Chinese AI start-up DeepSeek has begun raising external capital for the first time, largely to establish a market benchmark for its valuation at a time of aggressive poaching of AI talent, the South China Morning Post reported.

The limited funding round is intended to give employees greater clarity on the value of their stock options, in order to limit departures to well-funded competitors, the paper said, citing unnamed investors from Hangzhou and Beijing.

The start-up is not currently in urgent need of funding, as its parent company, hedge fund High-Flyer, was the second most profitable in China last year, according to industry figures.

Hangzhou-based DeepSeek is looking to sell no more than 3 percent of its equity, preferring to sell to state-backed and industrial investors, including local government guidance funds and affiliated tech platforms that can provide strategic resources such as AI infrastructure, the Post reported, citing three investors.

Private, market-oriented funds are reportedly more likely to be included in subsequent rounds, as the capital-intensive nature of AI development requires further financing.

High-Flyer founder Liang Wenfeng has said that DeepSeek’s main constraint is not access to capital, but access to advanced chips, amid US export restrictions.

The Information earlier reported that DeepSeek was aiming to raise at least $300 million (£222m) at a valuation of at least $10bn, and that Tencent Holdings and Alibaba Group were in discussions to invest at a valuation of over $20bn.

One of the investors who spoke to the Post said DeepSeek’s estimated valuation could exceed $100bn.