Two days after the U.S. Department of Homeland Security ordered the removal of all DeepSeek products and services from federal civilian agency IT systems, the Hangzhou-based company closed a funding round of approximately 100 billion yuan (US$15 billion), according to a Bloomberg report published on October 22, 2026. The amount, one of the largest ever raised by a Chinese startup, is three times the initial target of 50 billion yuan, which was revised twice during negotiations with investors.
The round is co-led by CATL (Contemporary Amperex Technology), the world's largest battery manufacturer, and Tencent, operator of WeChat, along with other institutional investors. New backers include Stony Creek Capital, China Fortune-Tech Capital, CPE Asset Management, Legend Capital, and Geely. CATL is doubling its stake, adding about US$1.38 billion after having invested roughly US$687.5 million in the previous round in June.
According to Dealroom, the pre-money valuation holds steady at around US$68.8 billion. If the deal closes as reported, total capital raised by DeepSeek in six months would reach US$20.6 billion — the largest primary market financing in China in 2026.
The timing is particularly striking. On October 20, DHS published an order in the Federal Register requiring all federal civilian agencies to remove DeepSeek implementations from their IT systems, classifying the company's models as multiple threat vectors. The order cited concerns about collection of personal data, user tracking, and the broad authority the Chinese government has to access private infrastructure. The measure took effect just days before the funding round closed, which seems to confirm a central thesis among investors: U.S. restrictions would have limited impact on DeepSeek's revenue, since its primary market is domestic.
DeepSeek itself has a risk-mitigation strategy that differentiates it from many competitors in the Chinese AI space. The company operates as an OpenAI-compatible API provider (POST /chat/completions at api.deepseek.com) and also offers its models as open weights, allowing customers to self-host on their own infrastructure. This decentralized architecture means that even with the U.S. ban, self-hosted versions of the V4-Flash and V4-Pro models remain accessible to developers and companies that do not mind the restriction.
In financial terms, the company's situation has evolved dramatically. According to The Information (published September 24, 2026), its annualized revenue run rate had already exceeded US$1 billion — double the level recorded a few months earlier. The gross margin of the API business reached 82.9% for the January-July period, with an overall gross margin of 44.6%. CEO Liang Wenfeng reportedly told investors that the August API price increases (two to four times previous levels) had not driven customers away.
The company also recently hired Yan Wentao, a former Hillhouse Ventures partner, as CFO, filling a post that had been vacant for three years. Hillhouse is already a DeepSeek investor and has a portfolio that includes ByteDance, Zhipu AI, and MiniMax.
DeepSeek is in an advanced phase of preparation for an IPO on Shanghai's STAR Market. According to the Seoul Economic Daily, the company plans to build a data center in the Inner Mongolia region, where it intends to deploy more than 160,000 Huawei Ascend AI chips — a strategically significant choice given the U.S. restrictions on NVIDIA hardware.
The global context of this financing is equally relevant. In May 2026, Moonshot AI (developer of Kimi) raised US$2 billion at a US$20 billion valuation. Zhipu AI and MiniMax, both listed in Hong Kong in January 2026, have market capitalizations of approximately US$29 billion and US$7.2 billion, respectively. With its current size, DeepSeek would be the largest Chinese AI player by capital raised, although still behind OpenAI (US$100+ billion) and Anthropic (also above US$100 billion).
The geopolitical irony is evident: the largest ban ever imposed on an AI company by a Western government coincides with the largest funding round ever received by a Chinese AI company. While Washington tries to isolate DeepSeek over national security concerns, Chinese investors — including industrial giants like CATL and Geely — are betting that the company will become a strategic pillar of China's AI infrastructure, well beyond the reach of U.S. sanctions. The question is whether this decoupling dynamic will ultimately create two parallel AI ecosystems, each with its own standards, investors, and models — a future where AI governance fractures as much as the code that powers it.
Sources: Bloomberg, TechCrunch, The Register
✓ Independent sources cross-checked and verified before publishing
