(Bloomberg) -- DeepSeek has told prospective investors in its second fundraising round that it's suspending the deal for now, people familiar with the matter said, days after comments widely attributed to founder Liang Wenfeng about US-Chinese AI competition went viral.
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The Chinese AI pioneer verbally informed some of its would-be backers that they wouldn't be signing investment agreements in the coming days, as they had expected, people familiar with the matter said. DeepSeek might choose to resume the deal process at a later date, the people said, asking to remain anonymous to talk about private discussions. The suspension stemmed in part from Liang's frustration over online reports about his comments to investors during his first financing deal, which closed in June and raised $7 billion for the AI lab, the people said.
Bloomberg hasn't verified the authenticity of those posts, which concerned a transcript of a meeting Liang held with unidentified parties. Chinese media including Yicai reported this week that the billionaire founder talked about a reliance on Nvidia Corp. chips for AI development and China's persistent lag in AI sophistication relative to the US. Deepseek didn't immediately respond to an emailed request for comment about the transcript or the fundraising.
Negotiations remain fluid and the company may still choose to proceed. It's unclear if DeepSeek has communicated its intentions to all prospective investors in the current deal. The talks kicked off mere weeks after DeepSeek closed its record first financing round, when it secured big names including Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd.
DeepSeek was aiming to raise at least 10 billion yuan of additional funds in a follow-on deal, though the final amount could go higher depending on the number of investors that sign on. The startup had been targeting a pre-money valuation of at least 480 billion yuan, Bloomberg News previously reported. That's an increase from the roughly $50 billion price tag DeepSeek drew in its first round.
In addition, the company has begun preparations for an initial public offering and may file as soon as this year, setting the stage for what could be a landmark debut for the country's technology industry.