DeepSeek Raises $15 Billion Days After US Restrictions on AI Technology

DeepSeek Secures $15 Billion in Major Funding Round

Chinese AI startup DeepSeek has raised approximately $15 billion, about 100 billion yuan, in one of the largest fundraising rounds in China's history1

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. The massive round comes just two days after the U.S. ordered federal civilian agencies to remove DeepSeek's AI technology from their systems over security concerns1

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. Battery maker Contemporary Amperex Technology, known as CATL, and Tencent, the company behind WeChat, emerged as the biggest investors in this latest round2

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. The Hangzhou-based company doubled its initial financing target of 50 billion yuan, underscoring strong investor demand as China aims to compete in the AI race against the U.S.2

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Valuation Surge and IPO Preparations

DeepSeek was valued at approximately $74 billion going into the round's final close3

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. The fundraising follows DeepSeek's investment round in June, when it raised more than $7 billion at a valuation of $50 billion1

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. Talks for the current round started in July and extended beyond typical AI financing timelines because more investors kept joining3

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. The company has hired CITIC Securities, a state-owned investment bank, to advise on a potential STAR Market IPO2

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. DeepSeek appointed Yan Wentao, a former venture capitalist, as chief financial officer in September, signaling its preparation for public markets3

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. If the planned Shanghai IPO proceeds on an accelerated timeline, DeepSeek might reach the stock market before both OpenAI and its Chinese peer Moonshot AI3

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Revenue Growth and Business Model

Founder Liang Wenfeng informed investors in September that DeepSeek was generating revenue at an annualized pace of $1 billion3

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. This represents more than double the $400 million to $500 million annualized revenue reported in July, driven largely by cloud-based access to its models through application programming interfaces, or API5

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. DeepSeek reportedly maintained gross margins of 70% to 80% on access to its V4 flagship model, despite charging less than U.S. competitors5

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. In August, DeepSeek introduced peak-hour pricing that increased rates for its flagship models by roughly fourfold, while remaining cheaper than major rivals5

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US Restrictions and Geopolitical Implications

The Department of Homeland Security cited national security concerns as a major consideration when ordering civilian agency IT systems to halt using all DeepSeek products and any third-party services using the AI model4

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. The notice stated that "multiple threat vectors" could potentially "result in the transfer of sensitive data to [China] if used by US government employees or vendors"4

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. Chinese Foreign Ministry spokesperson Mao Ning responded that China "will resolutely safeguard the legitimate rights and interests" of companies in the country, adding that "China consistently opposes the overstretching of the concept of national security"4

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. Despite these US restrictions, DeepSeek is ramping up spending on AI infrastructure and open-source models for domestic and international markets1

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Investor Landscape and Competition

Existing shareholders Monolith Management and Shixiang contributed new capital, while new backers included semiconductor-focused private-equity firm Stony Creek Capital, Legend Capital which Lenovo backs, and carmaker Geely3

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. The massive funding round signals investors pouring billions into AI companies around the world to compete in the global AI race. Chinese company Moonshot AI, which develops Kimi, secured $2 billion at a $20 billion valuation in May, while Manus AI raised more than $500 million earlier this month1

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. Chinese companies Zhipu AI (Z.ai) and MiniMax, which both went public in Hong Kong in January, have market capitalizations of roughly $29 billion and $7.2 billion, respectively1

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. DeepSeek's expansion could further intensify competition among domestic rivals.

Technology Strategy and Infrastructure Investment

DeepSeek was founded in 2023 by Liang Wenfeng, who previously co-founded Chinese quantitative hedge fund High-Flyer, which helped finance DeepSeek's early development1

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. The AI startup gained global attention in early 2025 with its free-to-use, open-weight R1 reasoning model, a cost-effective solution whose performance sent Silicon Valley leaders scrambling4

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. Last month, the company released its latest model, DeepSeek-V4.1-Flash, designed for greater capability, faster inference, higher throughput and scaling to larger models2

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. DeepSeek still depends on Nvidia hardware when it trains its most demanding AI systems but is partnering with Huawei Technologies to shift its training work onto Huawei chips made in China3

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. The new capital will support DeepSeek's push into overseas markets and investments in AI data centers and open-source models that can be used both domestically and overseas3

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. Liang still retains an estimated 81.6% stake in its Chinese operating entity following its earlier funding round1

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