After 80, Liu Zihong is finally going to ring the bell for IPO.
On the last day of 2020, Shenzhen Rouyu Technology Co., Ltd. (hereinafter referred to as “Royu Technology”) formally submitted a prospectus and plans to be listed on the Science and Technology Innovation Board. With the release of the prospectus, this unicorn began to unveil its mystery.
As the helm of Rouyu Technology, Liu Zihong is a super student. Born in Nancheng County, Jiangxi Province, Liu Zihong had excellent grades since childhood. At the age of 17, he entered the Department of Electronic Engineering of Tsinghua University as the top candidate in the geography college entrance examination; at the age of 26, he received a PhD from Stanford University. In 2012, 29-year-old Liu Zihong founded Rouyu Technology. A month ago, Liu Zihong ranked 15th in the “2020 Hurun Post-80s Rich List of Self-made Rich People” with a fortune of RMB 14.5 billion.
In just 8 years, Rouyu Technology has rapidly grown into a unicorn with a valuation of over 8 billion U.S. dollars (approximately RMB 52.2 billion), with a luxurious lineup of investors behind it. However, this may also be one of the most controversial companies in the primary market in recent years. Many investors firmly support it, and some investors hesitate. This time Royole Technology plans to raise 14.434 billion yuan. Once a successful IPO, the market value is expected to reach 100 billion yuan.
The champion of science college entrance examination, from Jiangxi county to Tsinghua University
Valuation of 50 billion in 8 years
Behind Royole Technology is an 8-year entrepreneurial journey of a super-student.
Liu Zihong, who was born in Nancheng County, Jiangxi Province, is a typical “child of someone else’s family” and has excellent academic performance since childhood. However, he is not a good student who is completely decent. He was obsessed with billiards in junior high school and couldn’t help himself. He even skipped class to play billiards.
It is such a very individual student who won the first prize of the National Mathematical Chemistry Olympiad in Physics and the first prize of Chemistry at the age of 17. Electronic Engineering.
Here is an episode. Because when I was a child, I always like to use electric blankets for sleeping in winter. Liu Zihong found that electric blankets could not automatically control the temperature, so he was thinking about how to solve this problem when he was undergraduate. In the end, he invented the “human body biological intelligent sensing and application system” that can automatically sense various biological indicators of the human body during his senior year, and won a special prize in the competition. A month later, this system developed by Liu Zihong was bought by an entrepreneur with an offer of 3 million yuan, and he also reaped the first pot of gold in his life.
After graduating from a bachelor’s degree in 2004, Liu Zihong went on to study for a master’s degree without the exam. When graduating from graduate school two years later, Liu Zihong was faced with an important choice in his life-he also received the admission letter from Cambridge University and Stanford University. In the end, Liu Zihong chose Stanford University in the United States.
It was at that time that an idea about “flexible Display technology” burst into Liu Zihong’s mind. In his opinion, 70% of human information input methods rely on vision. Why are all displays square and square? Can they be as thin as paper? So, Liu Zihong took “flexible Display” as his PhD research direction.
After graduating from his Ph.D., Liu Zihong first joined the international giant IBM. Until 2012, he felt that the time to start a business was ripe. So, he took two alumni from Tsinghua University and Stanford University to establish companies in Silicon Valley, Shenzhen, and Hong Kong. “At that time, our dream was to hope that flexible electronics would be everywhere and in the universe, so our company’s name was set as’Rouyu’.” Liu Zihong once recalled.
In August 2014, Rouyu Technology officially released the first new type of flexible display after two years of “keeping a low profile”. The thickness of this product is only 0.01 mm. Once it was launched, it caused quite a sensation. The young Rouyu Technology and Liu Zihong also became famous in one fell swoop.
In mid-2018, Royole Technology announced that it had mass-produced a sixth-generation fully flexible display screen and entered the production stage. In October of the same year, Rouyu Technology officially launched the world’s first foldable flexible screen mobile phone “Rupai”. At the same time, Rouyu Technology has also become one of the fastest-growing unicorn technology startups in the world. One of the representatives of entrepreneurs.
Controversial unicorn:
With 200 million revenue in a year, what can you rely on to support an IPO?
Positioned as a pioneer in the global flexible technology industry, what kind of company is Rouyu Technology?
According to the data, Rouyu Technology provides a complete set of flexible products and solutions centered on flexible electronics such as fully flexible displays and fully flexible sensors through independent research and development of flexible integrated circuit technology, which are mainly used in smart mobile terminals, smart transportation, and entertainment. Media, smart home, sports fashion, office education and other industries. According to product categories, Royole’s products can be divided into fully flexible display or fully flexible sensor solution products and consumer products such as FlexPai, FlexPai 2, RoWrite Rouji, Royole Moon, and Royole X.
The most interesting thing is revenue. The prospectus shows that from 2017 to January-June 2020, Rouyu Technology achieved operating income of 65 million yuan, 110 million yuan, 227 million yuan, and 116 million yuan. Among them, Rouyu Technology used enterprise solutions as the main source of revenue from 2017 to 2019, but the proportion was decreasing year by year; and in the first half of 2020, the proportion of To C products exceeded 50% for the first time.
In terms of net profit corresponding to revenue, from 2017 to January to June 2020, the net profit of Rouyu Technology attributable to ordinary shareholders of the parent company was -359 million yuan, -802 million yuan,- 1.073 billion yuan and -961 million yuan, with a total loss of 3.195 billion yuan in three and a half years.
It is worth mentioning that Rouyu Technology clearly stated in the prospectus that the company cannot guarantee profitability in the next few years, and may also face the risk of delisting after listing. The reason is that the company will continue to invest in large-scale research and development in the next few years, and the company’s sales scale is small, and there is a certain degree of uncertainty in commercialization.
Rouyu Technology admits that the demand for flexible electronic products in the downstream industry of flexible electronic products that the company is engaged in is still in its infancy, and the company is gradually going through the critical stage from research and development to downstream customer expansion. If the core products with strong competitiveness cannot be formed in the future, Will face the risk of difficulty in sustainable operations and greater uncertainty in the future development prospects.
In fact, since the release of the world’s first folding screen mobile phone “Roupai” in October 2018, the question of whether Rouyu Technology can be mass-produced has not stopped. Of course, Liu Zihong has personally responded to these questions. On May 30 last year, Rouyu also officially opened the running flexible screen mass production line to the outside world in response to external controversies.
When talking about the doubts from the outside world, Liu Zihong once said that it is normal for a company to encounter some different opinions from the outside world in the process of innovation. “It doesn’t matter, we also understand that the most important thing for a company is to do its own thing and use the product and the market to speak.”
In addition, Liu Zihong also said that Rouyu is the only domestic company that has not adopted the traditional foreign curved surface display technology route. Only the comparison between fully flexible technologies is fair. “Flexible screens are at a rapid rise in time, and the entire industry has a lot of room for imagination, and there is still a long way to go.” In the face of doubts from the outside world, Liu Zihong “I hope everyone will be more patient.”
In terms of orders and customers, Rouyu previously announced that it had received 4 billion orders within a few months of the production line, but it has not announced the list of customers. In the prospectus submitted this time, Rouyu Technology’s customer list finally surfaced. Rouyu Technology has accumulated a number of well-known enterprise-level customers including China Mobile, China Telecom, Vertu, Airbus, Louis Vuitton, Luzhou Laojiao, Dongfang Performing Arts Group, Gree Electric, etc.
It is reported that Rouyu Technology plans to raise 14.434 billion yuan in this IPO. In other words, Rouyu Technology’s valuation has been higher than the previously rumored US$8 billion. Once successfully listed, its market value may reach 100 billion yuan.
Get angel investment with a few papers, VC/PE lineup is luxurious
Why did they vote for Rouyu?
Looking at the primary market, Rouyu Technology may be one of the most controversial unicorns in recent years.
Since its establishment, Royole Technology has gone through multiple rounds of financing, and the lineup of investors behind it can be called luxurious, including Shenzhen Venture Capital, IDG Capital, Cornerstone Capital, Alpha Wealth, CITIC Capital, Yuanzheng Investment, Fuhui Venture Capital, Jack and Fischer Investment, Knight Capital, Qianhai Fund of Funds, AMTD Group, Yuexiu Industrial Fund, Yingke Capital, etc.
Back in 2012, Royole Technology has just been established, and it has been favored by well-known angel investors Yang Xiangyang, Shenzhen Venture Capital, and Songhe Capital. The investor in charge of this project at Shenzhen Venture Capital once recalled that when he first met Liu Zihong, the entrepreneur did not have a good sample or a good team, only himself and a few academic articles published after his research at Stanford in 2006. Thesis and PhD thesis. After doing a comprehensive technical research, Shenzhen Venture Capital invested millions of RMB in Rouyu, and then in 2013 and 2015, it invested in two consecutive rounds.
At the same time, Rouyu’s too advanced technology has made many investors “unintelligible.” In December 2012, at the Shenzhen Returnee Talent Entrepreneurship Competition, Liu Zihong showed a flexible electronic ink black and white display screen. There were more than 30 investors in a house, and no one understood it. However, Songhe Capital’s founding partner Li Wei and IDG Capital’s senior partner Yang Fei were attracted by Liu Zihong’s sci-fi world. In 2013, Rouyu received round B investment from IDG Capital, Shenzhen Venture Capital, Songhe Capital, and Alpha Wealth Finance.
In 2014, after Royole Technology released its first new flexible display, it began to attract the attention of leading companies in the industry. In August 2014, Liu Zihong received the senior management team of a leading company in the industry in Shenzhen. The other party gave a $300 million acquisition contract and allowed the founding team to cash out. After more than a month of negotiations, Liu Zihong rejected the US$300 million acquisition.
This decision seemed “willful”, but it became Rouyu’s key node. Since then, Royole has started to fly all the way on the road of financing: In August 2015, CITIC Capital, Shanghai Pudong Development Bank, etc. participated in Royole Technology’s C round of financing, with a total investment of 1.1 billion yuan; the C+ round launched in November 2016 Financing, the investment amount is 500 million yuan, at this time Rouyu Technology’s valuation has reached 20 billion yuan.
In September 2017, Rouyu signed a contract with China CITIC Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of China, and Ping An Bank, adding a total of USD 800 million in Series D financing. In March 2018, after Yuexiu Industrial Fund and Li Ka-shing’s Hong Kong AMTD Group strategically invested in Royole Technology to complete the E round of financing, Royole Technology’s investment institutions covered the real estate industry. In August 2018, Rouyu Technology’s E+ round of financing, China Merchants Bank and others joined, its valuation has reached 5 billion US dollars.
Rouyu Technology, which has been low-key for two years, has also been exposed to financing in 2020. On May 10, according to investment bank sources, Royole Technology has completed US$300 million in Series F financing in the fourth quarter of 2019, with a valuation of US$6 billion. Up to 8 billion U.S. dollars or even higher. However, this news has not yet been officially confirmed.
The prospectus shows that before this issuance, the top ten shareholders of Rouyu Technology are: Liu Zihong (holding 38.61%), CITIC Capital (holding 6.05%), and Wei Peng (holding 4.97%) , Shenzhen Venture Capital (holding 4.64%), Yu Xiaojun (holding 4.47%), Shenzhen Huigang (holding 4.06%), Jack and Fishcher (holding 3.79%), Shenzhen Songhe (holding 3.79%) Holding 3.60%), Tibet Xiangsheng (holding 2.53%), Yang Leyi (holding 2.17%).
Well-known angel investor Xu Xiaoping once publicly expressed regret for missing Rouyu, “Royu Technology is a project that I have really missed since I made an investment. Every time I see good news from them, I feel like a knife.”
Capital is betting on Rouyu Technology, perhaps the next era: flexible display is becoming a battleground in the panel industry. Data shows that flexible screen panels are showing an upward trend year by year. In 2018, global shipments of flexible screen panels will reach 202 million pieces, and shipments are expected to reach 570 million pieces in 2022.
In this context, the major giants compete in the field of flexible display and have formed two camps: one is the mainstream camp consisting of Samsung, BOE, and Huaxing Optoelectronics; the other camp is represented by Rouyu, focusing on new non-silicon materials. Technology.
Two months ago, Liu Zihong said in an interview with CCTV: “In fact, we have been digging holes in the dark with a flashlight.” Rouyu is following the route of’want to do it’-there is an idea, but there is no way to follow the predecessors. He can only research and develop a little bit according to his own ideas, and smash it to the end. “Now moving towards the IPO, the young 80s and his unicorn are about to usher in another “death.”
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