Chinese artificial intelligence startup DeepSeek is seeking its first external funding round, targeting a valuation of more than $20 billion.

On April 22, blockchain outlet Cryptopolitan reported that Tencent Holdings and Alibaba Group are discussing the possibility of investing in DeepSeek.

DeepSeek is owned by hedge fund High-Flyer Capital Management and has recently entered talks with external investors for the first time. The talks are still under way, so the final valuation and the amount raised could change. As market interest grows rapidly, the company’s valuation is also rising over a short period.

DeepSeek’s target has risen sharply in recent days. As of last week, a plan was being discussed to raise at least $300 million at a valuation of at least $10 billion, but demand for a valuation quickly rose to more than $20 billion as investor interest increased, it reported. Some U.S. venture capital firms are taking a cautious stance because it is a Chinese startup.

Interest in DeepSeek is not limited to fundraising. Nvidia Chief Executive Jensen Huang (젠슨 황) said on the Dwarkesh podcast on April 22 that it could be a terrible outcome for the United States if DeepSeek optimises a new AI model for Huawei chips rather than U.S.-made hardware. He said China could gain an advantage over the United States if AI models are optimised differently from the U.S. technology stack and Chinese standards and technology spread globally.

Huang said the chip performance gap is not the only core issue. He said China could catch up in the AI race because it has abundant energy and a large pool of AI researchers.

Based on chip performance alone, China still trails Nvidia. Huawei’s Ascend 910C has about 60 percent of the inference performance of Nvidia’s H100. U.S.-made chips are currently about 5 times stronger than competing Chinese products, and the gap is expected to widen to 17 times by 2027. Huawei aims to ship 750,000 AI chips in 2026, but its total computing power based on overall production is at the 3 to 5 percent level of Nvidia’s.

Investment is also continuing to flow into AI infrastructure companies. On the same day, AI infrastructure company Vast Data announced it had raised $1 billion at a $30 billion valuation. Nvidia also participated as an investor. The funding lifted Vast Data’s valuation by more than three times from $9.1 billion in 2023. This year, global AI companies have raised a cumulative $280.5 billion, of which more than $170 billion has gone to OpenAI, Anthropic and xAI.