Zhihu has started the listing process and intends to IPO in the US or Hong Kong stocks


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Wen / Chu Ji
Source: BT Finance (ID: btcjv1)
According to the exclusive source of “BT finance”, Zhihu is writing an IPO report and listing application. At present, three underwriters have been identified, namely Goldman Sachs, Morgan Stanley and Credit Suisse. The listing places may be in Hong Kong stock or US stock market, yet to be confirmed.
The founder is the largest shareholder
In August 12, 2019, Kwai almost completed the F round of $450 million in financing. The current round of financing was launched by fast hand, Baidu and Tencent.
Since Li Kaifu’s first angel round investment was obtained in 2011, Zhihu has successively completed six rounds of financing. The portfolio of investors is quite luxurious. Famous capitals such as Qiming investment and Saifu investment have made multiple rounds of investment, and Internet giants such as Tencent and Baidu have continued to increase their investment.
According to the company’s equity penetration chart, at present, Zhihu’s largest shareholder is founder Zhou Yuan, holding about 21.2%; Beijing innovation ark Technology Co., Ltd., a fund managed by Innovation workshop, holds about 18.1%; Saifu investment holds about 10.6% through its fund Xiamen Siyuan Investment Management Co., Ltd.; Tencent holds about 9.7% through Shenzhen Litong industrial investment fund Co., Ltd Dogs hold about 3.1%.
The current information does not show the shareholding ratio of Baidu and Kwai. According to China business network, “investor Zhuang Minghao’s analysis shows that the new shares of Zhihu are 12.4% based on the valuation of $3.5 billion.”. Considering that Baidu f round is a co investment, it should not get too many shares. In the last round of investment and high-profile publicity, the significance of strategic cooperation may be greater than the investment income itself. The original investors follow the investment, so that their shareholding ratio is diluted and limited.
Kwai Kwai technology in November this year, submitted to the HKEx prospectus, shows that the total investment of fast acting unlisted entities in 2019 was 2 billion 258 million yuan, and then combined with the information provided by enterprises. The total turnover of 2019 was only two yuan, and the total App expenditure of shrimp head was only 5 million yuan, while the remaining 2 billion 253 million yuan (at the time of the exchange rate of about 320 million US dollars) were all investments in Kwai TSE. 。 Kwai may eventually hold about 8.8%.
Sogou has become a wholly owned subsidiary of Tencent, Tencent also holds about 20% of Kwai Chung. After penetration calculation, Tencent holds about 14% of Zhihu’s shares and may become the third largest shareholder of Zhihu.
At present, the shareholding ratio of the management including Zhou Yuan should be about 35%, and they should have actual control over Zhihu. However, if we want to avoid differences in future decision-making, the management still needs to set up a corporate structure with the same share but different rights.
Liao Ming, founder of prospect Avenue capital (PAC) fund, said that Zhihu may have been hesitant to go to the United States or go to Hong Kong for listing, because there are many companies with content themes in the United States, and it is easy to find benchmarking. Zhihu itself was inspired by quora. However, there are articles in Hong Kong and the benchmarking is very clear.
However, there are also disadvantages in each listing.
One of the problems of listing in the United States is that China concept shares are facing a bad environment. Regulatory pressure and public opinion pressure make it difficult for China capital stock to survive and its future is uncertain. Moreover, due to the slow realization of quora, the new round of financing valuation in 2019 is only $300 million higher than that in 2017. Quora is still a pure Q & a platform, and Zhihu’s business is more diversified. If quora is benchmarked, the other businesses of Zhihu will probably be ignored and may be ignored; similarly, Yuewen group is an online literary creation platform, and it seems that it is difficult to fully understand the standard.
So why is it difficult to define what kind of product Zhihu is? This should start with the history of Zhihu.
Ten years of knowledge
This month, Zhihu just celebrated his 10th birthday.
From the “small and beautiful” knowledge community founded by the initial 200 invited registered users to the “big and miscellaneous” content service platform with 370 million registered users and more than 260 million Q & A as of December this year, it seems that it can maintain growth in the history of vertical platforms being crushed by comprehensive platforms, which can be regarded as an example of the early generation of “breaking circle”.
Zhihu’s development in the past ten years is not easy. If you look at the difficulties encountered by the second generation of “circle breaker” station B, we can know something about it. Zhihu has experienced the destruction of the community atmosphere, the loss of “tonality”, the intergenerational friction between new users and old users caused by traffic surge, and the difficulties in making profits.
Before the public registration of Zhihu was opened in 2013, it was sought after by many science and technology and Internet enthusiasts because of the high-quality professional Q & A invited by big V in the early stage. The number of registered users increased from 400000 to 4 million in less than a year after the opening of registration.
Since the Internet penetration rate was not high at that time, and the initial audience of Zhihu was small, the early users who entered Zhihu after opening public registration were basically “985 per undergraduate, top 10 in the United States for master’s degree, not high salary per million, and sincere thanks for invitation just after getting off the plane”, and the tone was geek and high-end.
However, with the spread of Zhihu’s excellent content, Zhihu has become more and more famous, and the number of users continues to expand. The differences in users’ education, income, work, vision, interests and life experience are becoming more and more obvious, and the conflict between new and old users becomes acute.
The increase in the number of users enriches the types of content on Zhihu, but also makes Q & a no longer focus on technology, Internet and other professional fields, and more problems such as entertainment gossip and emotional constellation that attract people’s attention appear. At this stage, new users are not happy with old users, and old users are also dissatisfied with the “ignorance” and “low-end” of “intruders”, and complaints about “don’t treat Zhihu as Baidu knows” constantly appear.
Between maintaining the initial tonality and sacrificing the content quality, Zhihu chose the latter. According to the change of business scope in 2014, Zhihu’s main profit model at that time was only advertising, and only large enough traffic could ensure the survival of the platform.

The reality proves that Zhihu’s choice is correct. In the era of traffic as the king, whether the platform relies on advertising or content providers rely on rewards, traffic is the foundation, so Zhihu has more long-term vitality than Douban, Tianya, maopu, etc. in the same period.
However, as the founder Zhou Yuan said in a future interview, “a very small circle, when you expand it to 1000 times and 10000 times, it must not be the way it is now (the quality of the content will seriously decline)” The decline of content quality leads to the increase of time cost in searching for high-quality content, the decline of high-quality answers, and the departure of some senior citizens.
The bigger threat comes from the emergence of new competitors.
When the “intergenerational conflict” is falling, the Internet and mobile Internet in China are also in the fast developing stage. The emergence of vertical knowledge websites, the emergence of WeChat official account, the micro-blog question and answer questions in Wukong and other knowledge communities have brought out more than 100 high-quality respondents.
By December 13, 2018, Zhihu registered users had reached 220 million, an increase of 102% year-on-year. What followed was an increasing popularity of witty answers and more and more “just made up stories.”.
Since the author has not yet found a solution to this kind of creative love, it is still possible to find a solution to this problem. As a result, there is a net writer income of more than 600000, the number of paid members increased four times.
In the beginning, Shangzhi looked at knowledge, then Shangzhi read Bagua, now Shangzhi read fiction. This is probably the best portrayal of the major user groups of Zhihu in the past ten years.
Zhihu didn’t tell a good story
Zhihu has been preparing for listing since its establishment.
In June 2011, Zhihu Technology (HK) Limited (hereinafter referred to as “Zhihu Hong Kong”) was established in Hong Kong. In January 2012, Zhihu Hong Kong’s wholly-owned domestic subsidiary Zhihu Sihai (Beijing) Technology Co., Ltd. was established. After the completion of the e-round financing in 2018, Zhihu shareholders pledged all their shares to Sophie Sihai, forming a typical vie structure.
But after the equity pledge, Zhihu’s listing plan was shelved. At that time, some users raised questions on the Zhihu platform about whether Zhihu could be listed in the market, and raised various questions about Zhihu. These problems have not been properly solved.
Unfortunately, Zhihu has tried several times over the years, and has even entered the recruitment market. The year 2020 will be over, but there is still no clear profit model.
In the process of searching for a way out, Zhihu has tried to pay for knowledge, such as reward, paper publications, electronic publications, and paid Q & A. this profit model seems to fit Zhihu best, but it is gradually weakened due to the increase of users.
In June 2018, Zhihu opened the book and live business, merged into the new knowledge market business unit, and upgraded the original “knowledge market” business to “Zhihu University”. It tried to make profits by selling courses. As a result, due to too many competing products in the market, the questionable effect of knowledge payment, and the decline in the quality of content caused by the departure of big V, etc., it was also tepid.
At the end of 2018, after the organizational structure adjustment and layoff storm, Zhihu turned the hope of profit to the member system and social realization. In 2019, Zhihu successively launched the “salt selection member” system, the “circle” function similar to wechat friend circle, live broadcast and good thing recommendation. E-books, videos, courses, etc. are free of charge for members. They are linked with the online support program to attract a number of members.
However, at present, the feedback from users to members is not ideal, and the continuous liquidity is not optimistic. Good thing recommendation and appreciation functions need to reach a certain level before they can be used, and the liquidity is also questionable.
At present, the way to realize Zhihu has not run smoothly, and there are difficulties in the transformation and future development.
With the advent of the short video era, the video knowledge communication platform represented by station B has risen, and the traditional long text + picture form of Zhihu has been impacted. Kwai has tried many times in short video and live broadcast, including the last round of cooperation with the fast hand, and it is also possible that it has taken a fancy to its ability in short video and live track. The video creator recruitment plan launched this year and the on-line video creation tools for internal testing show that Zhihu has started a new round of attempts to enter the video track.
However, some netizens disclosed that almost all the videos on Zhihu were transported from other platforms, and some even watermarks on other platforms were still there. More Zhihu netizens said bluntly: “why do I want to see fast hand on Zhihu?”
Short video track competition is very fierce, Zhihu now into almost no advantage. When focusing on the development of video and live broadcasting, Zhihu may have a new round of friction with its original users who like deep and long articles. It’s hard to say whether this one can be as smooth as before.
After the launch of Zhihu f round of financing, Ding Daoshi, President of speedway Research Institute, said: “when I saw Zhihu financing reach 434 million US dollars, I was completely shocked by the amount. Zhihu’s commercialization has not been very good. It has reached such a high point.”
After learning the news of Zhihu’s IPO preparation, the managers of several investment banks also said that they were not optimistic about Zhihu’s IPO behavior in an interview with BT finance, because they did not realize that Zhihu had a very clear profit model, and the story of Zhihu in the future was not accepted by all investors.
Zhihu has many wonderful and well structured stories, but it fails to tell one of its own. Will listing bring new help to Zhihu? BT finance will continue to pay attention to this.
(statement: This article only represents the author’s point of view, not Sina’s position.)