DeepSeek, a Chinese AI startup owned by hedge fund Zhejiang High-Flyer Asset Management, has paused its second fundraising round after telling some prospective investors that investment agreements expected in the coming days would not be signed, according to people familiar with the matter.

The pause was partly linked to founder Liang Wenfeng’s frustration with online reports that attributed remarks to him about China’s AI gap with the US and the industry’s reliance on Nvidia chips.

The talks could still resume, and it is unclear whether DeepSeek has informed all prospective investors.

DeepSeek grew out of High-Flyer’s AI research unit, according to the source material.

Investor interest has been driven in part by DeepSeek’s R1 reasoning model, which was reported to outperform OpenAI’s o1 on several benchmarks and became the No. 1 free iOS app in the US within a week of launch.

DeepSeek had been seeking at least 10 billion yuan (US$1.48 billion) at a pre-money valuation of at least 480 billion yuan (US$70.9 billion), weeks after a June round that raised US$7 billion from backers including Tencent and Contemporary Amperex Technology Co Ltd (CATL).

🔗 Source: Bloomberg