Chinese AI Firms Planning IPOs Amid High Burn Rates
According to a report, two prominent Chinese artificial intelligence startups, Zhipu AI and MiniMax, have submitted applications to be listed on the Hong Kong Stock Exchange. Both companies rank among China’s most recognized AI firms; however, their financial filings reveal that the growth in the sector incurs significant costs. In the last three years, the two startups have collectively invested approximately 11 billion yuan ($1.6 billion), with nearly 50% of that expenditure allocated to renting computing power for the training of their AI models. In spite of robust revenue growth, both companies anticipate continuing to operate at a loss in the foreseeable future. Zhipu intends to secure approximately $300 million through its listing, whereas MiniMax is said to be pursuing as much as $700 million, according to the report.
There is significant pressure for Zhipu and MiniMax to pursue an initial public offering at the earliest opportunity. The anticipated listings of US AI giants like OpenAI and Anthropic in 2026 are poised to draw considerable global investor interest and liquidity, according to the report. Once those large US offerings hit the market, smaller companies – including Chinese firms – may encounter challenges in distinguishing themselves or obtaining funding at advantageous valuations. Zhipu, officially recognized as Knowledge Atlas Technology and marketed internationally as Z.ai, was established in 2019 by professors Tang Jie and Li Juanzi from Tsinghua University. The company has garnered support from prominent Chinese firms such as Meituan, Tencent, and Ant Group.
In January 2025, Zhipu was placed on the US export control Entity List due to allegations of its involvement in “advancing the PRC’s military modernisation,” referring to China’s People’s Liberation Army. Zhipu stated that the listing “will not cause any material adverse effect” on its business or finances, but cautioned that additional US restrictions could impact operations. Presently, US export regulations hinder certain Chinese firms from directly acquiring advanced chips. However, numerous firms have discovered alternatives by leasing computing power from cloud providers such as Microsoft and Amazon Web Services in areas like Southeast Asia and West Asia. US lawmakers are currently advocating for the closure of this loophole, which may lead to heightened expenses for Chinese AI companies, according to the report. MiniMax was established in Shanghai in 2021 by Yan Junjie. The company’s investors comprise Alibaba, Tencent, miHoYo, and IDG. In contrast to Zhipu, MiniMax places a greater emphasis on consumer products. Approximately 65 percent of its revenue is derived from individual subscribers to its visual content platform Hailuo AI and the virtual companion app Talkie, referred to as Xingye in China. These platforms encounter fierce rivalry within the domestic market. MiniMax has pursued an aggressive expansion strategy beyond China, significantly diminishing its dependence on the mainland market. During the initial nine months of 2025, Singapore accounted for 24.3 percent of revenue, while the US contributed 20.4 percent.
The report indicated that Mainland China’s share decreased to 26.9 per cent, a significant drop from 81 per cent in 2023. Nonetheless, the company is confronted with legal challenges in the US. In September, prominent Hollywood studios such as Disney, Universal, and Warner Bros. Discovery initiated legal action against MiniMax, alleging copyright infringements by Hailuo AI and pursuing damages that could reach $75 million. Both firms continue to incur significant losses. In the first half of the year, Zhipu’s revenue surged 325 per cent year-on-year to 191 million yuan; however, its loss expanded to 2.4 billion yuan. Spending on research and development alone reached 1.6 billion yuan. Zhipu intends to dedicate 70 percent of its IPO proceeds to research and development. MiniMax disclosed revenue of $53 million alongside losses amounting to $512 million during the first nine months of the year. The company allocated $180.3 million towards research and development and intends to utilize new funding to create AI-native products. Despite increasing losses, the valuations of Chinese AI companies continue to lag significantly behind those of their US counterparts. Zhipu has secured more than 8.3 billion yuan in funding since 2019 and was most recently valued at approximately 40 billion yuan ($5.6 billion). According to the report, MiniMax was valued at over $4.2 billion following its fundraising in August. In contrast, OpenAI may achieve a valuation of $830 billion if it successfully completes a $100 billion fundraising round, whereas Anthropic holds a valuation of approximately $350 billion after significant investments from Microsoft and Nvidia.
