Chinese AI startup StepFun plans to drop its offshore structure as it prepares for an IPO. This signals a strategic shift aligned with regulatory and market dynamics in China’s evolving tech sector.
The evolving regulatory landscape is expected to continue shaping listing strategies for Chinese firms seeking access to global capital markets
Chinese artificial intelligence startup StepFun is unwinding its offshore incorporation structure as it prepares for a potential Hong Kong IPO, according to sources familiar with the matter.
The move comes as Chinese regulators tighten scrutiny over “red-chip” structures commonly used by companies to raise funds overseas.
According to Reuters, in StepFun’s case, sources revealed that the company has determined that adopting an onshore corporate structure would be more suitable given its strong backing from state-linked investors.
Hong Kong’s IPO market has seen a strong resurgence, with funds raised in 2025 surging 231% to $37 billion.
Exchange data shows that more than 530 companies, most of them Chinese, had filed for listings as of March data.
According to a February report by Chinese publication Caijing, StepFun had been planning to raise between 2 billion yuan and 3 billion yuan in a pre-IPO funding round at a valuation of up to $6 billion.
The report added that the company aimed to file for a Hong Kong IPO by the end of June at a valuation of $10 billion for anchor investors.
StepFun counts investment vehicles affiliated with Shanghai municipal and district governments among its backers, along with Qiming Venture Partners and technology giant Tencent Holdings, according to public disclosures and media reports.
Founded in April 2023 by former Microsoft Vice President Jiang Daxin, the company has emerged as one of China’s prominent AI startups focused on developing large-language foundation models.
In February, StepFun hired Yin Qi, founder of facial recognition company Megvii Technology, to be its president to enhance its core management team.
StepFun’s Step 3.5 Flash model has ranked among the three most-used models on the OpenClaw AI agent platform, alongside competitors MiniMax M2.5 and Kimi K2.5.
Corporate records indicate that its previous structure involved the Cayman Islands.
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China’s securities regulator said last month it had instructed certain companies registered abroad, often in tax havens but with primary operations in China, to dismantle such arrangements.
These structures typically allow firms to access foreign capital markets while maintaining domestic business operations. Industry experts have warned that the new regulatory stance could delay listing timelines for affected firms.
Several Chinese technology firms are evaluating whether to follow regulatory guidance and shift their domicile back to China, according to investors and legal experts.