DeepSeek suspends second funding round after leaked investor call goes viral

Chinese AI startup DeepSeek has told prospective investors in its second fundraising round that it is suspending the deal for now, Bloomberg News reported on Saturday, citing people familiar with the matter.thestar

The pause comes just weeks after DeepSeek closed a record first external financing round that raised more than 50 billion yuan, or roughly $7.4 billion, at a post-money valuation exceeding $50 billion. The company had begun preliminary talks in mid-July with new backers about a follow-on round targeting a pre-money valuation of about $71 billion, according to the Financial Times.bloomberg+3

Leaked Transcript Sparks Frustration

The suspension stems in part from founder Liang Wenfeng's frustration over leaked online reports about his private comments to investors. A recording of a nearly four-hour closed-door meeting Liang held with incoming shareholders on May 20 surfaced online in late July, quickly going viral across Chinese and international media.linas.substack+2

In the leaked transcript, Liang described computing resources as "a gap that looks very hard to close" in U.S.-China AI competition and said DeepSeek sometimes has to postpone research because of insufficient compute power. He disclosed that DeepSeek currently operates roughly 20,000 Nvidia ↘ 0.92% H100 chips, predicted that Nvidia's CUDA ecosystem monopoly is "rapidly crumbling," and outlined plans to participate in Huawei's AI chip ecosystem as an alternative.biz.chosun+1

The remarks, touching on China's reliance on Nvidia hardware and its persistent lag behind the United States in AI sophistication, proved politically sensitive at a time when Washington continues to restrict advanced chip exports to China.biz.chosun

What Comes Next

DeepSeek may still resume the second fundraising process at a later date, and the company has emphasized that the pause does not halt core product development. Bloomberg separately reported in July that DeepSeek has begun preparations for a mainland initial public offering, with a possible filing near the end of 2026 or early 2027.bloomberg+2

The first funding round, which closed in June with investors including Tencent, CATL Contemporary Amperex Technology Co., Ltd., JD.com ↗ 0.33%, and NetEase ↘ 0.52%, gave backers no voting rights and imposed a five-year lockup on their shares, with all capital flowing through a limited partnership controlled by Liang. The only exception was China's state-backed National Artificial Intelligence Industry Investment Fund, which received direct equity with voting rights.forbes+2