Kimi developer’s soaring valuation has triggered a frenzy for its shares ahead of an anticipated IPO, but fake deals and concerns over its $50 billion valuation are mounting.
By Li Man
As Moonshot AI, the company behind the wildly successful Kimi chatbot, accelerates its fundraising, a parallel market for its existing shares has gone into overdrive and the hunger for shares has become so intense that it has overwhelmed basic due diligence instincts.
In early July, a financial adviser known as Y received what appeared to be explosive news on WeChat: Kimi’s developer was offering secondary shares at a valuation of $18 billion while preparing to raise its next round at $31.5 billion. He was told that Moonshot AI’s founder and CEO Yang Zhilin and a childhood friend had personally set up a fund to handle the transaction.
The terms were demanding, but the opportunity was attractive enough that Y moved quickly. He began checking the fund’s general partners, contacting investors and preparing subscriptions. So many institutions wanted in that the potential investor list included prominent financial institutions and major companies.
But the deal fell apart at the last minute. The money was ready, but the agreement and term sheet never arrived. “The funding and the shares couldn’t be matched,” Y said, frustrated that he could not verify the information.
Fake deals proliferate
Another source described a similar deal, saying the buyers had strong backgrounds and that allocations and prices were changing in real time. An intermediary said one $18 billion tranche disappeared after a decision-maker hesitated, only for a new, higher price to appear. “Whenever an allocation appears, it is basically bought up immediately,” he said.
The result has been a market defined by speed, uncertain prices and allocations, and a proliferation of fake information. Some retail investors have even claimed to have bought shares ahead of the company’s long-anticipated listing.
The frenzy forced Moonshot AI to issue a statement: all fundraising is handled directly by the company. It stressed that transfers of existing shares, including common stock and employee incentive shares, require internal approval and that any unauthorized transaction would be invalid.
When investors are still lining up to buy despite a deal being unable even to produce a term sheet, it suggests that the hunger for AI exposure has begun to outweigh the instinct to check the paperwork.
A $50 billion valuation
The frenzy is also a reflection of Moonshot AI’s extraordinary fundraising trajectory.
Between January and February 2026, the company completed three financing rounds worth $500 million, $700 million, and $700 million, pushing its valuation from $10 billion to $18 billion. In May, Meituan’s Long-Z Venture Capital arm led a roughly $2 billion Series D, taking the post-money valuation above $20 billion. By June, another round started at a pre-money valuation of $31.5 billion.
The real acceleration came in July. Two weeks after the launch of Kimi K3, the company completed its Series F on July 29, raising more than $3.5 billion at a post-money valuation of $35 billion. The original target was only $1 billion to $2 billion, but demand exceeded that by more than three times, prompting the round to close early.
That oversubscription pulled the next stage forward. The planned August G round, effectively a pre-IPO round, was opened early at a pre-money valuation of $50 billion, or about 350 billion yuan. Goldman Sachs and China International Capital Corp. have reportedly been appointed joint sponsors, with a Hong Kong listing potentially coming within six months.
From the $4.3 billion valuation at last year’s Series C to $50 billion for the pre-IPO round, Kimi’s valuation has increased more than tenfold in less than a year.
People familiar with the fundraising say the increase reflects both the market impact of Kimi K3 and a sharp acceleration in commercialization. Annual recurring revenue rose from $100 million in March to $300 million in June. Revenue from its API (application programming interface), which lets other companies integrate Kimi’s AI into their own products, accounts for more than 70% of the total, while overseas revenue has increased 400% year over year and the business now reaches more than 200 countries and markets.
Moonshot AI also has an unusually strong shareholder base, including Sequoia China, IDG Capital, 5Y Capital, ZhenFund, Capital Today and Source Code Capital, alongside strategic investors such as Alibaba, Meituan, Tencent and Xiaohongshu.
Fear of missing out
Yet some existing investors are choosing not to chase the latest rounds.
One institutional investor, known as V, said his firm entered at a valuation of about $6 billion and continued investing in the following two rounds. But it has sat out the heavily oversubscribed Series F and pre-IPO round.
“It’s not that we don’t like the company,” V said. “It’s that after doing the math, we got a little nervous.”
His team believes the company’s valuation multiple is almost certain to fall. Current valuations are inflated with exuberance driven by fear of missing out and scarcity premiums, he argued. As the company heads toward an IPO and information becomes more transparent, valuation will pivot from “storytelling” to “number-crunching.”
The restructuring required to move Moonshot AI’s corporate structure toward a Hong Kong listing also creates additional friction, including how funds move across borders and how overseas investors’ holdings can be brought back into China in a way that complies with regulations.
So, amid the flood of oversubscribed rounds and constantly changing market rumors, V’s firm has chosen to pause.
K3 open-source lifts sentiment
That said, Kimi’s K3 open-source release has strengthened confidence across the industry. For investors, its significance extends beyond the company itself. One investor, who goes by the initial M, said a stronger open-source model increases demand for inference computing and strengthens the outlook for infrastructure providers such as optical-module manufacturers, high bandwidth memory suppliers and data centers.
M said that Kimi has also established a new price benchmark by charging the highest API prices among Chinese models, proving “premium with justification” can win.
For investors who missed earlier AI winners, the lesson may be less about chasing Moonshot AI than figuring out where the next opportunity lies.
As the company’s final pre-IPO round nears its close, rather than lamenting the rapid rise in its valuation, it is more important to identify who stands to cash in first along the value chain. “For an investor, knowing where the cake is and how it will be sliced matters more than simply trying to catch up,” M said.
Source:
Chinaventure.com.cn
