DeepSeek to raise $12 billion in Tencent- and CATL-backed funding ahead of IPO

Chinese AI startup DeepSeek is closing in on one of the largest private funding rounds in the sector, with more than 80 billion yuan, roughly $12 billion, committed by investors including Tencent and CATL ahead of a possible domestic IPO.

The round has blown past DeepSeek’s original target of about 50 billion yuan, according to people familiar with the fundraising. Reuters reported that the company expects to complete the round in October, with investor commitments already exceeding its initial goal. Bloomberg reported that the final tally could approach 100 billion yuan, or roughly $15 billion.

“DeepSeek is close to securing at least 80 billion yuan ($12 billion) in its latest round of funding, blowing past its own capital-raising target ahead of a landmark initial public offering in early 2027,” Bloomberg reported.

The news comes less than two weeks after DeepSeek reached a $1 billion annualized revenue run rate, more than double its pace from just a few months earlier, as rising demand for its models and higher prices turn last year’s breakout into a sizable business.

DeepSeek began seeking new capital in July at a targeted valuation of 500 billion yuan, or about $74 billion, just a month after raising roughly $7.4 billion in its first external funding round. Tencent and battery giant Contemporary Amperex Technology Co. Ltd., better known as CATL, are among the largest investors in the latest financing.

The round size puts DeepSeek in rare territory for an AI startup and signals how aggressively Chinese investors are backing domestic model developers as competition with U.S. AI companies intensifies.

DeepSeek is building for more than another model release

The new capital comes as DeepSeek prepares for a potential listing on Shanghai’s STAR Market. The company has hired CITIC Securities to work on IPO preparations, though the timing, valuation and size of the offering have yet to be finalized, Reuters reported.

DeepSeek’s fundraising momentum follows the release of DeepSeek-V4.1-Flash in September. The company said the model was built for higher throughput, faster inference and scaling to larger workloads.

That release appears to have strengthened investor interest. Bloomberg Intelligence said this week that the performance gap between leading Chinese and U.S. AI models has narrowed to about 3% on benchmark scores, down from roughly 9% in May, with DeepSeek among the companies driving the gains.

DeepSeek has been moving deeper into China’s effort to build an AI stack that depends less on U.S. technology.

Last week, the startup announced a partnership with Huawei to develop programming tools optimized for Huawei’s Ascend AI chips. The work includes open-source software aimed at giving developers an alternative to Nvidia’s CUDA ecosystem, which remains the dominant software platform for AI accelerators.

That makes the latest funding round about more than financing another generation of models. DeepSeek is positioning itself across models, developer tools, and domestic AI infrastructure at a moment when China is trying to reduce its reliance on Nvidia and other U.S. suppliers.

A $12 billion raise would give the company a substantial war chest heading into that fight. If the round reaches the reported 100 billion yuan upper range, DeepSeek could enter its expected 2027 IPO with close to $15 billion in fresh capital from its latest financing alone.

DeepSeek Founder (Image credit: South China Morning Post)