Why Everyone Wants to Invest in DeepSeek

In the past year, DeepSeek has been a unique player in China’s large model industry. Unlike typical startups, it is not rushing to secure funding or go public, nor is it trying to fit into familiar narratives of the capital market. While other companies are busy updating versions, commercializing, and competing for market share, DeepSeek has maintained a restrained approach. Liang Wenfeng and DeepSeek have made it clear to the outside world: focus on developing technology first, and everything else can wait.

Recently, however, news about DeepSeek’s first round of financing has surfaced. Reports indicate that DeepSeek is seeking at least $300 million in external funding, with a valuation of at least $10 billion. Subsequently, it was reported that Alibaba and Tencent are in talks with DeepSeek, raising market expectations for its valuation to over $20 billion. Meanwhile, another frequently mentioned point is that the highly anticipated DeepSeek V4 has yet to be officially released.

On the surface, this appears to be a typical financing round: a star AI company begins to attract investment, tech giants enter the scene, valuations rise, and market sentiment soars.

However, what is truly noteworthy is not whether DeepSeek will secure financing or who will invest, but rather why a single financing announcement can cause the entire industry to become tense. Why does it seem that as soon as DeepSeek opens a door, there are already many eager to enter?

The answer is simple: today’s DeepSeek is more than just a company. It is one of the few leading general model companies in China that has not been completely locked down by capital and major firms, and it has proven its global influence while retaining its independence. Everyone knows that such opportunities are rare and will not last forever.

Two years ago, discussions centered around whether China could develop large models. Today, the conversation has shifted to who can remain at the table, who can be valued by the market, and who can turn technological advantages into organizational and ecological strengths. DeepSeek is at the center of this transformation. On one hand, it remains one of the most representative technical samples of AI in China; on the other hand, it is being pulled into a new stage of capital, talent, resource, and ecological redistribution.

Thus, the phrase “everyone wants to invest in DeepSeek” reflects not just its monetary value, but also the changing dynamics of competition in China’s AI sector. In the past, the focus was on whether models could be developed; today, the competition is about who can retain talent, sustain investments, stabilize systems, connect resources, and secure positions. As soon as DeepSeek opens its door, everyone knows that a new competition has begun.

Why DeepSeek Is So Desirable

If we view DeepSeek merely as an AI company seeking funding, we may underestimate its current significance.

What makes DeepSeek truly scarce is not just the strength of its models, but that it meets several critical conditions: it has proven its technological influence, garnered global attention, symbolizes an independent path, and, until now, has not been truly locked down by any party. These factors combined make DeepSeek a highly sought-after asset.

First, consider its influence.

After the release of DeepSeek R1 in early 2025, perceptions of Chinese large models changed significantly. Many previously assumed that Chinese companies would have to follow American firms in foundational models for a long time, especially under constraints of high-end computing power. DeepSeek not only broke a model record, but also challenged a widely accepted notion: that Chinese teams could create globally competitive models without relying on the most expensive routes.

More importantly, it has taken a rare path.

In the past two years, many model companies have been chasing speed, funding, valuation, and commercialization. DeepSeek, while not free from commercial pressures, has given the impression that it is not a company racing against time, but rather a team slowly laying the groundwork. It does not open too many doors, provide excessive explanations, or rush to deliver results to the market. This restraint sets it apart from most companies in the industry. Observers naturally perceive it as an exception rather than just another AI company racing against the capital timeline.

In times of crisis, being an exception translates to premium value.

A company that has not been fully defined by capital yet has achieved world-class results is inherently considered more valuable by the market. Its worth is not just about current earnings or how much it can raise on paper, but also about the strong imaginative potential it embodies. For investors, this imaginative potential signifies future valuation flexibility; for major firms, it means that DeepSeek could become either an ally or a variable; for the entire industry, it represents one of the few examples that can embody the notion that “Chinese AI has other possibilities.”

Next, consider its scarcity.

Among the leading general model companies in China, many have already begun moving toward capital markets. Companies like Zhipu and MiniMax have completed IPOs, while others are accelerating their capitalization efforts. In contrast, DeepSeek is one of the few major model companies that has not yet accepted external funding, has not clearly aligned with any ecosystem, and has already established global influence.

Once such a company starts to open up financing, the market will react quickly. Everyone understands that a company of DeepSeek’s scale, topic relevance, and symbolic significance cannot remain in limbo indefinitely. It will eventually enter the capital system, be assigned a market price, and take a clearer position. The only question is who gets in first, who gets closer, and who can secure a place while it still maintains its independent vision.

This is why, when news of DeepSeek’s financing emerges, Alibaba, Tencent, investment institutions, and market discourse will quickly follow suit. Ultimately, the reason everyone wants to invest in DeepSeek is not just because it is a hot company, but because it may be one of the most important and scarce tickets in China’s AI industry at this stage.

Why Alibaba and Tencent Want to Invest

The answer to why DeepSeek is so sought after becomes clearer when viewed from the perspective of major firms.

What Alibaba and Tencent truly care about is not how much money they can make in the short term from this investment, but rather that a company like DeepSeek, once secured by someone else, could mean losing a key position in the AI era.

A few hundred million dollars in investment is not a significant amount for Alibaba and Tencent. Moreover, being on the shareholder list of such a company carries far more significance than just financial returns.

As AI enters its second phase, model capabilities are no longer just about the models themselves; they are beginning to redistribute many other aspects.

Models will determine whose cloud resources are consumed more, who can attract more enterprise clients, whose interfaces will be used by more developers, and whose applications are more likely to access cutting-edge capabilities. As the landscape evolves, models could even influence various entry points such as office, search, content, social media, and e-commerce, determining who has a better chance of capturing the AI windfall. Models, cloud, customers, traffic, and applications are being reconnected.

This means that the competition for DeepSeek is not just an offensive strategy; it is also a defensive one.

The offensive aspect is straightforward. Whoever can pull DeepSeek into their ecosystem first has the opportunity to tie model capabilities closer to their cloud, customers, channels, and interfaces. However, the more pressing reality is defense. What major firms find most concerning about DeepSeek is not how strong it is currently, but that it remains independent. A sufficiently strong model company that has not been truly captured by anyone is itself a significant variable. It could become an ally for one party or the biggest headache for another in the future.

From the perspective of major firms, the logic is simple: if they can invest, that’s ideal; if they can’t, they at least don’t want their competitors to easily secure that opportunity. Once DeepSeek is locked down by another force, it’s not just a project lost, but the loss of proactive control over an entire ecosystem.

This is why the valuation expectations surrounding DeepSeek can rise rapidly in a short period. The market is not just assigning a value to the company today, but is pricing a scarce position. This price encompasses technical capabilities, industry imagination, and who can gain a slight advantage in the future AI landscape.

Thus, the reason Alibaba and Tencent want to invest in DeepSeek is not complicated: everyone knows this is not an ordinary opportunity, but one that, if missed, will be hard to recover from.

Why DeepSeek Must Open This Door

If outsiders don’t want to miss out on DeepSeek due to its scarcity, the reason DeepSeek itself is considering opening a door now is even more pragmatic.

It’s not because it suddenly had a realization, but because its previous way of operating is becoming increasingly costly.

In the past, DeepSeek was able to maintain its independence largely due to the financial support from Huanfang Quantitative. Unlike many startups that must revolve around fundraising, it did not have to constantly explain its commercialization progress to investors. This allowed it to maintain a rare state: a stronger research atmosphere, less commercial pressure, and a pace of work that did not resemble a standard startup.

However, today, this state is encountering boundaries.

The most direct pressure comes from talent.

In the current AI industry, the competition is for top researchers and engineers. DeepSeek previously attracted talent through its technical ideals, organizational atmosphere, and creative space, which worked well; but now, the conditions offered to top talent across the industry are becoming increasingly clear: higher salaries, more tangible options, and clearer exit paths. From late 2025 to early 2026, DeepSeek experienced departures of several core R&D personnel, including Guo Dayu, Wei Haoran, Wang Bingxuan, Ruan Chong, and Luo Fuli, covering several critical technology lines such as foundational models, inference, OCR, and multimodal capabilities. For a company that relies on talent density, this is not just ordinary personnel turnover; it is an organizational issue.

Ultimately, organizational issues lead to a very practical point: options need to have value.

A startup can use options to retain talent only if employees understand what they are roughly worth. If a company does not raise funds for an extended period, lacks external valuations, and has no market price, many equity and options can end up being vague promises with unclear value. When external opportunities are scarce, this may not be a major issue; but once the industry begins to raise salaries and compete for talent, such ambiguous incentives become increasingly difficult to sustain. For DeepSeek, one realistic function of financing is to provide the company with a market price, giving the team a clear expectation and ensuring that the options they hold are no longer just “potentially valuable in the future,” but “worth something now.”

The second pressure comes from capital expenditure.

Today, large model companies incur significant costs not just for training a model but for a long list of heavier tasks: inference services, continuous iteration, long context, multimodality, agent capabilities, infrastructure stability, and adapting underlying code and chips. Although DeepSeek has appeared quiet recently, it has not stopped. The ongoing progress in areas like long sequence processing, conditional memory, and sparse attention, as well as the market’s keen interest in adapting to domestic chips like Huawei’s Ascend, indicates that it is moving toward deeper and more engineering-heavy tasks.

Such efforts may not be flashy, but they are resource-intensive.

Especially if DeepSeek aims to achieve deep adaptation on domestic chips, it involves not just swapping hardware but also reworking many foundational elements, requiring significant engineering resources. This investment is costly, time-consuming, and challenging to yield immediate, tangible results. Yet it is essential for the next phase of competition.

The third pressure arises from the changing pace of the industry.

Today’s competition in large models has shifted from merely “creating a model” to “operating a system.” Model performance is one aspect, but service stability, inference supply, application implementation, and system capacity are other critical factors. Since the beginning of 2026, DeepSeek has experienced multiple large-scale service interruptions, including an incident where both the web and app were down for about 12 hours. For a model company that has reached a central position in the industry, this indicates not just a technical failure but that the entire system and resource inputs are facing increasing pressure.

In essence, DeepSeek’s decision to open a financing window is not because it suddenly wants to operate like its peers, but because the previous approach of relying solely on independence and a research atmosphere is becoming increasingly difficult to sustain for the next round of competition.

This is the real challenge Liang Wenfeng faces. The external question is who DeepSeek will ultimately take money from—Alibaba, Tencent, or perhaps neither. Perhaps the more difficult question for him is not this. The hardest part is that once capital truly enters, will DeepSeek still be the same DeepSeek?

Receiving funds from major firms means more resources and a thicker safety net, but independence will inevitably be redefined; taking money from purely financial investors may preserve more independence, but the resources that are truly lacking might not be compensated. Ultimately, it is not about choosing who provides the money, but about determining what kind of company DeepSeek will become in the future.

Thus, the final takeaway is that it is not merely about everyone wanting to invest in DeepSeek. More importantly, even DeepSeek itself has reached a point where it cannot remain stagnant. In the past, the primary task for Chinese AI companies was to prove they could develop models; now, the more realistic task is to demonstrate that after creating these models, they can also remain at the table for the long term.

Technological breakthroughs can make a company visible, but only through being valued, organized, and supported by resources can it continue to move forward. The financing of DeepSeek signifies a transformation not just for Liang Wenfeng, but for the entire survival rules of the Chinese AI industry.