Summary of Key Points
A leading domestic AI company, DeepSeek, has recently completed its first round of external financing, with a valuation of 351 billion yuan. Investors include giants such as Tencent, CATL, NetEase, and JD.com. The company is preparing for its second round of financing, aiming for a valuation of 74 billion US dollars (approximately 500 billion yuan) and plans to attract Middle Eastern capital. There have been persistent rumors about an IPO, but the high concentration of equity may pose a short-term obstacle. The founder, Liang Wenfeng, has seen his wealth soar to 36 billion US dollars (about 244 billion yuan) due to the company's valuation.
1. How was the 351-billion-yuan valuation determined?
This figure was not directly announced by DeepSeek but derived from an announcement by the listed company, KaiRun Co., Ltd.:
KaiRun’s subsidiary invested 40 million yuan and indirectly held 0.0114% of DeepSeek’s shares through two partnership companies (Lisi Xingling → Hangzhou Chengli). In simple terms, if you spend 10 yuan to buy 0.01% of a company’s shares, the total value of that company would be 10 ÷ 0.01% = 100,000 yuan. Similarly, 40 million yuan divided by 0.0114% equals approximately 351 billion yuan.
The previously rumored valuation of 48 billion yuan was considered the target for the second round of financing; therefore, the current 351-billion-yuan valuation is more reliable.
2. Investors: A gathering of giants, with the founder still holding absolute control
The investors in DeepSeek’s first round of financing are all industry leaders:
- Tencent: Holds a 33% stake in Hangzhou Chengli (the financing platform) through two platforms and is the largest shareholder; the actual controller behind this investment is Pony Ma.
- CATL: Directly holds 11.7% of Hangzhou Chengli and also participates indirectly through another fund.
- NetEase and JD.com: Each hold approximately 10% of the shares.
- IDG Capital: Holds about 10% of the shares.
- Other investors include Monolith Lisi Capital and Zhengxin Valley Capital, among others.
However, the funds were not given directly to DeepSeek but were invested in the company controlled by founder Liang Wenfeng (Hangzhou Chengce) as the “executive partner” for the shareholding platform. This means that Liang Wenfeng has final say, ensuring his absolute control over the company (currently, he and related parties hold a combined 81.6% of the shares).
3. Second round of financing: Why the rush for 74 billion US dollars?
Just one month after completing the first round of financing, DeepSeek has launched its second round, aiming to raise 50 billion yuan (7.4 billion US dollars) and increasing the valuation to 500 billion yuan (74 billion US dollars). The reason is simple: AI is a capital-intensive industry:
- Computing power costs: Training large models requires numerous GPUs, and building data centers is expensive.
- Talent recruitment: Top AI talents command high annual salaries.
- Business expansion: DeepSeek is transitioning from model development to a full-stack approach that includes models, computing power, and chips; developing its own chips requires substantial funding.
It’s worth noting that DeepSeek has strong revenue capabilities, with annual revenues of 400–500 million US dollars (about 2.7–3.4 billion yuan) and a gross margin of over 50%. Its flagship model V4 has a gross margin of 70–80%, and its API prices are lower than those of OpenAI and Anthropic, indicating excellent technology and cost control.
The second round of financing also aims to attract Middle Eastern capital using the “QFLP” mechanism (allowing overseas dollars to be legally invested in domestic companies), which is different from the first round, which was funded entirely by domestic yuan funds.
4. IPO rumors: Potential on the STAR Market, but challenges ahead
There are rumors that DeepSeek plans to list on the STAR Market, with the earliest possible application submission this year and completion in 2027. Supporting factors include:
- Policy support: In June of this year, regulatory authorities clarified that the fifth set of criteria for the STAR Market (allowing unprofitable companies to list) applies to AI large-model companies, and DeepSeek meets these requirements.
- Preparatory actions: The company has already started communicating with accounting firms and investment banks and plans to finalize its financial statements by the end of 2026.
However, there are obstacles: The equity is too concentrated. Listed companies generally require a more dispersed ownership structure (for example, major shareholders should not hold more than 50% of the shares), and it will be difficult to dilute Liang Wenfeng’s stake to meet these requirements in the short term, so an IPO is unlikely to happen soon.
5. The founder’s wealth has doubled: A combination of the AI boom and the company’s strength
According to Bloomberg data, Liang Wenfeng’s wealth has more than doubled, from 16.7 billion US dollars to 36 billion US dollars. This is due to:
- The AI industry’s growth: The global competition for large AI models is fierce, and investors are willing to offer high valuations.
- The company’s strength: DeepSeek’s model technology is robust (high gross margins and low prices), and its business expansion strategy is clear, which gives investors confidence.
However, wealth is primarily paper wealth; the ultimate success will depend on the company’s ability to generate sustainable profits and successfully go public.
Conclusion
DeepSeek’s financing and valuation changes reflect the booming AI industry. On one hand, companies with strong technical capabilities can attract high valuations and investments from giants. On the other hand, the rapid development of AI requires continuous funding and a push for quick listings. For investors, this indicates that the AI sector is still growing rapidly, but caution is advised, as high valuations often come with significant risks.