Investing.com -- DeepSeek, a Chinese artificial intelligence startup, is considering raising outside funding due to its sudden rise to fame and the subsequent need for more AI chips and servers, according to a report from The Information, citing individuals familiar with the matter.
The startup, a two-year-old offshoot of Chinese quantitative hedge fund High-Flyer Capital Management, had previously refrained from raising outside funding to avoid rushing the commercialization of its products.
However, the recent popularity of its AI chatbot app has increased the demand for more resources, prompting internal discussions about outside fundraising. Deep-pocketed investors, including Alibaba (NYSE:BABA) Group and Chinese state-affiliated funds such as China Investment Corp. and the National Social Security Fund, have shown interest in financing DeepSeek’s growth.
The startup’s executives, along with those at its parent hedge fund, are debating whether to shift focus from research to building a business that generates substantial revenue and eventually profits. The company is also contemplating the use of data centers in Southeast Asia to access more Nvidia (NASDAQ:NVDA) AI chips.
The company’s fundraising plans are complicated. Raising money from major Chinese investors, especially state-owned ones, could exacerbate Washington’s concerns and potentially limit DeepSeek’s future business opportunities in the U.S. Furthermore, U.S. investors and funds may face difficulties investing in DeepSeek due to new U.S. rules restricting investments in Chinese AI companies.
Another challenge for DeepSeek is securing access to more Nvidia AI chips powerful enough for its AI development. The company is considering using a data center in Malaysia to access more Nvidia chips. Other major Chinese AI competitors, such as ByteDance, have already made arrangements to use Nvidia chips without violating U.S. export controls by renting Nvidia-powered servers at data centers outside China.
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