retaining the science project ethos. Sources familiar with the matter say Wenfeng feared that outsiders would interfere in DeepSeek's decisions. He noted that Beijing's connection could make winning the global adoption of DeepSeek's AI models harder. DeepSeek chatbot's popularity caused frequent service hiccups and drew global sanctions due to data security concerns. The Trump administration is considering restricting the Chinese artificial intelligence DeepSeek, including banning their chatbot from government devices. Several U.S. allies, including Italy, South Korea, Australia, Canada, and Taiwan, have limited the use of DeepSeek. DeepSeek's handling of user data has sparked national security concerns. When DeepSeek claimed that its AI model was built at a fraction of the cost of its U.S. rivals, it led to Nvidia Corp NVDA losing $600 billion in market cap in a single day. DeepSeek's AI model fueled a $1 trillion market wipeout. Reportedly, the U.S. is probing DeepSeek for possible Nvidia chip embargo violations. Also Read: Supermicro's AI Boom, Liquid Cooling Edge Spark Analyst Confidence In Growth Potential Photo by Erlin Diah via Shutterstock BABAAlibaba Group Holding Ltd$138.064.16%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum96.47Growth65.09Quality63.89Value77.38Price TrendShortMediumLongOverviewNVDANVIDIA Corp$108.741.65%TCEHYTencent Holdings Ltd$66.802.06%Market News and Data brought to you by Benzinga APIs

Chinese Investors 'Rushing To Find The Next DeepSeek,' Says VC, As AI Boom Fuels Investment Surge After Nvidia Selloff - NVIDIA (NASDAQ:NVDA)

DeepSeek AI's recent breakthrough has sparked renewed interest in Chinese tech investments, potentially reversing three consecutive years of venture capital declines in the region. "People are rushing just to find the next DeepSeek," said Annabelle Yu Long, founding partner of BAI Capital, according to CNBC. This surge follows VC investment in China-based companies falling to a record low of $48.86 billion in 2024, according to Pitchbook data. AI drug discovery firm Insilico Medicine recently closed a $110 million financing round led by Hong Kong's Value Partners, with CEO Alex Zhavoronkov stating that the last-minute interest from Chinese funds was "like an avalanche." The company, which uses DeepSeek's AI to develop drugs, is now planning an additional "E2" raise. Chinese government support is amplifying the trend. The government announced plans for a fund expected to mobilize 1 trillion yuan ($137.7 billion) for tech investment. Despite this momentum, U.S.-China tensions remain a significant hurdle for international investors considering Chinese AI opportunities. DeepSeek's AI breakthrough in late January led to a significant selloff in U.S. tech stocks, with NVIDIA Corp.'s NVDA market value dropping by $593 billion, as investors feared increased competition. Read Next: Jamie Dimon Cashed Out $234 Million In JPMorgan Stock, Warren Buffett Stockpiled $334 Billion In Cash -- Weeks Later, Markets Crashed. Coincidence? Image Via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$109.432.29%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum81.26Growth88.72Quality97.69Value7.47Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs