DeepSeek, whose name needs no introduction, has reportedly raised a round of funding. The round was reported to be RMB50 billion (US$7.35 billion) in total, with the founder Liang Wenfeng himself contributing RMB20 billion.
Perfect founder alignment.
News reports also mentioned that the company, now valued at US$45 billion, plans to double the size of many of its core teams.
However, what exactly happened during the fundraising process was not known to most people – and even some investors were caught off guard, because they thought DeepSeek would never raise external funding.
Recently a Wechat based media outlet named “elsewhere” shed some light on the fundraising call, which was fondly talked about by participating investors.
It was a fascinating account. We have brought some of the highlights here:
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- The meeting was held online using Tencent’s Meeting (or “VooV” as it is known outside China). It lasted four hours, with only 2 participants allowed for each institutional investor. Interestingly the majority of the investors present had never seen the founder Mr Liang in person, and the call was their first meeting/interaction with him.
Some got overly excited. Allegedly one investor introduced himself for almost ten minutes before asking questions. Mr Liang patiently answered all the questions. A lot of investors murmured “who is this guy? – they probably did not pay attention during the 10 minutes of self introduction.
- The meeting gave investors a better grasp of Mr Liang’s sense. Notable quotes shared by investors who attended the meeting (which will give you a feeling):
- “We (DeepSeek team) are a group of very ordinary people.”
- “For DeepSeek, the core is ensuring team stability. This is more important than money and resources. This is the biggest risk, and also the biggest challenge.”
- “Assuming AGI accounts for 20% of GDP, those who want 5% will lose to those who want 1%; those who want 1% will lose to those who want 0.1%.” (i.e. you really need to focus and not try to get everything).
- “AGI is big enough. Everything else is just due process.”
- Allegedly, DeepSeek’s initial ask was for a minimum investment of RMB5 billion (US$735 million) per ticket. And yes they only accept RMB funds. The threshold was later lowered to RMB1.5 billion as not many institutions could fork out 5 billion from a single vehicle.
- Interestingly, Hongshan (formerly Sequoia China) and Hillhouse – the two towering giants in China’s tech investment – are both missing from this round of fundraising. Their absence is unusual as top startups in China usually gravitate towards at least one of them. Someone said maybe they will join the next round – what would be the valuation though.
- Mr Liang’s key requirements for participating investors: do not poach his people, do not let your portfolio of other AI companies poach his people, and do not encourage his people to leave to found new companies.
- The article raises the question, “What would be the return for this investment?” “Will DeepSeek become the largest public company in China’s domestic bourse?” Nobody knows, but many investors feel that they need to be a part of this story/history.
- According to “elsewhere”, one investor interviewed emphasised, twice, the 16 characters used by DeepSeek during the launch of its V4 model.
“不诱于誉，不恐于诽，率道而行，端然正己。”
“Do not be tempted by praise, do not fear criticism, follow the path you believe is right, and keep yourself upright.”
- The meeting was held online using Tencent’s Meeting (or “VooV” as it is known outside China). It lasted four hours, with only 2 participants allowed for each institutional investor. Interestingly the majority of the investors present had never seen the founder Mr Liang in person, and the call was their first meeting/interaction with him.
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When this article was published, comments were mostly lauding the level of details shared. One, however, wrote: “Did Tencent also force them to a 40 minute time limit for a Voov video conference?”
Well, even if DeepSeek didn’t have a paid account, Tencent would have made sure that the meeting proceeds as long as it needs to.
