DeepSeek, a two-year-old Chinese AI startup that has quickly gained global attention for its cost-efficient large language models, is now in talks to raise its first external funding at a valuation that could reach $50 billion. The company is looking to secure around $3-4 billion in fresh capital, with interest from both major tech players and state-backed investors, reports Reuters.
The new round is expected to be led by China’s state-backed semiconductor and AI investment vehicles, including the national AI fund valued at about 60 billion yuan (~ $8.8 billion). Major technology companies like Tencent, have also been in discussions to participate.
DeepSeek is expected to use the fresh capital to expand its computing infrastructure, invest in advanced chips, and improve employee compensation as competition for AI talent intensifies. The funding push also comes as the company faces increasing pressure from rivals like ByteDance, Alibaba, and emerging startups like MiniMax and Moonshot AI, all of which have raised significant funding of their own.
A key factor that has set DeepSeek apart in the global AI race is its strong focus on efficiency. The company claims it trained one of its major models for around $6 million, compared with an estimated $100 million for comparable systems like GPT-4, while using significantly less computing power. This approach has challenged long-held industry assumptions about the cost of building cutting-edge AI systems and has played a major role in driving its rapid rise in valuation.
The company’s models, including the widely discussed DeepSeek-R1 and newer V4 series, have demonstrated performance comparable to leading systems while adopting an ‘open-weight’ approach that allows developers to access and build on the models. In early 2025, its chatbot briefly became the most-downloaded free app on Apple’s US App Store, showing strong global interest and adoption.
At the same time, the company’s growth is closely tied to broader geopolitical shifts in technology. The United States has imposed restrictions on advanced semiconductor exports to China, prompting Chinese firms to accelerate efforts toward technological self-reliance. DeepSeek has responded by adapting its latest models to run on domestic hardware like Huawei’s AI chips, highlighting a wider transition toward a parallel AI ecosystem within China.
However, despite its momentum, challenges remain. Estimates suggest that while DeepSeek’s models are competitive, they may still lag behind top-tier systems from leading US developers in certain advanced capabilities. The company has also faced talent attrition, with some researchers moving to rival firms.
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Ashutosh is a Senior Writer at The Tech Portal, largely reporting on new tech, and intersection of technology and business. Ashutosh’s career spans across nearly a decade of technology writing across multiple platforms and languages.
