Deepseek Plans $7.35B Raise as AI Startup Valuations Soar

Key Takeaways

• Deepseek is raising up to $7.35 billion, the largest AI funding round in Chinese history
• Core Automation quadrupled its valuation to $4 billion in just six weeks
• Deepseek founder Liang Wenfeng plans to personally contribute 40% of the round

Deepseek Eyes Record $7.35 Billion Round

Chinese AI lab Deepseek is planning a funding round of up to 50 billion yuan ($7.35 billion), according to The Information. If completed, it would be the largest funding round ever for a Chinese AI company.

Founder Liang Wenfeng plans to personally contribute up to 40 percent of the round. The deal could push Deepseek's valuation past $51.5 billion, placing it among the most valuable AI companies globally.

The company is also accelerating its path to revenue. Deepseek plans to release DeepSeek V4.1 in June with expanded enterprise tools, improved MCP support, and new image and audio processing capabilities.

Investors had previously raised concerns about the company's lack of revenue and the departure of key researchers to competitors like Xiaomi and ByteDance. The commercialization push appears to address those concerns directly.

Core Automation Hits $4 Billion in Six Weeks

The velocity of AI valuations is even more striking at Core Automation. The startup, founded by former OpenAI researcher Jerry Tworek just six weeks ago, is reportedly targeting a valuation of around $4 billion.

That's a fourfold increase from its $1 billion valuation when it raised $100 million only weeks earlier. Nvidia was among the backers in that earlier round.

Core Automation is building AI models that can keep learning after training, a technical approach that could address one of the fundamental limitations of current AI systems. Most large language models today are frozen after their initial training, unable to incorporate new information without expensive retraining.

What's Driving These Valuations

Both deals reflect the current state of AI investment: money is chasing the most promising technical teams at prices that would have seemed absurd a few years ago.

For Deepseek, the bet is that a well-funded Chinese lab can compete with Western counterparts like OpenAI and Anthropic. Liang's willingness to put his own money in, to the tune of nearly $3 billion, signals confidence in the company's technical direction.

For Core Automation, the investment thesis centers on Tworek's OpenAI pedigree and the potential of continual learning systems. Nvidia's participation suggests the chip giant sees strategic value in the company's research direction.

The Talent Factor

Both stories highlight how AI talent shapes investment flows. Deepseek's challenges with researcher departures to Xiaomi and ByteDance apparently spooked investors enough to raise concerns. Meanwhile, Tworek's exit from OpenAI instantly attracted $100 million.

This dynamic creates a competitive environment where the top AI labs must pay retention packages that rival startup equity, while startups can command billion-dollar valuations based primarily on who's building them.

Frequently Asked Questions

How much is Deepseek raising in its new funding round?

Deepseek is planning to raise up to 50 billion yuan ($7.35 billion), which would be the largest AI funding round in Chinese history.

Who founded Core Automation?

Core Automation was founded by Jerry Tworek, a former researcher at OpenAI. The company launched just six weeks ago.

What is Core Automation building?

Core Automation is developing AI models that can continue learning after their initial training, addressing a key limitation of current AI systems.

What is Deepseek's expected valuation after the funding round?

The funding round could push Deepseek's valuation past $51.5 billion.

Source: The Decoder / Matthias Bastian