China’s AI company, DeepSeek, recently completed its first round of funding of 50 billion Chinese yuan, and just a month later, news emerged about the initiation of a second round of funding and preparations for an IPO (Initial Public Offering) for listing and further fundraising. However, amidst the backdrop of the US-China tech war, DeepSeek is facing increased scrutiny.
According to reports from multiple media outlets, including the Science and Technology Innovation Board Daily, DeepSeek has begun the process of a second round of funding with a speculated scale of up to 50 billion yuan. Additionally, Bloomberg cited insider sources indicating that the funding for the second round is expected to be at least 10 billion yuan.
Simultaneously with the news of the second round of funding, it was revealed that DeepSeek has started intense discussions with banks and accounting firms to pave the way for an IPO, with the aim of submitting a listing application by the end of 2026 or early 2027. Insiders disclosed that DeepSeek is striving to complete the preparation of financial reports by the end of this year, with the preferred listing venue being the Chinese capital market. If all progresses as planned, DeepSeek could become one of the highest-valued AI companies listed on the A-share market.
As of the time of reporting, DeepSeek has not provided an official response to the rumors regarding the second round of funding and the subsequent listing.
On June 15, DeepSeek recently concluded its first round of funding totaling 51 billion yuan. This funding round utilized a special structure where institutional investors’ funds were injected into a limited partnership managed by DeepSeek’s founder, Liang Wenfeng, rather than directly into the entity of DeepSeek. All investors do not possess voting rights in DeepSeek, and the shares they hold come with a lock-up period of five years, preventing transfer in secondary markets or privately, thus avoiding short-term cash-outs.
The market is now closely monitoring DeepSeek’s valuation post the first round of funding. According to reports from First Financial, listed A-share companies such as Jiuan Medical, Koruna Shareholding, and Tongcheng BBJ have successively announced indirect investments in DeepSeek. Koruna Shareholding disclosed that its wholly-owned subsidiary Ningbo Purun Investment Partnership Enterprise injected 40 million yuan of self-owned funds to participate as a limited partner in Tianjin Lixi Xingling Entrepreneurship Investment Partnership Enterprise. In turn, Lixi Xingling indirectly invested in DeepSeek, holding a stake of 0.8265%.
Based on Lixi Xingling’s 29 billion yuan contribution and 0.8265% stake, the estimated valuation of DeepSeek following the first round of funding is approximately 350.877 billion yuan.
It is noteworthy that in the first round of funding, the China National Integrated Circuit Industry Investment Fund (commonly known as the “Big Fund”) invested around 1 billion yuan, with the funds directly injected into DeepSeek’s entity. The Big Fund retains voting rights and is not subject to the five-year lock-up period. The Big Fund is an industry investment fund in the semiconductor sector established by the Chinese government.
The Wall Street Journal views this highly concentrated voting structure as severely lacking the external audit and error correction mechanisms that modern enterprises should possess.
Amid China’s active support of leading domestic AI companies, the direct participation of the national “Big Fund” in DeepSeek with voting rights has raised industry concerns.
Renowned European tech media The Next Web (TNW) believes that DeepSeek accepting investment from the national “Big Fund” is not just a typical commercial funding but a “strategic declaration” from Beijing. Previously, DeepSeek deliberately maintained an image of being a “purely private, non-government-intervened geek lab.” However, as artificial intelligence is considered a core competitive foundation by Beijing, the entry of state-owned capital effectively reshapes it as a “national strategic asset,” erasing its original private background.
Political observer Xia Yan stated that although the Communist Party of China holds a very small percentage of shares, it often can gain board seats, voting rights, and substantial influence over critical business decisions. This is the latest demonstration of the Communist Party’s “civil-military fusion” strategy in the technology sector, using ostensibly independent private tech companies to serve its geopolitical expansion and strategic goals. On the surface, companies are creating value for investors, but in reality, they may have become the vanguards of the Communist Party’s tech warfare efforts.