Behind DeepSeek’s $16 Billion Funding: Chinese Tech Titans and State Players

Chinese AI star DeepSeek’s nearly $16 billion funding round this month involved not only a deluge of capital but a who’s who of Chinese tech investors—and some of the country’s most powerful state-backed institutions, according to details of the round obtained by The Information.

It was only the second fundraising round for DeepSeek. The three-year-old company was the only major AI model developer to eschew external capital until its first fundraising in April. The new round included previous backers—Tencent and battery maker CATL continue to be DeepSeek’s top two investors—but also other tech companies including notably memory chipmaker ChangXin Memory Technologies and its chairman Zhu Yiming, according to the details provided by two people with direct knowledge of the matter.

Notably, Chinese state-owned investors accounted for 27% of the 105.5 billion yuan ($15.8 billion) from nearly 30 investors in this new round, which valued DeepSeek at 615.5 billion yuan. While DeepSeek is a privately owned company started by entrepreneur Liang Wenfeng, that figure—up from 2% in DeepSeek’s first fundraising—could reinforce suspicions in the U.S. that DeepSeek’s competition with leading American AI companies is driven in part by the Chinese government’s agenda.

DeepSeek doubled the size of the latest round in the middle of fundraising, due mainly to the surging prices of Nvidia’s Blackwell chips on the black market, according to the two people. The cost of a server containing eight B300 chips climbed to about 19 million yuan ($2.85 million) from 15 million yuan in the four months DeepSeek was raising the round—more than five times what the same machine sells in most countries, according to chip smugglers.

Another reason for DeepSeek to increase the round size was to build a warchest for a rainy day in case the AI bubble bursts, the two people said. Already, MiniMax and Zhipu, known as Z.ai, the first two Chinese model developers to go public, have seen their market values plunge since the summer, when restrictions on sales from pre-IPO investors expired.

DeepSeek has now raised 136.5 billion yuan in about six months, and Liang pumped another 2 billion yuan into the company. Although that total is dwarfed by what Anthropic and OpenAI have raised, it remains the largest venture capital fundraising by a Chinese AI firm to date. The blitzing funding pace became possible thanks largely to backing from Chinese tech incumbents spanning internet, electric vehicle, chipmaking and social media.

A slew of Chinese tech companies joined the latest round. In addition to ChangXin, state-backed foundry Semiconductor Manufacturing International Corp participated, marking alliances with two powerful Chinese chip giants that make sense at a time when DeepSeek and other Chinese model developers are battling a compute shortage caused by U.S. export controls on advanced AI chips and a global deficit of memory chips.

Other, less obvious tech backers included smartphone maker Vivo, food delivery giant Meituan, home appliances retailer Midea, iPhone supplier Luxshare, carmaker Geely, travel website Ctrip and social media network Xiaohongshu, also known as RedNote. These companies contributed between 1 billion and 3 billion yuan each.

In total, tech companies have footed 42% of DeepSeek’s two funding rounds combined. State-backed investors have accounted for 19%. China’s National Artificial Intelligence Development Fund wrote another 1 billion yuan check in the second round, same as the first fundraising. The fund invested directly in DeepSeek, a contrast with most other investors.

In DeepSeek’s first fundraising, it employed an unusual deal structure where all investors except for the National AI fund had to put their money in an entity owned by Liang, forfeiting their voting rights and committing to locking up their shares for five years unless the company goes public before then, The Information reported previously.

But the National AI fund is by no means DeepSeek’s biggest state-backed financier to date. State-owned telecom carriers China Mobile and China Telecom, as well as China International Capital Corp. and Citic Securites—two of the country’s top investment banks—and insurer China Life wrote checks ranging from 2 billion to 8 billion yuan.

China’s venture capital and private equity firms together only come in third in their combined stakes in DeepSeek. The biggest checks were written by Beijing-based Monolith Management, led by former Sequoia Capital China partner Cao Xi. IDG Capital invested in a total of 6.5 billion in the two rounds. Boyu Capital, co-founded by Alvin Jiang, grandson of late Chinese leader Jiang Zemin, participated in the second round with 3.5 billion yuan.