Chinese tech giants Tencent and Alibaba are in discussions to invest in AI startup DeepSeek, The Information reported, citing four people familiar with the matter.
Owned by Chinese hedge fund High-Flyer Capital Management, DeepSeek is seeking to raise funding at a valuation exceeding US$20 billion, as early talks with prospective investors have generated strong interest, according to one of the sources.
Alibaba’s US-listed shares rose 1.3% in premarket trading, according to The Information.
Reuters previously reported that DeepSeek had begun discussions to raise external capital for the first time, targeting at least US$300 million at a valuation of no less than US$10 billion.
The potential fundraising highlights the significant capital required to develop and operate advanced AI models, particularly as systems become more complex with reasoning capabilities and autonomous agent-style functions.
The parties are continuing discussions and may still revise both the valuation and the capital they plan to raise.
As a Chinese startup, DeepSeek may face some hesitation from US venture capital firms considering participation, the tech news outlet noted.
DeepSeek’s initial release in January 2025 triggered a global tech sell-off and prompted rival Chinese firms to accelerate upgrades to their own AI models.
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