Tencent and Alibaba in Talks to Invest in DeepSeek at $20 Billion-Plus Valuation
China’s two biggest tech giants, Tencent and Alibaba, are in active talks to invest in DeepSeek at a valuation exceeding $20 billion, according to a report by The Information.
The DeepSeek $20 billion valuation talk marks a stunning turn for a company that, until recently, had made a point of rejecting outside money entirely. Founder and CEO Liang Wenfeng built DeepSeek as a side project of his quantitative hedge fund, High-Flyer Capital Management, which still holds 99% ownership of the lab. Liang had repeatedly rebuffed approaches from China’s major venture capital firms and tech companies, framing financial independence as a shield against commercial pressure. That wall is now visibly cracking.
The reasons are not hard to find. DeepSeek is burning through significantly more capital as it works toward its next flagship model, V4, which is being engineered to run on Huawei’s Ascend AI chips part of Beijing’s broader drive to wean Chinese AI off Nvidia hardware. The transition has proved technically demanding, with Huawei engineers reportedly embedded within DeepSeek’s team to resolve stability issues during training runs. The model has already been delayed multiple times.
At the same time, DeepSeek has been losing key talent to well-funded rivals. Guo Daya, a lead author on the R1 model that stunned the global AI industry in January 2025, departed for ByteDance’s Seed AI division. Luo Fuli, a core developer of the V2 model, left for Xiaomi. Wang Bingxuan, another engineer, reportedly moved to Tencent making it all the more notable that Tencent is now among those circling the company as a potential investor.
The Strategic Play Behind The Bid
The irony isn’t lost on observers: the very companies poaching DeepSeek’s engineers are also among those willing to bet big on a DeepSeek $20 billion valuation. Alibaba, whose open-source Qwen model family now accounts for over 50% of global open-source model downloads, and Tencent, which has been aggressively expanding its own AI capabilities, both have clear strategic interest in gaining a foothold in a lab that still commands enormous credibility among developers worldwide.
The expected investor base remains domestic. U.S. venture capital faces mounting regulatory and national security barriers to investing in Chinese AI, which narrows the field to Chinese institutions and tech conglomerates. No deal has been finalised, and it is still unclear whether Liang Wenfeng will agree to terms that dilute High-Flyer’s near-total grip on the company. What the $20 billion figure makes plain is that DeepSeek, which famously trained its V3 model for a reported $5.6 million, is no longer being valued like a scrappy outsider, it is being priced like a cornerstone of China’s AI future.
