StepFun, a Shanghai-based AI startup founded by former Microsoft Vice President Jiang Daxin in April 2023, is restructuring its offshore incorporation to prepare for an initial public offering (IPO) in Hong Kong. This decision follows increased scrutiny from China's securities regulator on 'red-chip' companies, which are registered in tax havens but operate in China. Experts suggest that this regulatory shift may delay or even halt some IPO plans as companies navigate the complexities of changing their legal structures. StepFun, which develops advanced AI models, has significant backing from state capital and aims to raise between 2 billion yuan ($293 million) and 3 billion yuan ($439 million) in a pre-IPO funding round, with a valuation target of $10 billion for its IPO. The firm’s models are gaining traction in mobile and automotive sectors through partnerships with companies like OPPO and Geely. Other tech startups, such as Moonshot, are also contemplating similar structural changes to comply with new regulations and maintain their IPO prospects.