In private capital markets, access to a closed primary round has a price: intermediary vehicles with layered fees and long lock-ups. A new fundraising round at Chinese AI laboratory DeepSeek has spawned exactly that market, triggering a rush of investment vehicles carrying escalating fees and five-year lock-up terms around the lab's latest capital raise.
The constraint here is straightforward. When primary allocation closes to a limited pool, outside investors who want exposure have to go through intermediaries, each of whom captures part of the primary stake and sells access to it at a markup. The more investor demand outpaces primary supply, the higher each successive vehicle can price its fees, a dynamic the DeepSeek round appears to have triggered quickly.
Five-year lock-ups, the terms now attached to these vehicles, sit at the longer end of standard private market conventions. They reflect the reality that a position in a closely held company at this stage has no liquid secondary market and no guaranteed near-term exit. The investor who buys in through one of these shadow vehicles is holding an illiquid claim on an illiquid position.
The costly shadow market the round has spawned is, structurally, a rationing mechanism with a compounding fee structure. Each vehicle that forms around the DeepSeek allocation adds a layer between the original security and the end buyer. Escalating fees are the mechanism's defining feature and its cost.