Insta360's Four-Year IPO Battle: Founder Calls for Fairness Amid China's Regulatory Hurdles

Insta360’s Struggle with IPO Approval Amid China’s Regulatory Slowdown

In a surprising move, Jingkang Liu, the founder of Insta360, a leading 360-degree camera company, publicly voiced his frustration over the ongoing delays in securing approval for the company’s Initial Public Offering (IPO) in China. Despite Insta360's impressive growth and contributions to both the local and global economy, the company has been unable to complete its IPO process for nearly four years. Liu’s comments on social media reflect broader challenges that innovative tech companies face in China's increasingly cautious regulatory environment.

Key Takeaways

• Insta360’s Founder Speaks Out: Jingkang Liu took to social media to express his concerns over the prolonged delays in Insta360’s IPO process, highlighting the company's significant achievements and clarifying issues related to regulatory concerns.
• Regulatory Hurdles: The China Securities Regulatory Commission (CSRC) has been particularly cautious about approving IPOs, especially for tech companies like Insta360, contributing to the delays.
• Economic Contributions: Insta360 has made notable economic contributions, including exporting goods worth $400 million annually and paying taxes in the nine-figure range, yet these achievements have not sped up the IPO process.
• Liu’s Appeal: Liu is not merely seeking approval for the IPO but is calling for fair treatment, emphasizing the importance of recognizing the efforts of young tech entrepreneurs in China.

Analysis

Insta360’s journey to go public in China has been fraught with difficulties, reflecting the broader challenges that tech companies face in navigating the country’s evolving regulatory landscape. The company, which filed its IPO application in October 2020, has seen its application repeatedly delayed. This delay has occurred despite Insta360’s impressive growth, which saw its revenues surpass industry giant GoPro by the first half of 2023, and its recognition as a key innovator in the global tech scene.

The primary reasons for the delay appear to stem from a combination of market conditions, regulatory scrutiny, and perhaps the company’s own rapid evolution. The CSRC has been cautious with IPO approvals, particularly in the high-tech sector, due to concerns about market stability and the potential risks posed by rapidly growing companies. Insta360’s fast-paced innovation, while a strength in the market, may have also contributed to regulatory hesitance, as the company’s ever-evolving business model could be seen as needing more time to mature before entering the public markets.

Additionally, the broader economic and political environment in China has been challenging for IPOs. The Chinese government has tightened regulations on corporate governance and compliance, partly due to its anti-corruption efforts. This has led to a slowdown in the approval process for many companies, particularly those in sensitive sectors like technology. The economic pressures from both domestic and global challenges have also made the market less favorable for new listings, adding another layer of complexity to Insta360’s IPO journey.

Despite these challenges, Liu’s public statement is not just a complaint but a call for fairness in the treatment of innovative Chinese companies. He stresses that the achievements of companies like Insta360, which are at the forefront of China’s technological advancement, should be recognized and supported rather than hindered by bureaucratic delays.

Did You Know?

Insta360 is not just a leader in the 360-degree camera market; it has achieved remarkable global recognition. The company was twice named one of the world’s most innovative companies by Fast Company, even ranking ahead of tech giant Apple in one of these lists. Additionally, one of its products was featured on the cover of Time magazine in 2020, underscoring the brand’s impact on the global stage. Moreover, Google listed Insta360 among the top 50 Chinese brands making a mark internationally, highlighting the company’s significant role in promoting Chinese innovation worldwide.

Liu's Social Media Statement

Jingkang Liu’s original social media post provides a candid look at the challenges faced by Insta360 during its IPO process:

"People are byproducts of their environment. Given the current state of the A-share market in China and the backdrop of financial anti-corruption efforts, I fully understand the concern of approving potentially problematic companies and have no complaints. However, I would like to clarify our situation, and if anything I state is untrue, I will voluntarily resign: Our sensitive shareholders have been cleared, and there has been no transfer of interests. We did not secretly purchase A-shares; the regulation stating that A-share purchases should be reported six months after an IPO application was submitted came into effect later. We provided a special audit report to regulators within a month of the regulation’s introduction. All issues were cleared up a year and a half ago, and I am currently using most of my monthly salary to repay interest, which amounts to seven figures annually. Despite the hurdles, our performance has been strong—growing fourfold during the four years of our IPO application process. In 2017, we were only 1/40th the size of industry leader GoPro; by the first half of this year, we had overtaken them. Last year, without accounting for this year’s growth, our performance was in the top 5% on the STAR Market and ChiNext, and in the top 50% on the main board. We have been recognized as a 'Little Giant' and 'Single Champion' in specialized and innovative fields. We generate $400 million annually in export revenue and pay nine-figure taxes locally each year. Despite the IPO process, we have continued to reward our core talent, giving out $3 million in bonuses last year. Over our nine-year history, we have generated over a billion in profits without any dividends. We have twice been recognized by Fast Company as one of the world’s most innovative companies, even ahead of Apple. One of our products was featured on the cover of Time magazine in 2020, and Google ranked us among the top 50 Chinese brands making an impact internationally. After an on-site inspection in 2022, we did not receive any regulatory pushback. I am not asking for approval of our IPO, only for a fair assessment. Please do not dishearten the 2,000 young tech entrepreneurs who genuinely want to use technology to showcase China's innovation and technological rise to the world."