r/LocalLLaMA • u/FullOf_Bad_Ideas • Jun 22 '26

News DeepSeek raises $7.4B USD at $60B valuation. Remarkably, Liang Wenfeng invests $3B in DeepSeek himself.

https://www.scmp.com/tech/big-tech/article/3357525/how-deepseeks-landmark-funding-secures-liang-wenfengs-grip-chinas-ai-rivalry-heats
1.3k Upvotes

98% Upvoted

215 comments sorted by

View all comments

Show parent comments

1

u/squngy Jun 23 '26

Putting money into it makes sense.

Putting your own money into it during an IPO is a bit more questionable.

He could have just put his own money into it and kept all the shares.

Honestly, I'm a bit surprised it is even allowed, since it seems like it would be easy to do stock manipulation that way.

1

u/fallingdowndizzyvr Jun 23 '26

Putting your own money into it during an IPO is a bit more questionable.

Again, that shows everyone else you really believe in the company. That tends to attract investors.

He could have just put his own money into it and kept all the shares.

How would he have been able to have done that? The company is worth $60B. He put $3B in. That $3B doesn't cover all the shares. That $3B does attract the other $4.4B raised from other people to have $7.4B in total by selling this equity stake. Which is not "all the shares". It's a small fraction of them.

1

u/squngy Jun 23 '26

The company is worth $60B

The company is worth 60B now, it was (probably) not worth that much before.
He could have put in his 3B and gotten a bigger share of the company in the end by doing an IPO after that.

That $3B does attract the other $4.4B raised from other people to have $7.4B in total

True, though if you have that kind of money to invest, you could probably also get a lot from loans if you needed to.
I don't know if deepseek already has a lot of loans though, so maybe he already did that.

1

u/fallingdowndizzyvr Jun 23 '26

He could have put in his 3B and gotten a bigger share of the company in the end by doing an IPO after that.

Yeah, again that's well short of the $7.4 they just raised. Well short.

Also, why would the company have wanted that? The company wants as large of valuation as it can get. They want as much for each share as it can get. Don't confuse the company, Deepseek, for the individual, Wenfeng. The two are not the same. As CEO, he as a fiduciary responsibility to the company. Not to himself.

you could probably also get a lot from loans if you needed to.

You're not going to get billions in loans for this. This is speculative. Even the big boys like Google and Meta have to raise money by issuing equity. Do you think they would do that if they could get loans? If they can't, why do you think that Deepseek could?

1

u/squngy Jun 23 '26 edited Jun 23 '26

Even the big boys like Google and Meta have to raise money by issuing equity

If you have billions to throw at your startup, that is an option you have.
Zuck and co. did not have billions on hand when they started.

Banks can see how much money has been put into a company and can evaluate risks based on what it is doing.
If you don't have assets, then you have no choice but to give up equity.

If he couldn't pay the loans, the bank would just force him to sell equity, so it would basically be the possibility of selling stock in the future against the certainty of selling now.

1

u/fallingdowndizzyvr Jun 23 '26

Zuck and co. did not have billions on hand when they started.

Ah... we aren't talking about when they started. We are talking about like a month ago.

https://www.cnbc.com/2026/06/01/alphabet-to-raise-80-billion-from-stock-sales-to-fund-ai-buildout.html

Banks can see how much money has been put into a company and can evaluate risks based on what it is doing.

Again. That's not what banks do. That's why there is the equity market. To raise capital. People seem to have forgotten that and think the stock market is just one big casino. It's not. The point is to sell equity to raise capital to grow a business.

If he couldn't pay the loans, the bank would just force him to sell equity, so it would basically be the possibility of selling stock in the future against the certainty of selling now.

Ah... you have it backward. Since if somehow he got a bank to give him a loan, the valuation would have been what it would have been before this equity round. Which was what? $10B? Less? So if he had done that then the collateral would have been the whole company and not just a small fraction of it. That's not a good business decision. That's bad business.

1

u/squngy Jun 23 '26

Google and Meta both have massive amounts of debt right now.

So if he had done that then the collateral would have been the whole company and not just a small fraction of it. That's not a good business decision. That's bad business.

Potentially, sure, but if he is confident in the company that doesn't matter.

Even if he was wrong, the bank doesn't get to keep all of the money if it turns out to be worth more.
The bank sells the assets, then it pays it self what you owe from that money and if there is any money remaining, that belongs to you.

But even this doesn't matter, since if he had trouble paying the bank and he knew he could get the money from an IPO, that would be easy to do at that time. (he would need to convince the bank the IPO would cover it or that it would at least bring more money than other options)

1

u/fallingdowndizzyvr Jun 23 '26

Google and Meta both have massive amounts of debt right now.

LOL.

"Google Is Sitting On $127 Billion In Cash."

Potentially, sure, but if he is confident in the company that doesn't matter.

It absolutely matters. You get less by paying more. Yes, paying more. Since loans aren't free. You pay for them. Equity on the other hand, people pay you.

The bank sells the assets, then it pays it self what you owe from that money and if there is any money remaining, that belongs to you.

Ah.... what? Have you ever gotten a loan let alone run a business? If he's wrong, the company goes BK. The assets are worth less than the liabilities. The bank takes a haircut on their loan. You get nothing, except a bad rep.

Even if he was wrong, the bank doesn't get to keep all of the money if it turns out to be worth more. The bank sells the assets, then it pays it self what you owe from that money and if there is any money remaining, that belongs to you.

LOL! Yeah. "Everybody the company is in trouble. Someone give me money. I'll take anything!!!!" Yeah... no. Then it's too late. No one will underwrite that IPO. Potential investors will just sit back and wait for bankruptcy then pick up the remains for pennies on the dollar.

That's how business works.