Why DeepSeek is Choosing to Skip VC Funding: 3 Key Reasons Explained

DeepSeek, a rapidly growing AI startup, is making waves in the tech industry, particularly in Silicon Valley. Founded by Liang Wenfeng, the company has garnered significant attention for its innovative AI models. Despite various offers from venture capitalists, Liang remains cautious about seeking outside investment, preferring to maintain control over his company.

Liang Wenfeng’s Unique Approach to Investment

As reported by the Wall Street Journal, DeepSeek has not engaged in any fundraising efforts, despite a surge of interest from venture capital firms. This decision stems from Liang’s desire to retain complete control over the startup, which is primarily owned by him and his hedge fund, High-Flyer.

Ownership Structure of DeepSeek

According to an analysis by TechCrunch, Liang holds an impressive 84% ownership stake in DeepSeek. The remaining shares are held by individuals associated with his hedge fund. This unique ownership structure allows Liang to operate DeepSeek without the typical external influences faced by many startups.

Challenges and Opportunities for DeepSeek

While most startups rely on outside funding to kickstart their operations, DeepSeek has managed to thrive on profits generated from High-Flyer. Liang stated, “Money has never been the problem for us; bans on shipments of advanced chips are the problem.”

Concerns Over Privacy and Trust

Being a Chinese company, DeepSeek operates under stringent regulations that allow the government significant access to data. This has raised concerns, leading to bans from various governments and private corporations. Accepting funding from local investors could exacerbate these issues.

• Potential bans could increase if DeepSeek partners with Chinese investors.
• The U.S. government has a history of sanctioning tech companies with close ties to the Chinese government.

Future Prospects for DeepSeek

Despite Liang’s current stance on funding, there may be a future shift. Recently, DeepSeek announced its first theoretical profit margin, indicating a move towards monetization, which is appealing to investors.

• Access to advanced AI chips remains a critical factor in DeepSeek’s growth.
• Liang has noted that the availability of these chips is hindered by U.S. export controls.

Moreover, the sustainability of High-Flyer’s profits is uncertain, especially with recent underperformance in some funds. The Chinese government’s crackdown on quantitative funds since 2024 has added another layer of complexity.

Growing Interest from Major Firms

DeepSeek has attracted attention from major players in the tech industry, including Tencent and Alibaba, indicating a potential shift in the funding landscape.

As the situation evolves, it remains to be seen whether DeepSeek will eventually open its doors to outside investment. For now, Liang prefers to focus on maintaining control and navigating the complexities of the tech industry.

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