Moonshot, DeepSeek, and the Great Chinese AI IPO Rush

Moonshot AI, the Pink-Floyd inspired startup behind Kimi, is reportedly preparing a Hong Kong listing within six months. The startup is close to finalizing a funding round that values the startup at just over $30 billion–and then, according to Bloomberg, will immediately turn around and try to raise even more money.

The Beijing-based developer just released K3, a 2.8 trillion-parameter model that’s topped several AI benchmarks and shrinks the gap with U.S. frontier models even further. Moonshot’s Hong Kong IPO also follows two of its peers, Minimax and Z.ai, which both debuted in the Chinese city in early January.

DeepSeek, the Hangzhou-based developer that’s perhaps China’s most respected AI lab–is also pursuing an IPO. But it’s instead aiming for Shanghai’s STAR market, the city’s Nasdaq-style tech board, with a listing as early as the second quarter of 2027.

The company doesn’t really need external funds: Its founder, Liang Wenfeng, runs High-Flyer, a quantitative hedge fund with deep enough pockets to bankroll years of AI research without outside capital. 

Yet DeepSeek raised $7.4 billion in its first-ever external funding round in June—at a valuation north of $50 billion—and is reportedly now seeking fresh capital at a valuation as high as $71 billion ahead of the IPO.

Some reports have suggested that DeepSeek needed to raise funds to retain talent. Rival startups have dangled stock options and high valuations to poach the lab’s researchers, meaning it needed to find some way to make itself more attractive.

DeepSeek’s funding round was a little unusual. According to The Information, commercial investors, like Tencent, JD.com, and CATL, accepted a five-year lock-up and zero voting rights, while China’s National Artificial Intelligence Industry Investment Fund, a state vehicle, got to invest directly, with voting rights and no lock-up. (Liang himself wrote the biggest check: 20 billion yuan, or almost $3 billion)

There’s long been an onshore-offshore split when it comes to Chinese companies seeking public funding. Mainland Chinese markets, like those in Shenzhen and Shanghai, offer access to domestic capital, particularly local retail investors, yet offer more limited access to international funds; Hong Kong, on the other hand, offers a highly international investor base, even as getting money from mainland China is more difficult.

When it comes to the newest wave of Chinese tech companies, there seems to be a pattern when it comes to listing. Companies regarded as “national champions”—either because they’re dominant in their category or explicitly working to replace foreign technology restricted by U.S. export controls—go for a mainland Chinese listing, at least at first.

Robot maker Unitree, known for the dancing humanoid robots that have become a fixture of Chinese state television broadcasts, is also pursuing a Shanghai listing. Moore Threads, a domestic company that makes Nvidia-style graphics processing units, also chose Shanghai for its IPO last December. And next Monday, CXMT, the world’s fourth-largest manufacturer of DRAM memory (used in PCs, smartphones, and electronic devices), will start trading on the STAR Market next week following an $8 billion IPO.

Hong Kong, on the other hand, is still the destination of choice for China’s large internet companies.  Both Shein and Xiaohongshu (known better overseas as RedNote) are both working towards Hong Kong IPOs. Baidu also plans to convert its secondary listing in Hong Kong to a primary one, opening the door for mainland Chinese investors to buy its shares through the city’s Stock Connect scheme. 

Still, a Hong Kong listing is, in practice, an overseas listing in the eyes of Chinese regulators. That means those hoping to debut in Hong Kong must get approval from China’s securities regulator first—which may be dicey for those working in strategic technologies. 

Mainland China and Hong Kong aren’t mutually exclusive. Luxshare, a key Apple supplier, completed its secondary listing in Hong Kong earlier this month, raising $3.1 billion in the city’s largest IPO so far this year. That record’s set to be overtaken this week, as Zhongji Innolight, a Shenzhen-listed maker of optical transceivers used in AI data centers, plans to raise $8 billion.

Hong Kong isn’t likely to keep its position at the top of the global IPO leaderboards this year, after holding it throughout 2025 and the first quarter of 2025. SpaceX’s record-breaking $85.7 billion U.S. offering and SK Hynix’s $26.5 billion American depositary share listing–let alone OpenAI and Anthropic’s pending IPOs–will pull the U.S. far into the lead this year.

But even with all the attention on U.S. markets, Chinese markets, including in Hong Kong, will keep raising money. CXMT starts trading in Shanghai on July 27; Innolight starts trading in Hong Kong on July 30.

See you tomorrow,

Nicholas Gordon
X: @nickrigordon
Email: nicholas.gordon@fortune.com
Submit a deal for the Term Sheet newsletter here.

Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

– Glow, a Tel Aviv, Israel- and Palo Alto, Calif.-based company designed to help businesses protect employee devices from cyberattacks, raised $180 million in funding. Sequoia, Cyberstarts, Greenoaks, and Redpoint Ventures led the round and were joined by Index Ventures, Swish Ventures, Lux Capital, Operator Collective, and Holly Ventures.

– Crystalys Therapeutics, a San Diego, Calif.-based biopharma company focused on treatments for gout, raised $130 million in Series B funding. Frazier Life Sciences led the round and was joined by Wellington Management, HBM Healthcare Investments, Soleus Capital, and others.

– Arrakis, a London, U.K.-based company that helps industrial businesses deploy AI agents for critical operations, raised $37.5 million in funding. Blossom Capital led the $30 million Series A round and Accel led the $7.5 million seed round.

– Neon Commerce, a San Francisco-based payments and commerce platform for video game publishers, raised $13 million in Series A funding from KRAFTON, a16z, and Renegade Partners.

– Yope, a Warsaw, Poland-based private photo-sharing app for friend groups, raised $12.3 million in funding. Northzone led the round and was joined by Inovo, Redseed, and Geek Ventures.

– Inner Logic, a Baltimore, Md.-based company that develops software tools for makers of medical devices used in procedures, raised $11.5 million in seed funding. General Catalyst and Bison Ventures led the round.

– Cheiron, a Los Altos, Calif.-based company that uses AI to help drugmakers develop medicines, raised $8 million in seed funding. Menlo Ventures led the round and was joined by others.

– Lil Snack, a New York City-based daily games company, raised $8 million in funding. a16z led the round and was joined by Lerer Hippeau, Waverley Capital, Powerhouse Capital, and Hasbro.

– Tikva Allocell, a Singapore-based biotech company developing cell therapies for solid tumors, raised $8 million in Series A funding. Kantharos Capiora led the round.

– StrongestLayer, a San Francisco-based AI-native email security company, raised $4.1 million in funding. Inovia Capital led the round and was joined by Sorenson Capital, LaunchPod, Alumni Ventures, and Chris Key.

– Ossprey, a London-based cybersecurity company that scans open-source software for malicious code, raised $2.7 million in pre-seed funding. Episode 1 Ventures led the round and was joined by Osney Capital and Octopus Ventures.

PRIVATE EQUITY

– Cinven agreed to acquire Salsify, a Boston, Mass.-based provider of software that helps brands manage and share product information online. Financial terms were not disclosed.

– Fundamental Advisors acquired BlueSky Helicopters, a La Verne, Calif.-based helicopter services operator focused primarily on firefighting, utility services and other essential aviation services. Financial terms were not disclosed.