As fireworks lit up the sky during the Lunar New Year, another kind of frenzy was unfolding in China’s large model industry.
At one end, tech giants were spending heavily on “red packet” giveaways and free beverage promotions to draw users to their artificial intelligence apps. At the other, the so-called “little tigers,” a colloquial term for China’s leading large model startups, were seeing their valuations rise as fresh capital flowed in.
Among them, the biggest deal so far this year likely belongs to Moonshot AI.
Bloomberg previously reported that Moonshot is close to extending an existing funding round, originally estimated at USD 500 million. Already backed by Alibaba, Tencent, and 5Y Capital with a total round size of USD 700 million, the extension could lift Moonshot’s valuation to about USD 100 billion or more.
36Kr has learned that, in addition to investors already disclosed, the round extension may include existing backer Gaorong Capital and a new entrant, Cathay Capital. For Cathay, this could be its first investment in a large model company.
Sources familiar with the matter said Moonshot’s fundraising has attracted interest from multiple institutions, including overseas funds with European ties. As of press time, Moonshot AI had not responded to requests for comment.
“Scramble” may be the most accurate word to describe this round. One person close to the deal told 36Kr that since the second half of 2025, when Moonshot began raising funds, limited partners at several institutions have been pressing their general partners to participate.
Recent rounds have also drawn investors who had previously stayed on the sidelines of the large model race. Cathay Capital is one example. As recently as May 2025, managing partner Duan Lanchun told 36Kr that the firm had not invested in general-purpose large models or core infrastructure, preferring to focus on applied deployment and ecosystem development.
This may be the industry’s biggest wave of bandwagoning since early 2023.
The surge has been fueled largely by the rising market capitalizations of Z.ai and MiniMax, whose Hong Kong IPOs have revived confidence in the sector.
Since going public at the start of the year, both companies have seen steady gains. On February 12, after each launched a next-generation model, their market caps reached new highs. As of February 17, Z.ai’s intraday valuation surpassed HKD 220 billion, while MiniMax topped HKD 260 billion. Both have risen roughly four to five times their IPO valuations.
Strong returns in the secondary market have drawn primary investors toward pre-IPO companies such as Moonshot, eager to secure positions ahead of a potential listing.
The Hong Kong listings have also boosted global visibility for China’s large model developers. Notably, European capital, which had shown limited interest in Chinese tech, has now taken a closer look at Moonshot.
According to a source, new investors in the ongoing round had to move quickly to secure allocations. In effect, the new tranche, priced at a valuation above USD 100 billion, was driven by institutions that missed out in the previous round.
“The market caps of Z.ai and MiniMax have provided a valuation anchor for large model companies in the secondary market,” another source said.
Previously, Moonshot and StepFun were valued more conservatively. Even at USD 100 billion, Moonshot would still lag behind Z.ai, at around USD 128 billion, and MiniMax, at about USD 153 billion.
As the secondary market validates the value of large model developers, Moonshot and StepFun have adjusted their fundraising strategies. Since mid-2025, both have adopted rolling fundraising models to accelerate valuation growth.
For Moonshot, the shift has been dramatic. It first announced a USD 500 million round by the end of 2025, which quickly expanded to USD 700 million. The latest extension, potentially pushing its valuation to or past USD 100 billion, would represent more than a twofold increase in just two months.
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Across China, large model companies are now racing to raise funds in both primary and secondary markets. Meanwhile, the tech giants—ByteDance, Alibaba, and Tencent—have entered a new phase: spending aggressively to capture users.
During the Lunar New Year, these firms sponsored national broadcasts and poured money into “red packet” campaigns and beverage giveaways, hoping to make their AI apps household names.
For the remaining startups, the more pressing task is staying in the top tier of foundational model R&D.
In a recent interview, StepFun chairman Yin Qi said developing base models requires annual spending of RMB 3–5 billion (USD 420–700 million) just to remain competitive.
For startups, buoyant valuations and investor enthusiasm offer a rare window of optimism. Whether that optimism can translate into lasting technological leadership, however, remains an open question.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Zhou Xinyu for 36Kr.