Two years without financing, half a year of unpaid wages, Royole Technology has fallen into the line of life and death.
Recently, Royole Technology (hereinafter referred to as "Royole"), a unicorn enterprise once valued at about 50 billion yuan, was rumored to have been on holiday for three months by all employees, and the salary arrears have exceeded half a year.
Royole Technology, established in 2012, the main business is the development and production of full-flexible display screens and full-flexible sensors, as well as flexible screen folding mobile phones and other intelligent devices, the founder Liu Zihong is Tsinghua Xueba, Stanford Doctor, "flexible display" is Liu Zihong's research direction during his doctoral studies.
After returning to China, Liu Zihong resigned from IBM to establish Royole Technology, two years later, Royole Technology released the world's thinnest, freely curlable flexible display, and once declared to "bend the world", Royole's dream is very beautiful, but why does reality usher in the dilemma of running out of food?
The unpaid wages began last October
As early as last October, there was a media exposure of Royole Technology's unpaid wages, employees said that the salary in September can only be paid partly, and the salary is suspended in October, but the company promises to reissue it at the end of November.
Immediately after, the news about the shortage of Royole's capital chain continued. In October, Royole was sued in court for defaulting on payment to its partners.
In December, royole employees continued to break the news, saying that their and the company's more than 1,000 employees had not been paid normally, and the arrears were more than three months, which showed that the company's previous statement that it would pay back salaries in November was not implemented.
Soon after, Royole founder Liu Zihong published a "darkest moment" entrepreneurial speech in the circle of friends, lamenting that "it is not easy to start a business, and it will persist to the end". Subsequently, some Royole employees said that the company had paid part of the salary before the Spring Festival, and royole internal rumors that the capital chain problem had been alleviated, or that a new financing had been discussed.
But what I didn't expect was that the problem of Royole's "unpaid wages" was once again exposed recently. According to a report by the Red Star Capital Bureau on March 29, an employee of Royole said that he had not received a salary since September last year, and only received 5 unpaid emails, and was owed nearly 100,000 yuan in wages.
Subsequently, there were media reports that Royole had verbally conveyed that from April onwards, all employees would be on holiday for three months, and the salary in April would be paid according to the theory, and the minimum wage would be settled in May and June. From this point of view, Royole is not only unpaid, but also has to stop work, which shows that the capital chain problem has reached an unprecedentedly tense situation.
However, on April 6, Royole debunked the "employee holiday", saying that many employees were still at work, but for the "unpaid wages", Royole did not explain.
For the rumors of Royole, the outside world believes that it is "responding with a hard scalp", after all, the focus of this matter is not whether all employees are on vacation, but what to do about cash flow problems? Is there any unpaid wages? Royole does not seem to give a definitive answer, but also disguised to make the outside world more certain that there is a problem with its capital chain.
I have been financing all the way to get soft
Since the release of the world's thinnest color flexible display with a thickness of only 0.01 mm in 2014, Royole Technology has gone to a highlight moment, and Royole, which is favored by capital, has received multiple rounds of financing.
In 2017, royole technology had already won more than 6.6 billion yuan of financing, and in May 2018, Poly Capital's fund invested 400 million yuan to lead the D+ round of financing, at which time royole's valuation had reached 20 billion yuan. Subsequently, Poly Capital again increased its capital to participate in the Series E financing, and Li Ka-shing's Hong Kong AMTD Group also followed suit in this round.
In November 2019, Shenzhen Huigang increased its capital by 1.7 billion yuan to acquire 4.06% of the shares of Royole Technology, at which time the valuation of Royole was as high as 41.9 billion yuan. According to public information, Royole's most recent round of financing is the F round of financing in May 2020, which includes Vincent Zhongli, SF Holdings and China Railway Dentons, with about 1.9 billion yuan.
That is to say, Royole has not had new financing funds for more than 2 years, and what is worse is that Royole, which submitted an IPO application at the end of 2020, was also revoked in January 2021, which means that there is no financing and no way to go public to raise funds, and Royole's "money" is indeed worrying.
Open Royole's prospectus, it is not difficult to find the pressure of its capital chain. From 2017 to the first half of 2020, Royole's revenue was 64.7267 million yuan, 109 million yuan, 227 million yuan and 116 million yuan, respectively, but it has not yet made a profit, with losses of 359 million yuan, 802 million yuan, 1.073 billion yuan and 961 million yuan, respectively, and the loss has a tendency to expand.
The main reason for the continuous loss is that R&D investment must be the first item. In the same period, Royole's R&D investment was 160 million yuan, 490 million yuan, 590 million yuan and 580 million yuan, and the R&D rates were 247.87%, 447.88%, 258.25% and 502.01% respectively.
As a technology company, "heavy research and development" is also beyond reproach, but the investment is far more than the income, resulting in "income is not enough", which also reverses the problem of Royole's current business model, after all, the enterprise is not a charitable organization, it should be responsible for investors and employees first.
Why is it difficult to monetize a product
From another point of view, why does Royole not only have eye-catching star products, but also belong to the first movers in the same category in the industry, and its revenue volume is still so "down"?
In recent years, Royole has successively released a number of C-side-facing items, such as the world's first foldable head-mounted smart theater Royole-X, the smart handwriting book "Rouji RoWrite", the world's first consumer-grade folding screen mobile phone FlexPai, etc.
Wearable Royole-X can be many years earlier than the emergence of the meta-universe, folding screen mobile phone is also a product leading the trend of the mobile phone industry, why not sell well? The main reasons for the difficulty of mass production and the low yield rate or their difficulty in surviving in the market.
At present, the mainstream screen manufacturers in the global research and development of flexible screens, such as BOE, TCL, Samsung, etc., basically use low-temperature polysilicon (LTPS) technology, and Royole uses "ultra-low temperature non-silicon process integration technology", but Royole has not reached supply chain cooperation with other folding screen mobile phone brands, lack of market orders, Royole technology can only be used in their own mobile phones, the output is naturally not large, and other mainstream mobile phone manufacturers why do not use Royole's flexible screen, which is also worth playing.
In addition, the panel industry has always been a "heavy asset" industry, investing in a production line is often tens of billions of yuan to start, Royole in 2017 to build the sixth generation of flexible AMOLED production line cost 11 billion yuan. However, from the perspective of input-output ratio, according to media statistics, Royole's Shenzhen 6th generation line outputs 110 units per 100 million yuan, which is lower than the 142 units of the competitor Shenzhen Tianma Wuhan 6th Generation Line and the 129 units of Huaxing Optoelectronics' Wuhan 6th Generation Line.
The investment is so large, the output is not high, the input-output ratio is so low, Royole naturally can not come up with funds to increase research and development and upgrade the production line, resulting in Royole's mass production capacity has not been able to improve.
On the other hand, Royole's marketization ability is also insufficient, in addition to the problems in product quality, it is indeed difficult to compete with traditional mobile phone manufacturers such as xiaomi, OPPO, vivo and other traditional mobile phone manufacturers in terms of marketing and channels.
Many users reflect that Royole folding screen mobile phone will have a broken screen, and even see such problems as machine components behind it, and worse, as a technology company, rather than a mobile phone brand enterprise, Royole's after-sales service can not keep up, which greatly affects the consumer experience.
Undoubtedly, folding screen mobile phone is a boom in the current mobile phone market, a number of mobile phone brands have launched folding screen products, from the data point of view, the market is also very imaginative, last year's global foldable mobile phone (including clamshell and folding screen) shipments totaled 7.1 million, an increase of 264.3% year-on-year, is expected to 2020-2025 compound annual growth rate of about 70%.
However, although the market has room for development, but likewise, there are many competitors, as the supply chain end, there are Samsung, LG, BOE and other panel manufacturers; as a consumer end, there are OPPO, vivo and other old brands, no matter at which end, Royole is facing a lot of pressure.
At present, the outlet of the mobile phone market has not completely turned to the folding screen, the big outbreak has not yet arrived, Royole is already facing product slow sales, capital chain breakage, word of mouth plummeting and other problems, if there is no new capital input, or it is difficult to support it.
But compared with the early capital side's relaxed attitude towards unicorns, as the investment market becomes more severe, the current capital is obviously no longer blindly believing in the story, compared to the pie, the current liquidity of the company is obviously more important, this time, Royole needs to come up with more hard power to convince investors.