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Introduction: A Game-Changer in AI?
January 27, 2025, may go down as a landmark date in AI history. That day, global media outlets erupted with reports on DeepSeek, a Chinese AI startup making waves with its large language model (LLM).
DeepSeek seemed to appear out of nowhere, much like the legendary Monkey King from Journey to the West. The startup claims its AI model rivals OpenAI’s GPT-4, a bold statement backed by comparisons on its official website. DeepSeek even proclaims: “It tops the leader board among open-source models and rivals the most advanced closed-source models globally.”
What’s even more surprising is the scale of its operation—DeepSeek reportedly developed its model with a small fraction of the funding used by comparable U.S. AI firms. (AlJazeera)
Minimal Resources, Maximum Impact
DeepSeek’s emergence is even more astonishing considering the challenges faced by Chinese AI companies. With U.S. restrictions on exporting advanced chips to China, DeepSeek had to develop its model with limited computing power and "non-cutting-edge" hardware. (FastCompany)
Perhaps the most unexpected aspect? DeepSeek is open-source.Any business or individual can use it to build their own AI models for free.This has baffled analysts and investors alike.
The global financial markets took notice—DeepSeek’s debut reportedly contributed to a $1 trillion stock market shakeup, led by a slump in Nvidia andother U.S. tech giants. (Bloomberg)
DeepSeek’s Corporate Structure
Company Name and Registration
DeepSeek’s official English website (deepseek.com) does not display a company name in its copyright notice, simply stating “DeepSeek.” The Chinese version lists its full name as 杭州深度求索人工智能基础技术研究公司.
According to public records in the Chinese company registry system:
- Official Name: 杭州深度求索人工智能基础技术研究公司
- English name: Hangzhou Deeply Seeking Artificial Intelligence Basic Technology Research Co., Ltd. (“DeepSeek”)
- Founded: July 17, 2023, in Hangzhou, Zhejiang Province (home to Alibaba’s headquarters)
- Registered Capital: RMB 10 million (approximately USD 1.4 million), fully paid by shareholders
For those unfamiliar, registered capital in China reflects shareholders’ equity investment and can be a useful indicator of financial strength. (Trustiics Guide)
Who Owns DeepSeek?
DeepSeek has a simple shareholding structure:
- LIANG Wenfeng (the founder) holds 1%
- 宁波程恩企业管理咨询合伙企业（有限合伙）(Ningbo Cheng’en Enterprise Management Consulting Partnership (Limited Partnership) in English), (“Cheng’en Partnership”) owns 99%
Regarding the ownership structure of Cheng’en Partnership, public records show:
- LIANG Wenfeng controls 50.1%
- Another limited partnership, 宁波程信柔兆企业管理咨询合伙企业（有限合伙）( Ningbo Chengxin Rouzhao Enterprise Management Consulting Partnership (Limited Partnership) in English), (“Chengxin Partnership”), holds 49.8%
- A consulting company, 宁波程普商务咨询有限公司 (Ningbo Chengpu Business Consulting Co., Ltd. in English) (“Chengpu Consulting”), owns the remaining 0.1%
Public records also show that all these entities are affiliates and they are all eventually majority owned by the DeepSeek founder, LIANG Wenfeng.
Affiliated Companies and Their Capital Contributions
- Cheng’en Partnership: Registered capital of RMB 12 million (~USD 1.7 million), the deadline for full contribution: December 31, 2066
- Chengxin Partnership: RMB 6 million (~USD 830,000), same contribution deadline: December 31, 2066
- Chengpu Consulting: RMB 30,000 (~USD 4,200), fully paid
- Hangzhou Zhisuan Technology Co., Ltd. (“Zhisuan Technology”): RMB 1 million (~USD 140,000), fully paid
Despite its ambitious AI model, these figures suggest a highly lean financial structure.
Group Structure
The following group structure chart provides a visual summary of DeepSeek’s ownership:
Are There VCs Backing DeepSeek?
The answer: none.
DeepSeek appears to be a self-funded startup controlled entirely by Liang Wenfeng. Despite being based in Hangzhou and Ningbo — two of China’s wealthiest cities — DeepSeek has no listed investments from Alibaba or major Chinese venture capital firms.
With its explosive debut, major VC firms may be already lining up to send DeepSeek term sheets.
Final Thoughts
DeepSeek’s rise is nothing short of extraordinary. In an era where AI development typically requires massive investment and access to top-tier semiconductors, a small, self-funded Chinese company has managed to shake up the industry.
The big question now: Will DeepSeek remain independent, or will it soon partner with—or be acquired by—one of China’s tech giants?
Stay tuned.
Another Takeaway: The Importance of Due Diligence
The DeepSeek case highlights why due diligence is essential when evaluating foreign businesses, particularly in emerging markets like China. Ownership structures, capital contributions, and complex corporate affiliations are critical factors to assess in VC/PE investments or business collaborations. Even a basic verification process can uncover crucial details about a company's financial health and governance. For businesses and investors, conducting due diligence is not just a best practice—it’s a necessity for informed decision-making.
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