DeepSeek's A-list investors tick three boxes

Tencent Holdings

05/06/2026 02:13

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Katrina Hamlin

    HONG KONG, June 5 (Reuters Breakingviews) - CATL 300750.SZ and Tencent 0700.HK have triple motivation to get behind Chinese AI champion DeepSeek. Backing the company could unlock revenue and knowhow, as well as pleasing Beijing. That makes it a decent addition to the duo's sprawling investment portfolios.
DeepSeek could raise about 50 billion yuan ($7.4 billion) in its first funding round, Reuters reported on Wednesday, citing sources. The world's largest battery maker and the messaging-to-gaming giant are set to contribute 5 billion yuan and 10 billion yuan, about $2.2 billion in total, becoming its largest external investors.
Cultivating a relationship with the AI whizz might be helpful. Tencent is playing catch-up integrating agents and other features into core products like super-app WeChat. CATL uses the technology to accelerate research into battery materials and smart factories.
They are also vying for roles in the supply chain. Tencent Cloud provides services for AI systems. CATL wants to sell more batteries to data centres. DeepSeek could help it understand the market better and may even become a client – although it's primarily focused on developing models, not infrastructure, the company is currently recruiting staff for an Inner Mongolia data centre, Bloomberg reports.
China's national intelligence fund is also discussing a stake, per Reuters. That suggests policymakers view DeepSeek as highly strategic and will welcome the companies contributing capital.
Financial returns may be modest, though. Founder Liang Wenfeng prefers to run DeepSeek like a lab, downplaying its earnings potential, and since its early breakthrough in low-cost chat models, agents have stolen the show. Yet backing DeepSeek makes more sense than many of Tencent and CATL's earlier bets.
CATL spent nearly $10 billion investing in everything from mines to robots and flying cars over the past decade, per Dealogic, hoping to secure access to raw materials and battery buyers. Those included a fair few duds, like electric vehicle maker Hozon New Energy Automobile, which entered bankruptcy proceedings last year.
That pales in comparison to Tencent, however, which splurged close to $200 billion amassing stakes in companies across tech, real estate, finance and more over the same period. While some aligned neatly with strategic priorities, others, like Tim Horton's coffee chain, are harder to parse. Eventually, it tightened its purse strings, investing around $11 billion last year, versus $37 billion in 2021, when Beijing warned tech giants against what it called "reckless expansion of capital". 
At least for DeepSeek, CATL and Tencent can count three solid reasons to pile in. 
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CONTEXT NEWS
Chinese AI startup DeepSeek is set to raise about 50 billion yuan ($7.4 billion) in its first funding round from investors including Tencent and CATL, Reuters reported on June 3, citing people with knowledge of the matter. The fundraising could value the company after the investment at between 350 billion yuan and 400 billion yuan, or between $52 billion and $59 billion, the people said.
Founder Liang has committed 20 billion yuan of his own money in this funding round, the people said. They added that tech conglomerate Tencent is considering investing 10 billion yuan and battery giant CATL is looking at 5 billion yuan, which would make them the largest external investors.

Tencent's investment volumes have fallen from their peak https://www.reuters.com/graphics/BRV-BRV/zjpqmxkaypx/chart.png
(Editing by Una Galani; Production by Ujjaini Dutta)
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