DeepSeek Rejects Alibaba: Prioritizing Corporate Independence Over Big Tech Ecosystems
In April, DeepSeek launched a rare, massive financing plan that attracted interest from two of China’s largest tech giants: Tencent and Alibaba. However, we have exclusively learned that recent negotiations between Alibaba and DeepSeek have fallen through. A source close to DeepSeek informed us that the two parties failed to reach an agreement on specific investment terms. On one hand, Alibaba’s internal ecosystem was not considered a high-priority fit for DeepSeek; on the other, DeepSeek is not short on alternative investors and seeks to minimize restrictive clauses in its agreements.
In other words, a fundamental conflict exists between Alibaba’s strong desire for an integrated AI ecosystem and DeepSeek’s positioning as an independent model company. Several sources close to the deal echoed this sentiment.
Alibaba’s Integrated AI Ambition Since the beginning of this year, Alibaba has attempted to fully integrate its own ecosystem within the AI sector. In March, it established the Alibaba Token Hub, which houses five major departments including Tongyi Lab, the Qwen Division, and the Wukong Division. This covers the entire pipeline from foundation model R&D to B2B and B2C AI applications. In early May, it released the unified AI digital human Qwen Xiaojiuwo, accelerating the integration of the Qwen AI assistant into core apps like Taobao, Amap, Tmall, Fliggy, and Alipay. We reached out to Alibaba Group for comment, but received no response by the time of publication.
The Power Struggle with Giants Meanwhile, DeepSeek and other potential shareholders are engaged in a strategic tug-of-war. Bloomberg, citing people familiar with the matter, reported that Tencent proposed acquiring up to a 20 percent stake in this round, but DeepSeek is reluctant to cede such a large degree of control. The fact that both Tencent and Alibaba appeared on the potential investor list for a top-tier model company is significant. Whichever giant becomes a DeepSeek shareholder gains a massive advantage in the infrastructure alliance of the next-generation AI narrative. Clearly, the tech giants want a seat at the table.
The Shift in Market Dynamics However, the era of model companies desperately seeking funds is over. There are currently too many institutions eager to invest in DeepSeek, leaving investors—including giants like Alibaba—with very little bargaining power. Furthermore, DeepSeek is not hurting for cash. Jiang Yi, Managing Partner at Hengye Capital, told us that for the current DeepSeek, the best financing offer is the one with the fewest strings attached.
In fact, founder Liang Wenfeng’s insistence on independence has been a hallmark of DeepSeek’s history. Since its founding in July 2023, DeepSeek has operated entirely on internal funding from High-Flyer Quant and has never conducted external equity financing. Liang has previously used intermediaries to decline investment invitations from Tencent and Alibaba, keeping giants and VCs at bay for nearly three years. He has explicitly stated his refusal to accept external financing that would dilute equity or force the company to be driven by an investor’s commercialization agenda.
Why Open the Door Now? While the door has finally opened, the company's bottom line remains firm. According to Jiang Yi, this round of financing serves two core purposes: first, supplementing computational power and R&D funds to stay competitive in the increasingly expensive AI arms race; and second, providing a clear market valuation anchor for employees to retain top-tier talent.
DeepSeek is far from broke. In 2025, High-Flyer Quant achieved an annualized return of 56.55 percent on its 70 billion RMB assets under management. Performance fees alone could generate over 700 million dollars in cash flow. DeepSeek is looking for investors who understand its technical idealism without imposing commercial pressure.
High Stakes and State Involvement The restrictions for this round are reportedly very strict. On April 23, we exclusively reported that DeepSeek was valued at 300 billion RMB, seeking to raise 50 billion RMB. This valuation was confirmed by internal employees.
In early May, the Financial Times reported that the final valuation for this round could settle around 45 billion dollars. That report also noted that the China Integrated Circuit Industry Investment Fund (the Big Fund) is in talks to lead the round. The final roster of participants has not yet been finalized.
One investor described the current situation vividly: Now, investors are chasing Liang Wenfeng, waiting to see who he finally chooses. Multiple investors analyze that state-owned capital will likely play a crucial role in the final lineup. Pan Helin, a member of the MIIT's Information and Communications Economy Expert Committee, believes that introducing the Big Fund is not just about money, but also about meeting the needs of future AI security and regulatory compliance. For DeepSeek, a state-led investment may come with fewer commercial strings, aligning perfectly with Liang Wenfeng’s long-standing vision.
