DeepSeek Paused Its Second Fundraising Round After Leaked Comments — Here's What We Know

Chinese AI startup DeepSeek has paused its second external fundraising round just weeks after closing a record first round, as founder Liang Wenfeng's leaked comments on Nvidia and the US-China AI race send ripples through investor circles. The company is now preparing for a mainland China IPO as early as 2027.

Why DeepSeek suspended its second fundraising round

DeepSeek verbally told prospective investors in its planned second fundraising round that it is suspending the deal for now . The pause comes days after comments widely attributed to founder Liang Wenfeng about US-China AI competition went viral — a leaked transcript of a four-hour May 20, 2026, investor meeting, published by Tencent Tech and circulated widely starting July 23, 2026 . The politically sensitive nature of those remarks appears to have spooked the deal's momentum, though DeepSeek has not issued a formal statement.

Prior to the pause, DeepSeek had just closed its first external fundraising round in June 2026 — over 50 billion yuan (~$7.4 billion) at a valuation above $50 billion . By mid-July, it was already in preliminary talks for a second round targeting a pre-money valuation of about $71 billion . DeepSeek might resume the deal at a later date, according to people familiar with the matter .

DeepSeek's unusual financing structure

The first round involved a founder-centric deal structure highly unusual for a startup of this scale :

• Investors did not buy DeepSeek shares directly. Instead, they invested in a limited partnership, with Liang Wenfeng retaining outsized control as managing partner .
• The structure is designed to let Liang prioritize artificial general intelligence (AGI) research over profit maximization and short-term monetization .
• Major participants in the first round included Tencent Holdings and CATL .
• Liang Wenfeng himself contributed about 20 billion yuan — the largest single investment in the round .

This arrangement has been described as "bizarre" and "aggressively founder-centric," rarely seen outside of founder-controlled tech giants . Investors accepted a five-year lockup period and no voting rights .

Liang Wenfeng's politically sensitive leaked investor meeting comments

A lightly edited transcript of a roughly four-hour closed-door investor meeting held on May 20, 2026, was published by Tencent Tech and quickly went viral in late July . Key claims attributed to Liang:

On Nvidia and China's hardware reliance:

• Liang argued that Nvidia's CUDA ecosystem is not irreplaceable and predicted "meaningful cracks could appear within a year" .
• He said domestic Chinese alternatives — specifically Huawei's chips — are expected to reach functional parity with Nvidia within a year, and that even a 1–2× price premium would be acceptable .
• He stated that "NVIDIA's CUDA dominance is crumbling" and that the monopoly power of Nvidia's AI chip ecosystem is a key vulnerability he expects to break .

On the US-China AI competitiveness gap:

• Liang's central thesis is that China's AI gap with the US is overwhelmingly a compute-access gap, not a talent or algorithmic gap .
• He estimated the gap at roughly one year but noted that China has used only about 1/20th of the compute that the US has — implying the gap is narrower than raw numbers suggest, provided China can secure adequate hardware .
• He argued DeepSeek can remain competitive by operating one or two model generations behind, using radically less compute and emphasizing efficiency .

These remarks are politically sensitive in China because they could be read as acknowledging a structural hardware dependency on US technology (Nvidia) and quantifying a concrete technology gap with the United States — topics the Chinese government typically downplays.

Future plans: Mainland China IPO

Despite the fundraising pause, DeepSeek is actively preparing for an initial public offering on mainland China's stock market:

• Target exchange: Shanghai's STAR Market (China's Nasdaq-style tech board) .
• Timeline: Filing as soon as late 2026 or early 2027, with a listing debut targeted for 2027, possibly as early as Q2 2027 .
• Target valuation: Approximately $71–74 billion (480–500 billion yuan) for the IPO-stage valuation .
• Advisors: DeepSeek is already working with accounting and banking advisors on IPO preparation .
• The IPO is seen as necessary to access deeper capital pools onshore, given that China's domestic equity markets remain relatively shallow compared to US markets for AI companies .

Liang Wenfeng has indicated a preference for pursuing AGI over near-term monetization, which could create tension with public market investors who expect returns . The company is also still seeking a smaller private top-up (~$1.5 billion at ~$71 billion valuation) if the second round resumes .