Chinese tech giants Tencent Holdings and Alibaba Group are in discussion to invest in artificial intelligence startup DeepSeek. Owned by Chinese hedge fund High-Flyer Capital Management, DeepSeek is now reportedly aiming to raise funding at a valuation exceeding $20 billion, as its initial discussions with prospective investors sparked immense interest.
According to reports, DeepSeek started discussions to raise outside capital for the first time, with a target to raise at least $300 million at a valuation of at least $10 billion. This potential fundraise underscores the intense capital required to develop and operate cutting-edge AI models, especially with the growing complexity of advanced reasoning and autonomous agentic bots.
The talks are still underway and both the valuation and the amount of capital to be raised could still change, according to the report.
As it is a Chinese startup, some U.S. venture capitalists might hesitate about investing in DeepSeek.
Reuters reported earlier this year that the company did not show U.S. chipmakers its flagship model for performance optimization, and had trained one of its newest models on Nvidia's most advanced chip despite it being banned.
DeepSeek's initial release in January 2025 triggered a global tech selloff and spurred its Chinese rivals to release upgrades to their own models.
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