DeepSeek accelerates its capital plans: IPO this year, second round targets 50 billion yuan

DeepSeek is moving faster on outside capital. Reuters reported on September 9 that the company has hired CITIC Securities to prepare a STAR Market listing and plans to start the IPO process within the year. How much it will raise and at what valuation are not yet set. DeepSeek wants the proceeds to expand computing infrastructure, spend more on model research and in-house chips, and strengthen incentives for core staff.

On funding, the report says DeepSeek is working on a new round at a target valuation of about 500 billion yuan. In June the company closed its first outside round at a post-money valuation above 50 billion US dollars, raising about 7.4 billion US dollars. Founder Liang Wenfeng put in about 20 billion yuan himself, the largest single contribution. Tencent contributed about 10 billion yuan and a CATL-affiliated company about 5 billion yuan. JD.com, NetEase, IDG Capital and the National Artificial Intelligence Industry Investment Fund also took part.

On September 24, The Information reported, citing two people familiar with the matter, that DeepSeek's annualized revenue has passed 1 billion US dollars and that a second round of 7.5 billion US dollars is set. A few months earlier annualized revenue was still under 500 million US dollars. The growth comes partly from a recent increase in API pricing and partly from continued market demand for large models. The company plans to close the round by the end of October.

Liang told investors that DeepSeek keeps most of its resources on new model research, the people said. More than 70% of computing power goes to model training, leaving under 30% for inference on existing models. He also said the price change did not cost the company customers and that demand remains strong.

The scramble for a share of the round has brought abuses. Caijing magazine reported that some middlemen are asking for 18% upfront and 35% of later gains. An investor putting in 100 million yuan would pay 18 million yuan upfront and hand over 35% of investment returns later. By comparison, a fund manager normally charges an annual management fee of about 2% of fund size.

DeepSeek vets who can join the round, the report adds. Some individuals face a minimum ticket of 100 million yuan, and the company requires look-through checks on the limited partners behind investing funds. The investment carries a five-year lock-up with no transfers. Apart from the National Artificial Intelligence Industry Investment Fund, most outside investors get no voting rights and no board seat.