DeepSeek is seeking additional outside capital to finance its ambitions in artificial intelligence, putting greater pressure on the hedge fund founded by Liang Wenfeng to support a business that is becoming increasingly expensive to operate, according to a report by CNBC.
The Chinese AI lab was initially funded and supported by Liang’s quantitative investment firm, High-Flyer Quant, which had spent years applying machine learning and deep-learning techniques to financial markets before backing DeepSeek with capital and computing resources.
As DeepSeek expands, however, it has increasingly turned to external investors. At the same time, High-Flyer and affiliated investment vehicles have been building positions in some of China’s most closely watched technology IPOs, including semiconductor and robotics companies.
The strategy offers the quant firm an opportunity to capture substantial gains from pre-IPO allocations when newly listed stocks surge. But it also exposes High-Flyer to the sharp swings that have characterised China’s technology market this year.
Two High-Flyer affiliates — Zhejiang High-Flyer Asset Management and Ningbo High-Flyer Quantitative Investment Management — have secured allocations in several prominent Chinese technology companies ahead of their public listings.
Their investments have included memory-chip manufacturer CXMT, robotics company Unitree Robotics and businesses involved in chip packaging, electronic components and renewable energy.
CXMT represented the largest disclosed allocation, with the two High-Flyer vehicles collectively receiving about RMB175m ($26m) of shares before the company’s Shanghai listing, according to data compiled by Chinese private-fund consultancy PaiPaiWang.
CXMT shares surged more than fivefold on their July debut and have subsequently added further gains, making the memory-chip maker one of the most valuable companies in China.
The High-Flyer funds also secured about $5.8m of Unitree shares before its listing. DeepSeek itself participated separately as a strategic investor, receiving 2.31% of the offering and agreeing to a 36-month lock-up.
Unitree shares initially soared about 460% on their Shanghai debut before retreating around 27%, highlighting the risks associated with investing in some of China’s hottest emerging technology themes.
The volatility has also affected High-Flyer’s core quantitative strategies. Eight of the firm’s nine products reportedly posted losses in July as a global selloff in AI-related stocks spilled into momentum-driven quant strategies. Chinese quantitative funds subsequently recovered some of those losses in August.
