DeepSeek Targets $50B Valuation as China AI Funding Surges

Chinese AI startups are racing to secure massive funding rounds as competition in the sector intensifies. DeepSeek, the Beijing-based startup known for its open-source models V3 and R1, is in advanced talks to raise $3 billion to $4 billion in its first external venture-capital round, targeting a valuation of $45 billion to $50 billion. China's state-backed 60-billion-yuan national artificial intelligence fund is in negotiations to lead the round, with Tencent Holdings and Alibaba also discussing participation. Founder Liang Wenfeng is personally driving the fundraising, a significant shift from DeepSeek's long-standing policy of self-funding through his quant hedge fund, High-Flyer. The capital would scale computing capacity and improve employee benefits as DeepSeek faces pressure from domestic rivals.

Simultaneously, Moonshot AI, the developer of the Kimi chatbot, closed a $2 billion funding round that values the company at more than $20 billion. The round was led by Long-Z Investments, Meituan's venture arm, with participation from China Mobile's investment arm, CPE, Alibaba, and Tencent. HF Capital, which advised on the deal, noted Moonshot has raised a cumulative $3.9 billion over the past six months. The company's annual recurring revenue surpassed $200 million in April, and its K2.6 model ranks among the world's top three AI models by token usage. Moonshot is also navigating new Chinese listing rules that favor mainland-registered entities as it eyes a Hong Kong initial public offering.

The back-to-back funding moves underscore a surge of investor appetite for Chinese large-language-model developers, with DeepSeek and Moonshot AI competing alongside ByteDance, MiniMax, and others for global market share.