A company with roughly 160 employees just raised around $7 billion and is gunning for a valuation north of $70 billion. DeepSeek, the Chinese AI lab that sent shockwaves through global markets when it dropped its R1 model in January 2025, is no longer just a scrappy underdog. It’s becoming something that looks a lot more like a strategic national asset.
The Hangzhou-based company, founded in July 2023 as a spin-off from the High-Flyer quantitative hedge fund, is now in discussions for yet another funding round at a pre-money valuation between $71 billion and $74 billion. The endgame: a potential IPO on the Shanghai STAR Market, reportedly targeted for 2027.
From hedge fund side project to global AI contender
Liang Wenfeng, the company’s CEO, carved the AI lab out of his quant trading firm and staffed it with a skeleton crew. The team then built the V3 model for an estimated $6 million in training costs. Leading Western frontier models have been developed with budgets measured in hundreds of millions, sometimes billions. DeepSeek accomplished comparable benchmark performance at a fraction of the cost, partly through innovations like Mixture-of-Experts architecture and the creative use of older, less restricted hardware.
