Knowing that it has 100 million monthly active users, the total financing of 10.7 billion yuan in history, and now the market value is less than 8 billion yuan, is the market wrong killing or its true valuation?
Zhihu has a number of luxurious shareholders. Among the industrial capital, the five giants support, Tencent and Kuaishou, one with the most investment rounds, one with the most investment amount, and now they are all floating losses; Alibaba, JD.com, and Baidu entered the game late, but all spent hundreds of millions of dollars. Veteran VCs and PEs have the blessings of Innovation Factory, Today Capital, Saifu, Qiming Venture Capital, etc., and have accompanied them for many years.
Knowing that after the listing of the US stock market, the stock price plummeted, and the yield of many institutions has experienced a roller coaster, from 10 times shares and 20 times shares to only 1 times. There is also a natural person whose investment yield may reach a thousand times. This time the Hong Kong stock offering, the old shareholders cashed out 20% of the US stock IPO issue price a year ago, and they knew that they could not get a penny, how will it evolve in the future?
After passing the hearing on April 8, the IPO began on the 11th, and is expected to be listed on the 22nd, knowing that the dual major listing on the Hong Kong Stock Exchange was exceptionally smooth.
However, all the shares offered by Zhihu came from old shareholders and no new shares were issued.
Knowing that the revenue comes from three blocks, advertising, membership payment and content commercialization solutions, the last piece sounds a bit awkward, essentially still advertising, but the technique is more clever, unconsciously complete the "planting grass", but the average commercial value of its customers is lower than traditional advertising.
Knowing that shareholders rarely gather BAT, as well as JD.com, Kuaishou and other head CVC, of which Tencent invested a total of about 170 million US dollars, from the C round of investment to the IPO placement stage, a total of 6 rounds, is a hardcore supporter, its entry early, still suffered losses. Kuaishou only invested one round, but the highest amount, a total of 250 million US dollars, but a floating loss of more than 60%, book loss of nearly 170 million US dollars (about 1.1 billion yuan).
Innovation Factory investment has been known for 10 years, and there was a yield of 600 times, but when it came to the IPO of Zhihu U.S. stocks, its overall investment yield was about 28 times, and if it remained until now, it was only about 5 times. Today's capital in this case is a loss, before and after the three rounds of cumulative spending of 95 million US dollars, the US stock IPO after a small amount of reduction, this time with the help of Hong Kong stock listing, to equivalent to the previous IPO at a two-fold price to sell 80% of the position, but also suffered about 26 million US dollars floating loss, the remaining 3.3 million shares can help it turn around?
Among all the investors, Shao Zhong, the founder of Modern Communication Group, is undoubtedly the most successful, with an angel investment of 1.5 million yuan, allowing him to obtain thousands of times the income and kill others in seconds.
01 The total raised 10.7 billion, the market value of 7.8 billion,
The old shareholder cut the meat in two folds
On 8 April, Zhihu (ZH.NYSE/02390.HK) passed the hearing of the Hong Kong Stock Exchange, and the underwriters were Credit Suisse, JPMorgan Chase & Co., CICC and CMB International. When Zhihu landed on the New York Stock Exchange, the lead underwriters were Credit Suisse, Goldman Sachs and JPMorgan Chase, and this time Credit Suisse and JPMorgan Chase continued to underwrite for Zhihu.
Zhihu plans to list on the Hong Kong Stock Exchange on April 22, offering 26 million shares of HK$32.06 per share, raising about HK$832 million, which is about 1/5 of the amount raised at the time of the US stock IPO (equivalent to HK$4.08 billion). The shares offered are all from old shareholders and have no new shares. That is to say, the amount of 800 million raised funds is for old shareholders to cash out, knowing that they cannot get money.
As of December 31, 2021, Zhihu held cash and cash equivalents, time deposits, short-term investments, etc. totaling $7.4 billion. In 2021, Zhihu has accumulated a loss of about 1.3 billion yuan, and if the intensity of such losses is maintained, liquidity can persist for 5-6 years, and the company does not look short of money.
Even if the new shares are offered this time, the price may not be ideal, because in the US stock market, the stock price has suffered a heavy decline.
On March 26, 2021, Zhihu was listed on the New York Stock Exchange with an issue price of $9.50/ADS, and by the close of trading on April 18, it had broken nearly 80% (Figure 1). From New Year's Day to The close of the market on April 19, 2022, Zhihu has fallen nearly 67%, the Dow is down 3.9%, the NASDAQ is down about 13%, and the S&P 500 is down 6.4%, and its performance is far behind the broader market.
Figure 1: Knowing the trend of US stock prices
Since its inception, it has been sought after by many star PE and VCs, and since 2011, when the angel round of financing was launched to the US stock IPO, the cumulative fundraising exceeded 1.65 billion US dollars (equivalent to 10.7 billion yuan), and now the market value is only 1.2 billion US dollars (7.8 billion yuan), and the inversion of the primary and secondary markets is obvious.
If the issue price of Zhihu Hong Kong stocks is about US$4.08 per share and the US stock issue price of US$9.5 per ADS (2 ADS is 1 ordinary share, that is, US$19 per share), then the sale of shares by the old shareholders in Hong Kong this time is a 20% "meat cutting" compared with a year ago.
The shares in the hands of the old shareholders have long been lifted, and they can be sold directly in the US stock market, but they know that the stock price has been weak, and choosing to sell from the Hong Kong stock market through dual listing can affect the stock price of the US stock market less.
Unlike Alibaba (BABA.NYSE/09988.HK), JD.com (JD.NSDQ/09618.HK), Baidu (BIDU.NSDQ/09888.HK) and other Chinese stocks listed on the Hong Kong Stock Exchange, it is known that it is a double major listing return.
The so-called dual main listing means that both capital markets are the first listing places. Secondary listing means that the company issues the same type of shares in two places, realizes the cross-market circulation of shares through international custodian banks and securities brokers, plus the Hong Kong dollar is linked to the US dollar, ignoring taxes, trading hours, friction costs, and the spread is basically negligible. On the other hand, the dual listing, Hong Kong stocks and US stocks can not be directly circulated across the market, and the stock price performance is relatively independent.
When the offer price of Zhihu stocks in Hong Kong went from the highest "no more than HK$51.8" to the final fix of HK$32.06, equivalent to about US$4 per share, its US stock market also retreated to less than US$4 per share, which shows that investors in the two places tend to be consistent in their judgments on the value of Zhihu.
From the perspective of process, the double listing has to go through a complete listing application process, while the secondary listing process is much simplified and many rules are exempted. Dual-listed companies should meet the regulatory requirements of the two places, and it is easier to be included in the Hong Kong Stock Connect to attract funds from the south.
Just on April 12, the U.S. Securities and Exchange Commission (SEC) added 12 Chinese-listed companies, including Sohu (SOHU.NSDQ) and OneConnect (OCFT.NYSE), to the "pre-delisting" list, the fourth batch of Chinese stocks to be included in the list since March.
Knowing that at this time, I rushed to Hong Kong stocks, and obviously had the consideration of looking for a "safe harbor". After the double listing, even if it is known that the US stock market encounters "accidents", such as being forced to delist and delist, it will not affect its listing status on the Hong Kong Stock Exchange.
Recently, it has been reported that a number of Chinese stocks plan to double-list in Hong Kong. On March 31, MINISO plans to double-list on the Hong Kong Stock Exchange. Even 09626.HK/BILI.NSDQ, which has completed its secondary listing, announced on March 16 that it intends to double-major listing on the Hong Kong Stock Exchange. In the coming period, there will be two major listings of Chinese stocks or more.
02 tens of billions of capital or "buried", 7.8 billion valuation is not low
Valuations after Series A, B, C, D, D1, E and F were valued at $29.9 million, $132 million, $375.1 million, $918.5 million, $1 billion, $2.4 billion and $3.4 billion, respectively.
Today, the market capitalization is around $1.2 billion, which is half the valuation after the Series E financing in July 2018.
On April 18, 2022, Zhihu's stock price was 3.68 US dollars / share, while its C round financing price was 2.17 US dollars / share, and the D round price was 4.63 US dollars / share, which means that all the capital entering the C round after the loss. So, how much capital is "buried" in the end?
Zhihu D, D1, E, F, IPO and IPO placement raised US$100 million, US$35 million, US$270 million, US$434 million, US$490 million and US$250 million respectively, accumulating US$1.579 billion (RMB10.3 billion). In the tens of billions of capital, there are probably not many lucky escapes. For example, Tencent and Kuaishou, as the largest investors, have invested more than 420 million US dollars cumulatively, and a share has not been sold after the IPO; other institutions will close if they do not see good in time, but they are afraid of getting deeper and deeper.
So, the fall from the issue price of $9.5/ADS to $1.84 is seriously undervalued?
The rapid rise of content commercialization solutions in the past two years is still essentially advertising, but it is more clever. Advertising + content commercialization, in 2021 to create a total revenue of 2.134 billion yuan, accounting for 83% of the total revenue, from the perspective of business model, Zhihu is like an advertising company.
Knowing that there is no company that can be directly benchmarked, Baidu and Weibo are the majority of advertising revenue, and the valuation may have reference significance. As of the close of the US stock market on April 18, according to the price-to-sales ratio (TTM), Baidu was 2.24 times, Weibo was 2.36 times, and Zhihu was 2.58 times, which was slightly higher than Baidu and Weibo.
According to the Wind classification, the "software and services" section of the US stock where Zhihu is located removes the "abnormal" companies (the price-to-sales ratio is more than 100 times), and the average price-to-sales ratio is 2.6 times, and the median value is only 0.9 times. Knowing that the price-to-sales ratio and the industry average are extremely close, even if the stock price is so squat, it seems that it is not always possible to say that the valuation is seriously undervalued.
03 Q&A planting grass, monetization mainly depends on advertising
Knowing that it was launched at the end of 2010, how does the product impress users? Founder Zhou Yuan's original intention was to make the Chinese version of "Quora", an SNS Q&A community, to aggregate high-quality information through Q&A format.
Knowing that in the early days, the niche route was taken, and user registration should be through the invitation system, tencent Ma Huateng, Meituan Wang Xing, Sogou Wang Xiaochuan, innovation workshop Li Kaifu, etc. are all early users of Zhihu. "Thank you, people in the United States, just got off the plane", this set of often ridiculed answers begins with a sentence that reflects the high-end portrait of its user base.
In 2013, Zhihu opened up registration until 2016, and began to explore commercialization, successively testing the waters of knowledge payment, paid membership, content marketing, e-commerce, education and other business models, and precipitating four main monetization paths: advertising, paid membership, content commercialization solutions and others (vocational training, e-commerce, live broadcasting, games, etc.).
In 2021, Zhihu achieved total revenue of 2.959 billion yuan, of which advertising revenue was 1.16 billion yuan, content commercialization solution revenue was 974 million yuan, paid membership was 669 million yuan, and other income was 156 million yuan (Figure 2), accounting for 39.2%, 32.9%, 22.6% and 5.3% respectively.
Figure 2: Changes in the structure of zhihu revenue
Prospectus of the source company
Advertising is easy to understand, but also the majority of the revenue contribution, there are mainly APP screen, banner and information flow three forms of display, through CPC, CPM and other mainstream methods of charging.
From 2019 to 2021, Zhihu had 2,539, 3,511 and 3,036 advertisers respectively, and each advertiser contributed about 227,000 yuan, 240,000 yuan and 382,000 yuan respectively. In 2021, zhihu implemented a quality customer retention strategy, with advertising revenue increasing by about 38% year-on-year, and the average contribution revenue of each advertiser increased by 59%, at the cost of a 14% decrease in the number of advertisers.
According to the GF Securities Research Report, the loading rate of Zhihu ads is 15% (that is, 1 of about 7 content ads), which is lower than 20% of Weibo, but higher than 5% of Station B and 7% of Kuaishou.
With the surge in revenue from content commercialization solutions, the share of advertising revenue has declined rapidly, and the business structure has become more balanced.
The content commercialization solution implemented in early 2020 is accompanied by the "Knowledge +" solution, which has three main forms. Home page recommendation, according to user interests, topics of interest distribution, etc.; answer recommendation, the user from any position into a certain answer after triggering; search recommendation, search bar for keyword search, through the results of the display for distribution.
If the brand asks questions is tantamount to hard and wide, the big V soft text is abrupt, "know +" because it is combined with a specific topic, more like to solve the problems that users are bothering, avoid embarrassing blowing, and can successfully "plant grass". According to the prospectus, the overall click-through rate of the content commercialization solution is 2 times that of traditional advertising.
This move can also benefit creators, such as the paid product "Zhihu Live" in the early stage of the launch, the main speaker can make an average of 11,000 yuan per hour, but the head creator is a minority after all. By the end of 2021, the cumulative number of Zhihu content creators has reached 55 million, with a cumulative contribution of 420 million Q&A content, with an average of about 8 Q&A contributions per person. The content commercialization solution allows waist creators not only to "generate electricity with love", but also to receive orders through the "cheese" platform to obtain benefits.
Content commercialization solutions, in 2019, the revenue was only 641,000 yuan, accounting for only 0.1%; in 2020 and 2021, the revenue reached 136 million yuan and 984 million yuan, respectively, which has surpassed the paid members and become the second largest source of income for Zhihu.
From 2019 to 2021, Zhihu has 80, 2,413 and 5,745 content commercialization solution customers, respectively, and each customer contributes about 8,000 yuan, 56,000 yuan and 170,000 yuan respectively. In terms of monetization ability, the average revenue per advertiser (382,000 yuan) is about 2.25 times that of content commercialization customers.
From 2019 to 2021, its B-end customers were 2619, 5924 and 8781 respectively, corresponding to revenues of 578 million yuan, 979 million yuan and 2.134 billion yuan, and the income per B-side customer was about 221,000 yuan, 165,300 yuan and 208,300 yuan, an increase of 26% over 2020 in 2021, but it has not yet reached the average level in 2019. How to tap the realization value of B-end customers, I know that there is still room.
But if you put Zhihu in the "jungle" world of advertising, the revenue volume of more than 2 billion yuan is insignificant compared to the tens of billions of revenues of Baidu and Tencent.
04 20 months of active users have about one member,
Per capita income fell
Paid members are the third largest source of income for Zhihu, all from salt selected members. The subscription fee for the automatic monthly, quarterly and annual membership service of Yanxuan members is 19 yuan, 53 yuan and 198 yuan respectively. Members can enjoy access to 3.9 million exclusive content, including stories and novels, other books and magazines, live and recorded lectures, and audiobooks. From 2019 to 2021, the average monthly renewal rate of Zhihu Yanxuan members was 56%, 62% and 65% respectively.
Zhihu will also launch a joint membership program with other platforms. For example, in the Agricultural Bank of China APP, users click on the Zhihu advertisement, can jump to become a salt selection member, according to the custom, Zhihu will pay the ABC diversion fee.
Zhihu currently has more than 100 million monthly active users, but the penetration rate of paid members is not high. From 2019 to 2021, the average number of monthly subscription members was 574,000, 2,363,000 and 5,076,000, respectively, with a payment rate of 1.2%, 3.4% and 5.3%, an obvious increase. The membership income was 88 million yuan, 320.47 million yuan and 668.51 million yuan respectively, and the average contribution income of each member was 153 yuan, 136 yuan and 132 yuan respectively, showing a continuous downward trend. Referring to the price of 68 yuan season card, it is equivalent to each member purchasing the season card service twice.
Based on the monthly active users, in the fourth quarter of 2021, each user only contributed an average of 10 yuan to Zhihu (Figure 3).
Figure 3: Changes in monthly active users, members, etc. in the zhihu quarter
Compared with other platforms, zhihu membership scale and payment rate have room for improvement. For example, station B (BILI.NSDQ/09626.HK) to the fourth quarter of 2021, the average number of monthly paid users is 24.5 million, which is nearly 5 times that of Zhihu, with an average monthly active user of 271.7 million, and the payment rate is 9%.
iQIYI has 97 million paid members by the end of the fourth quarter of 2021, which is nearly 20 times that of Zhihu, with a member-side income of 16.7 billion yuan and a per capita payment of 172 yuan per member, which is about 1.3 times that of Zhihu in the same period.
Previously, Zhihu acquired the majority stakes of Prez and Yincheng for 183 million yuan, prez provided CFA, CPA and other professional qualification examination courses; Yincheng provided professional language proficiency test courses. In 2021, vocational training contributed 45.8 million yuan to Zhihu, which has not yet become the main force.
Alibaba, Pinduoduo (PDD.NSDQ), JD.com, Kuaishou, B station and other head enterprises, traffic peaked, growth slowed down, know that with 100 million monthly active users, in the business model side can naturally explore e-commerce and live broadcasting, whether it can become an important way to monetize, still needs to be verified. 100 million monthly active users, but only corresponds to less than 8 billion valuation, the cruel valuation system of the real business world, I don't know if the big Vs can have a reasonable answer.
05 BAT joint blessing, Jingdong Kuaishou entered the game,
Today's capital, innovation workshop and so on many shots
Since its inception in 2010, to the US stock IPO, it has gone through more than ten rounds of financing. Veteran VCs and PEs include Today Capital, Innovation Factory, Saifu, Qiming Venture Capital, Joy Capital, etc.; industrial capital includes BAT, as well as JD.com, Kuaishou (01024. HK), Sogou, etc. (Table 1), the shareholder lineup is quite luxurious.
Its Series A offering was priced at $0.26 per share and series F at $12.52 per share, up about 47 times in 8 years and $19 at the time of its IPO, and about 72 times in less than 10 years compared to Series A (Figure 4). If there are shareholders who withdraw before the IPO, there will be different degrees of returns for those who do not worry about the takeover. Since its listing, major shareholding institutions have rarely reduced their holdings, and now it is not only difficult to cash in on investment returns, but also bear large losses.
Figure 4: Know the price per share of each round of financing
Image source: Company's U.S. stock prospectus
Prior to the Listing in Hong Kong, Chairman and CEO Zhou Yuan held 17.63 million Class A shares, holding all 19.23 million Class B shares (1 share can cast 10 votes), with a voting power of 42.86%, making him the controlling shareholder. Including Directors and executives such as Li Dahai (CTO) and Sun Wei (CFO), a total of about 1.98% of the shares are held (Figure 5).
Figure 5: Major shareholders known before the Hong Kong stock offering
Image source: Company's Hong Kong stock prospectus
Among the other major shareholders, Tencent holds 12.02%, Innovation Factory holds 9.65%, Qiming Venture Capital holds 8.26%, Saifu holds 6.72%, Kuaishou holds 6.31%, and Today Capital holds 4.84%.
This time, Zhihu is offering in Hong Kong, Innovation Factory, Qiming Venture Capital, Saifu Investment and Today Capital will cash out about HK$240.45 million, HK$104.2 million, HK$104.2 million and HK$384.72 million respectively. Zhou Yuan, Tencent and Kuaishou did not reduce their holdings and continued to hold (Figure 6).
Figure 6: Major shareholders of Zhihu hong Kong stocks after the offering
Image source: Company's Hong Kong stock prospectus
According to the disclosure, the average cost per share of Innovation Factory, Qiming Venture Capital, SAIFU and Today Capital Investment Zhihu was approximately $0.67, $0.87, $1.61 and $5.83 respectively. Early investors can easily exit, and investors in the middle and late stages really can't hold back, taking the opportunity to ship, and investors in the primary market have to bear the pain of cutting meat.
06
Investing $95 million and losing $25.78 million, Xu Xin sold nearly 80% of its shares at a discount
Among institutional investors, today's capital attracts attention. Xu Xin, the head of today's capital, invested in JD.com in the early days, obtained huge profits, and laid its position in the jianghu; its well-known investment cases include Meituan (03690. HK), Ctrip (TCOM.NSDQ/09961.HK), Dingdong Grocery Shopping (DDL.NYSE), Three Squirrels (300783), Vipshop (VIPS.NYSE), NIO Automobile (NIO.NYSE/09866.HK), etc.
CTG Evergreen Investment, a subsidiary of Today Capital, originally held 15.33 million shares, sold 12 million shares this time, and also held 3.33 million shares, and the shareholding ratio also decreased from 4.84% to 1.05%.
Today's capital in the Zhihu D round, E round, F round three shots, at $4.63, $9.89, $12.52 per share to obtain 12.97 million shares, 2.53 million shares, 800,000 shares, respectively, 60 million U.S. dollars, 25 million U.S. dollars, 10 million U.S. dollars, a total of 95 million U.S. dollars. Among them, the D round of Zhihu raised a total of 100 million US dollars, and today's capital contributed 60 million US dollars, taking 60% of the share.
Before the US stock IPO, today's capital held 16.29 million shares, and it did not reduce its holdings at the time of the IPO, and the investment yield at that time was 226%. On February 10, 2022, according to the disclosure, the number of capital holdings today became 15.33 million shares, a decrease of about 960,000 shares, and cashed out about $7.97 million at the average transaction price of $4.15/ADS, or $8.3 per share, according to the average transaction price of the day.
Today's capital sold 12 million shares at a price of $4.08 per share, cashed out about $49 million, cashed out about $56.97 million twice, and held 3.33 million shares, at the closing price on April 18, the market value was about $12.25 million, plus the amount of cash, a total of about $69.22 million, compared with the cost of holding $95 million, a loss of nearly $25.78 million, a floating loss rate of about 27%.
Today's capital cash-out still holds more than 3 million shares, and if you want to use it as a chip to recover the hole of nearly $25.78 million in losses, you need to know that it has risen back to more than $11, that is, the US stock market has risen to $5.5 /ADS, which is about twice as much as the stock price on April 18.
07 The earliest admission to the innovation workshop,
Yields fell from 27x to 5x
Compared with today's capital, the shareholding cost of Innovation Factory, Qiming Venture Capital and Saifu is far lower than that of today's capital, and it can also obtain positive returns and have more time to reduce holdings.
Before the U.S. stock IPO, Innovation Factory held 31.53 million shares (including 7.8 million A series of ordinary shares, 16.2 million series preferred shares, 3.76 million B series preferred shares, 2.15 million C series preferred shares, and 1.62 million D series preferred shares), with an average cost of $0.67 per share and a total holding cost of about 21.1 million US dollars.
According to the issue price of $19 per share, the market value of innovation factory at that time was about $599 million, and the floating profit ratio was about 27 times (2739%). From the beginning of the angel round in 2011 to the listing of Zhihu, in the past 10 years, the yield of 27 times is not bad.
At the time of the IPO, the innovation factory did not reduce its holdings. On February 17, 2022, innovation workshop held 30.57 million shares, a decrease of about 1 million shares, according to the average transaction price of $4.16 /ADS on the day, the price of $8.32 per share, innovation workshop cashed out about $8.32 million.
At this offering, Innovation Factory reduced its holdings by approximately 7.5 million shares and cashed out $30 million. Innovation Factory also holds 23 million shares, with a market value of about $84.64 million, and after more than a year of US stock IPO, innovation workshop investment yield fell to less than 5 times, greatly shrinking.
SAIFU entered from the B round, investing four rounds to D+ rounds before and after, with an average holding cost of $1.61. At the time of the IPO, Saifu held 22.445 million shares, with a total holding cost of 36.14 million US dollars, according to the calculation of 19 US dollars per share, the market value of Saifu at this time was about 426.46 million US dollars, and the floating profit was 10 times.
On February 14, 2022, the number of SAIFU shares was reduced to 21.282 million shares, reducing its holdings by about 1.163 million shares, cashing out about US$9.07 million at the average transaction price of US$3.9/ADS on the day; SAIFU cashed out US$13 million in Hong Kong stocks, totaling about US$22 million.
SAIFU also holds 18.03 million shares, which is about $66.35 million based on $3.68 per share, plus $22 million in cash, for a total of $88.35 million, which is a decline in yield to 144% compared with the cost of holding $36.14 million.
Qiming Venture Capital invested five rounds from the A round D+ round, and invested alone in the A round, and the final shareholding cost was 0.87 US dollars per share. Before the IPO, Qiming Venture Capital held about 27.16 million shares, with a total shareholding cost of 23.63 million US dollars and a stock market value of 516.04 million US dollars, at this time the investment yield was about 2084%.
On February 14, 2022, the number of shares held by Qiming Venture Capital became 26.196 million shares, reducing its holdings by about 964,000 shares and cashing out about 7.52 million US dollars; this time it cashed out another 13 million US dollars, a total of 20.52 million US dollars, basically recovering most of the investment. In addition, Qiming Venture Capital also holds 22.946 million shares, with a market value of about 84.46 million US dollars, plus the 20.52 million yuan cashed out, the investment yield becomes 344%.
Innovation Factory, Saifu and Qiming Venture Capital for a more pure financial investors, even compared with the US stock IPO price, the offer price of Hong Kong stocks has shrunk to 20%, due to the early investment amount is more, still in a profitable state, considering that the investment for more than 10 years, exit pressure has been very large, choose to fall into the bag for safety, but also hold more chips, you can choose the opportunity to reduce holdings.
Series E investment institutions Shanghun Capital, Joy Capital, Mercer Investment and Sunshine Life invested $95 million, $24 million, $40 million and $30 million respectively, and the amount of investment exceeded that of Innovation Factory, benefiting 92% by the time of the US stock IPO.
Shangjun Capital's one-time investment amount of 95 million US dollars, and today's capital investment amount is the same, although it is in the E round of entry, if you can fast in and out, the yield may greatly exceed the "catch up early" of today's capital.
08 Tencent, the most hardcore supporter,
The floating loss was $57 million
Unlike Today's Capital, Innovation Factory, Saifu, Qiming Venture Capital, etc., Tencent, Kuaishou, Baidu, etc., pay more attention to the synergy of the business side, and may not care too much about profit and loss for a while.
As the largest shareholder of Zhihu, What is the overall investment income of Tencent? Due to Tencent's privatization of Sogou, the more than 7 million shares held by Sogou are also counted under Tencent, and Tencent currently holds about 38 million shares.
If you look at Tencent alone, it has a total of six shots in the C, D, D1, E, F1, and IPO rounds, which is the largest number of investment rounds among all institutions, and can be called the most hardcore supporters; followed by Qiming Venture Capital, five rounds of investment, four rounds of Saifu Investment, and three rounds of investment in Innovation Factory.
Tencent holds a total of about 31.07 million shares after the IPO of Zhihu U.S. stocks, with a total cost of 171.79 million US dollars and an average holding cost of 5.53 US dollars (Table 2), and if Tencent wants to obtain positive returns, the stock price of Zhihu is also higher than this price.
At the time of the IPO, Tencent's total stock market value was 605.87 million US dollars, and the overall investment floating profit ratio was 253%, holding shares for 7 years before and after, this achievement can only be said to be average; by April 18, 2022, Tencent's stock market value plummeted by 80%, falling to 114.34 million US dollars, with a floating loss of more than 57 million US dollars, or a loss of 33%.
Tencent C round began to invest, still fell into a loss, the main reason is still known to the deep break after the listing, in mid-March once fell to $1.5 / ADS, although the recent rebound, but still in the $2 shock, want to stand above the issue price, it is quite difficult.
09 The largest gold lord Kuaishou, with a floating loss of 176.5 million US dollars, more than 70%.
According to the prospectus, Kuaishou only knew how to re-position in the F round, spending $250 million to obtain about 19.98 million shares, with a cost of $12.52 per share. Kuaishou is also the institution with the highest amount of investment, nearly $80 million more than Tencent.
Kuaishou has not sold a single share so far. At the time of the IPO, Kuaishou Investment yielded about 52% and now its stock market value has shrunk sharply, with a loss of more than 73.53 million US dollars, about 176.5 million US dollars (1.15 billion yuan).
There is another important investor in the F round that must be mentioned, that is, Baidu. It acquired 11.985 million shares for $150 million, but Baidu holds less than 5% of the shares, and the time to reduce the holding is no longer known, and the yield is unknown.
At the time of the U.S. stock IPO, it also launched a $250 million private placement financing, and alibaba, JD.com and Lilith participated in the total investment of 220 million yuan, holding less than 5% of the shares. Whether they left the market in time to avoid losses is unknown.
Baidu, Kuaishou, Tencent and Zhihu have a large number of related party transactions. From 2019 to 2021, Zhihu purchased a total of 560 million yuan of services from related parties (Figure 7), of which Tencent's Reading Group and Tencent Cloud all provided services for Zhihu, earning a total of 340 million yuan.
Figure 7: The amount of services purchased from related parties
Image source: Zhihu Hong Kong stock prospectus
After Baidu invested in Zhihu, Zhihu Whole Site Q&A accessed Baidu App in the form of intelligent mini programs, and completed personalized distribution through AI technology in Baidu search, information flow and other product matrix. To this end, Zhihu also has to pay diversion costs, in 2019-2021, the cost of purchasing traffic from Baidu is 24.97 million yuan, 48.66 million yuan, 142.35 million yuan, and in 2021, it will exceed Tencent's service purchase cost.
To some extent, Tencent and Baidu Investment know that losses in equity can be "recovered" in disguise through related party transactions. In the past three years, Tencent has purchased only 32 million yuan of advertising services from Zhihu, while the service fee charged from Zhihu has reached 340 million yuan, which is similar to its investment floating loss (US$57 million). It is difficult for Kuaishou to make up for losses in this way (Figure 8).
Figure 8: The associated direction knows the amount of the service purchased
Image source: Zhihu Hong Kong stock prospectus
Kuaishou began to provide services for Zhihu in 2021, charging only 2.18 million yuan, which is much lower than Baidu and Tencent. At the same time, Zhihu collected 15.27 million yuan from Kuaishou from 2020 to 2021, and was the only related party to achieve "positive cash flow".
On the whole, the interval between U.S. stock IPOs and listed Hong Kong stocks is less than one year, and the yield gap is huge (Table 3). Cutting meat out of today's capital; innovation workshop, Qiming Venture Capital, Saifu timely take profits, basically get back the investment principal, the remaining stocks may still be chips for higher returns in the future; Tencent and Kuaishou, who do not reduce their holdings, are deeply trapped and will continue to accompany them.
Saifu, Qiming Venture Capital, innovation workshop overall investment is not loss- and their investment cycle front is long, from early VC to middle and late PE, the investment yield is more than ten or twenty times, shrinking to one or three or four times, experiencing a roller coaster.
As for Baidu, Alibaba, JD.com, Lilith, Joy Capital, Sunshine Life and other financial investors are more flexible in selling, knowing that after the listing, there are also good times to rise to more than 13 US dollars / ADS, if you sell in time, you should be able to get a good return.
10 Zhou Yuan's circle of friends, some people earn 8,000 times
Zhou Yuan is a post-80s, Guiyang, Guizhou, born in a family of scholars; undergraduate study in Chengdu University of Technology, majoring in computer science, master's degree in Southeast University, majoring in software engineering. In 2006, after graduating from graduate school, Zhou Yuan first did development in a company, which did not mean much, and then joined "IT Manager World" as a reporter. In October 2008, Zhou Yuan founded Beijing Nobote Information Technology Co., Ltd., focusing on the development of big data analysis in e-commerce business.
When Zhou Yuan was a journalist, he heard a lot of business stories, and starting his own business was another matter.
Once, Wang Xing went to Zhou Yuan's place, saw that he had many different business cards, and asked why? Zhou Yuan said that there are not many people in the company, and he needs to have different identities to meet people from all walks of life. Wang Xing immediately pointed out that things cannot be done, and the right person must be found. This was a great inspiration to Zhou Yuan, and he regarded it as a commercial enlightenment.
A good man three gangs. Li Dahai, the current CTO, was a former Google China engineer and a middle school classmate of Zhou Yuan.
Zhou Yuan did a technology blog site about Apple products in the early days, and there were two partners Zhang Liang and Huang Jixin, and Huang Jixin and Zhang Liang later joined the innovation workshop as investment managers.
In the spring of 2011, after Zhihu was launched, the Internet became a phenomenon-level product in the Chinese, and there were not many users, but the stickiness was very high. In the end, Innovation Factory invested in Zhihu Series A on its own at a valuation of $8 million.
Innovation Factory acquired 7.8 million shares of zhihu common stock and 16.2 million series of preferred shares in series A. The A-round Zhihu stock price is $0.26 per share, and the innovation workshop has obtained a total of 24 million shares, and the cost of holding shares is about $6.24 million. The prospectus discloses that the valuation after the A round of investment is 30 million US dollars. It is estimated that the innovation workshop acquired about 20% of the shares of Zhihu after the A round.
Innovation Factory Investment knows that there was a "yield of 600 times", which should be estimated from the valuation of $8 million at the time of the first investment to about $5 billion at the time of the US stock IPO, and the actual rate of return is far from being achieved.
In fact, the earliest investment in Zhou Yuan was not the innovation workshop, but Shao Zhong, the founder of the modern communication group. Shao Zhong was introduced to Zhou Yuan by the Innovation Factory, and one night in August 2010, Shao Zhong and Zhou Yuan met at the Beijing World Trade Center, and the two sides talked for about half an hour.
The next day, Zhihu received 1.5 million yuan from Shao Zhong. It has been said that Shao Zhong obtained about 40% of the shares of Zhihu, and the valuation of the Angel Wheel was about 4 million yuan. In the early days, Zhihu also borrowed the Sanlitun workstation provided by Shao Zhong. By the time of the IPO, Zhihu's market value was 5 billion US dollars, and the valuation had risen by more than 8,000 times, and if Shao Zhong retained part of his equity until the IPO, the yield should be more than 1,000 times; even if the current market value of Zhihu shrank to 1.2 billion US dollars, the valuation was more than a thousand times higher than that of Shao Zhong's angel round.
Two or three years before Zhihu went public, Shao Zhong began to ask the people around him: "Can I tell you how much money I make on Zhihu?" Shao Zhong even listed the establishment of a modern communication group and investment as two major achievements in his life.
The first time Kai-Fu Lee met Zhou Yuan, he was in the Zhihu office and felt that he was a literary and artistic youth, a little bookish. Zhou Yuan's evaluation of himself was not very strong. Zhihu co-founder Li Shenshen's evaluation of Zhou Yuan is "slightly paranoid, but always in self-examination".
A business reporter who has interviewed Zhou Yuan many times believes that Zhou Yuan's luck is better, in terms of innovation, he knows that in addition to Q&A, there is no amazing product coming out, "he is slightly lacking in judgment of commercialization trends."
After Zhou Yuan got Shao Zhong's angel investment, Huang Jixin and Zhang Liang also became co-founders of Zhihu. Zhang Liang himself has invested a little money in Zhihu and is still proud of being the "co-founder of Zhihu". Huang Jixin later settled overseas and did not appear at the time of the IPO.
When Zhou Yuan and Kuaishou founder Su Hua attended a party and exchange, they knew that they each used a trumpet to brush Kuaishou and Zhihu, and the frequency was not low, and then they made a dinner party. Cheng Yixiao, another founder and current CEO of Kuaishou, and Zhou Yuan are more compatible with their product thinking, and they both believe that content producers can win the world. The two founders of Kuaishou and Zhou Yuan feel sorry for each other, and investment is the best support.
In August 2019, Kuaishou received a round of strategic investment from Tencent, and in the same month, Kuaishou, which was still in the cash burning stage, resolutely invested $250 million in Zhihu. After Kuaishou was the first to list on the Hong Kong stock market in February 2021, its share price exceeded HK$417 at its peak. Nowadays, Kuaishou's own stock price fluctuates around 60 Hong Kong dollars / share, with a retracement of more than 85%, and the investment knows that the loss is more than 70%, as if the golden age of the Internet, caught off guard, turned a corner, which should be Su Hua, Cheng Yixiao and Zhou Yuan did not expect.
This article originated from New Fortune