DeepSeek funding round paused before planned IPO, Bloomberg reports

DeepSeek has paused its second funding round, Bloomberg News reported, interrupting a capital raise that had targeted at least 10 billion yuan, or $1.4 billion. The Chinese artificial intelligence startup had been seeking a pre-money valuation of at least 480 billion yuan, or $70.8 billion, according to Bloomberg, as it prepares for a possible initial public offering as soon as this year.

People familiar with the matter told Bloomberg that DeepSeek informed some prospective backers it would not sign investment agreements as previously planned. The reported pause follows online posts about comments on U.S.-China artificial intelligence competition that were widely attributed to founder Liang Wenfeng.

Bloomberg said the funding suspension was tied in part to Liang’s frustration over online accounts of remarks he made to investors during DeepSeek’s first financing. That earlier round raised $7 billion and valued the company at $50 billion, according to the report.

Why did DeepSeek pause its funding round?

Bloomberg reported that the decision was linked partly to the fallout from online reports about Liang’s comments during the company’s first funding deal. The posts included what was described as a transcript of a meeting with unidentified parties, in which Liang discussed dependence on Nvidia chips for AI development and China’s continuing gap with the U.S. in AI sophistication, Bloomberg said.

Bloomberg noted that it had not verified the transcript. DeepSeek’s reported decision to stop short of signing new investment agreements puts added attention on how private AI companies manage fundraising, investor communications and political sensitivity in a sector shaped by U.S.-China technology competition.

A pre-money valuation is the value assigned to a company before new capital is added in a funding round. If investors had committed 10 billion yuan at the valuation Bloomberg reported, the post-money figure would have reflected both the agreed company value and the fresh capital injected by new backers.

What is at stake for DeepSeek?

DeepSeek became a closely watched AI company after releasing a model early last year that offered performance comparable with systems from U.S. rivals OpenAI and Meta while using substantially fewer Nvidia chips, according to earlier reporting cited by PYMNTS. That claim drew attention because advanced AI development has been closely tied to access to high-end semiconductors.

The company is also preparing for an IPO that could take place as soon as this year, Bloomberg reported. A public listing would require DeepSeek to face greater disclosure expectations than a private funding round, including closer scrutiny of its financial position, growth strategy and technology supply chain.

The reported fundraising pause does not mean DeepSeek has abandoned an IPO or a future financing. Bloomberg’s account says the company told some potential investors that agreements would not be signed as planned, while the report did not state a new timetable for the second round.

For investors and policymakers, the episode highlights the pressure around Chinese AI champions as they seek large pools of capital while operating in a field affected by semiconductor access, regulatory scrutiny and strategic rivalry between the world’s two largest economies.

This story draws on original reporting from PYMNTS.