Battle for the Yuan: Moonshot AI Goes After a $10 Billion Valuation

Battle for the Yuan: Moonshot AI Goes After a $10 Billion Valuation

Chinese startup Moonshot AI is at the center of an investment surge, having launched a new funding round that values it at more than $10 billion. It follows the recent $700 million raise from giants including Alibaba and Tencent. Market optimism is fueled by the strong performance of rivals Zhipu AI and MiniMax, whose market capitalizations rose several-fold after their initial public offerings (IPOs) in Hong Kong.

While startups compete hard for capital, tech giants such as ByteDance and Alibaba are waging an aggressive marketing war, spending billions to promote their chatbots Doubao and Qianwen. Analysts stress that taking part in the large language model (LLM) race demands enormous spending: up to $700 million a year for developing foundation models alone.

The year opened with a flood of capital into China's large language model market. On one side, major players such as ByteDance, Alibaba and Tencent are spending billions of yuan on giveaways and traffic acquisition for their flagship AI apps. On the other, the startups known as the "six tigers" of large models are seeing their shares surge and are actively raising funds. In this race for capital, the biggest deal of the year so far is Moonshot AI's financing.

It was previously reported that Moonshot AI is preparing to close a round of more than $700 million, with participation from existing investors including Alibaba, Tencent, Source Code Capital and Ascendent Medical, and that the round was oversubscribed. At the same time, the company began a new round at a valuation of $10-12 billion. According to exclusive information, a new investor, Cathay Innovation, joined existing investors such as Source Code Capital in the round of more than $700 million, marking its first investment in a large-model company.

The new round, at a valuation above $10 billion, has already drawn interest from several institutional investors, including funds with European capital. At the time of publication, Moonshot AI had not commented on these reports.

Competition for a place in Moonshot AI's funding is intense. Sources say investors have shown active interest since mid-2025, when the company began raising money. This round has also attracted funds investing in large models for the first time. For example, Cathay Innovation, which had earlier described a strategy focused on practical applications and ecosystems, has now invested in Moonshot AI. This points to growing frenzy, comparable to the initial surge of interest in large models in early 2023, known as FOMO (fear of missing out).

The main driver of the surge was the rapid rise in market capitalization of Zhipu AI and MiniMax after their Hong Kong IPOs. After listing in early 2026, shares of both companies rose significantly. Especially after new model launches in February 2026, their market values hit new highs: Zhipu AI exceeded HK$220 billion and MiniMax HK$260 billion, 4-5 times their initial valuations. The appeal of the secondary market pushes primary-market investors to look for opportunities in companies such as Moonshot AI before they go public.

The Hong Kong IPOs have also extended the influence of Chinese large models internationally. European investors, previously less active in funding Chinese tech companies, are now showing interest in Moonshot AI. Fast decision-making was the key to getting a stake in Moonshot AI's previous $700 million round. The new round, at a valuation above $10 billion, was essentially initiated by those who missed out on a stake in the previous one.

The market capitalizations of Zhipu AI and MiniMax now serve as a benchmark for valuing other large-model companies. Moonshot AI and Baichuan AI were previously valued relatively low. Even with a current valuation above $10 billion, they still trail Zhipu AI (about $28 billion) and MiniMax (about $33 billion) by a wide margin.

Confirmation of model companies' value on the secondary market has changed the financing strategy of Moonshot AI and Baichuan AI: since mid-2025 they have moved to continuous fundraising to raise their valuations quickly. For example, after announcing the close of a $500 million round in late December 2025, Moonshot AI immediately started a new $700 million round, and then the current round at a valuation above $10 billion. In just two months, Moonshot AI's valuation rose more than 2.

2 times.

All four leading large-model startups are now speeding up fundraising in both primary and secondary markets. Their main competitors, ByteDance, Alibaba and Tencent, have already pulled ahead by entering an active spending phase to attract users. Holiday advertising spend, including giving away billions of yuan in bonuses and promotion through popular platforms, shows the big companies' drive to dominate the market for "mass-market AI apps."

For the four startups that remain, staying in the top tier of technological development is the top priority. Baichuan AI chairman Ying Qi recently said that staying competitive in foundation model development requires investment of 3-5 billion yuan a year. High valuations and investors' willingness to put money in on primary and secondary markets are an optimistic signal for the startups.