(Yicai) April 20 -- DeepSeek, which previously turned down multiple investment offers, is reportedly seeking external funding for the first time, with the Chinese artificial intelligence startup likely trying to keep core talent amid intensifying competition in the industry, according to an industry insider.

The shift in DeepSeek's funding strategy is likely aimed at pricing and cashing out employee stock options, but it comes "too late," the insiders told Yicai. In addition, it may not be suitable for most investors, with the terms likely to be exceptionally stringent, the person noted.

On April 17, the Information reported that Hangzhou-based DeepSeek is planning to raise at least USD300 million at a valuation exceeding USD10 billion. The move is seen as a significant strategic shift for the firm that had long rejected external capital and emphasized its independence.

DeepSeek's uniqueness lies in the fact that the stock options held by employees are entirely dependent on internal valuations due to its long-standing refusal of external capital, the insider said, adding that until external institutions confirm the price with real capital, the paper wealth lacks sufficient liquidity and premium anchors in the eyes of top talent.

Competition for AI talent is intense, with DeepSeek's core research and development team becoming a primary target for headhunters from major companies and unicorns. According to industry estimates, the firm's salaries are not low, but rivals are offering compensation packages that can be worth double or even more.

Several top talents have already left DeepSeek, including Luo Fuli, a key contributor to the DeepSeek-V2 architecture, who joined Xiaomi last November, Guo Daya, who reportedly recently joined ByteDance's Seed, and Ruan Chong, its former core multimodal researcher, who joined smart driving solutions provider DeepRoute.ai. In addition, Wei Haoran, a core author of the DeepSeek-OCR series, is rumored to be joining a tech giant.

In addition, the strategy change is aimed at introducing market-based pricing for the stock option system and addressing practical funding needs, some industry insiders pointed out.

By bringing in outside funding, DeepSeek will have more computational resources to develop new models, while also being able to offer more competitive salaries to prevent top talent from leaving, analysts said. Potential investors are rumored to primarily include Chinese yuan funds because US venture capital may have reservations, they noted.

"Founder Liang Wenfeng can't indefinitely use funds from High-Flyer to subsidize DeepSeek," an AI entrepreneur said to Yicai. "Splitting off and raising funds independently based on a market-driven valuation is a more rational business choice."

DeepSeek has not commented on the report yet. Earlier this year, it quickly refuted rumors that Alibaba Group Holding was interested in investing in the AI firm.

Editor: Martin Kadiev