BEIJING — Chinese artificial intelligence startup DeepSeek is close to completing a funding round worth 20 trillion won, after surging revenue drew a rush of investor interest and pushed the size of the raise to double its initial target.
Chinese financial outlet Caijing reported on the 14th, citing multiple sources, that DeepSeek will soon wrap up a second funding round of 100 billion yuan (about 20 trillion won). The round comes just four months after the company raised 50 billion yuan in its first round in June. Joining existing backers such as Tencent and CATL are new investors from a range of industries, including chip designer GigaDevice, foundry operator SMIC and Geely Automobile. The round targets a valuation of 500 billion yuan (about 100 trillion won).
DeepSeek had originally planned to raise 50 billion yuan (about 10 trillion won) but doubled the target within two weeks as investor demand piled up. The driver is profitability. Annualized revenue has climbed past $1 billion from $500 million just months earlier, according to U.S. technology news outlet The Information. User demand held firm even after the company raised prices for application programming interface calls in August to two to four times previous levels. Even before that increase, gross margin on the API business reached 82.9% in the January-July period, with an overall gross margin of 44.6%. Caijing said the company "built an entry barrier with a low-price strategy and is now converting its technological edge into profitability through price increases."
DeepSeek will channel the new funds into a large data center under construction in the Inner Mongolia Autonomous Region, where it plans to deploy more than 160,000 of Huawei's Ascend AI chips. The company is also moving faster on preparations for an initial public offering. On the 21st of last month, DeepSeek hired Yan Wentao, a former partner at Hillhouse Ventures, as chief financial officer, filling a post that had been vacant for three years. Hillhouse is a venture capital firm whose investments include ByteDance, Zhipu AI and MiniMax. DeepSeek is expected to file a listing application with the STAR Market, the Shanghai Stock Exchange's board for technology companies, as early as the end of this year and to go public sometime next year.