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DeepSeek Attracts Interest from Alibaba and Chinese State Funds: Report

Chinese AI startup DeepSeek is considering seeking external funding for the first time, as reported by The Information on Wednesday. The company has piqued the interest of Alibaba and state funds according to sources familiar with internal discussions.

In January, DeepSeek surprised the tech industry with cost-effective AI models that can rival or surpass Western counterparts at a reduced cost, raising questions about the dominant position the U.S. holds in the technology race. A surge in demand following the initial success led to operational disruptions at the startup. To accommodate increasing usage and support model development, the company is exploring external funding options.

Reports indicate that China Investment Corp and the National Social Security Fund have reached out to DeepSeek for potential investment. Both Alibaba and DeepSeek have not responded to requests for comments from Reuters as of yet.

Discussions are underway between executives at DeepSeek and its parent hedge fund, High-Flyer Capital Management, to pivot towards establishing a revenue-generating business model from its research activities.

Meanwhile, competitor OpenAI plans to transform its for-profit branch into a public benefit corporation to mitigate constraints imposed by its current non-profit parent and enhance investments.

Recently, Chinese President Xi Jinping called upon business leaders, including Alibaba's co-founder Jack Ma and DeepSeek's founder Liang Wenfeng, to fortify the nation's economy and advance its technological prowess.