Recently, Liu Jingkang, the founder of Insta360, posted on his social media platform, calling for a "fair characterization" of Insta360's initial public offering (IPO), which has attracted much attention.

Generally speaking, information related to an IPO for a company planning to go public is officially released through announcements. It is not common for corporate executives to "vent" about the progress of an IPO on their personal social platforms. However, after reviewing his life experiences, Liu Jingkang's somewhat "impulsive" behavior this time may be understandable.

A Post-90s Computer Prodigy Entrepreneur

Public information shows that Liu Jingkang, the founder of Insta360, was born in 1991 and has been a computer prodigy since childhood, able to program web pages and websites on his own when he was in the fifth or sixth grade of elementary school.

During high school, Liu Jingkang participated in the National Middle School Students' Computer Production Competition, creating a "plug-in" for Google Maps: using a camera to recognize users' legs moving forward, backward, turning, etc., and then displaying the street view of the place the user "walked" to on the computer based on these movements.

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Nowadays, the application of this technology is quite common, but it was very innovative a decade ago. Ultimately, Liu Jingkang not only won an award in this computer production competition but also received a 20-point bonus for the college entrance examination, which allowed him to be admitted to Nanjing University. In 2010, Liu Jingkang entered the School of Software at Nanjing University to further study computer technology.

During his university years, Liu Jingkang became "famous" for several technical operations. According to People's Daily Online, in July 2012, Liu Jingkang had a "whim" and used 7,000 photos of his classmates to create the "standard faces" of various faculties at Nanjing University, earning him the title of "Standard Brother."

In December 2012, "Standard Brother" Liu Jingkang posted a sensational message on Renren.com about how to obtain and modify final exam papers and grades by hacking into teachers' email accounts. Liu Jingkang stated, "It seems that many universities' email systems have such vulnerabilities, and students from other schools are welcome to practice and verify." Although he only technically verified the feasibility and did not "do anything wrong," Liu Jingkang almost got expelled from school.

Another incident that made Liu Jingkang famous was his decryption of the mobile phone number of Zhou Hongyi, the chairman of 360, through technical means. It is reported that Liu Jingkang successfully obtained Zhou Hongyi's mobile phone number through the key tones in an online video. Subsequently, Zhou Hongyi responded positively to this matter on Weibo, saying "This student is indeed capable."The "tech enthusiast" characteristic, coupled with the experience of being personally "authenticated" by Zhou Hongyi, quickly gained Liu Jingkang the favor of capital.

In May 2014, Liu Jingkang, who was still a senior in college, received angel round investment from IDG Capital and Chuangyebang Angel Fund. In July 2015, Liu Jingkang founded Insta360, developing VR panoramic cameras, with products covering consumer-grade, professional-grade panoramic cameras, sports cameras, and other fields, with competitors including GoPro, DJI, etc.

From 2015 to 2023, Insta360 underwent six more rounds of financing, with investors including Qiming Venture Capital, Suning Capital, CITIC Securities, China Merchants Group Yidun Fund, etc.

Where is the IPO process stuck?

It can be seen that Insta360's financing has been exceptionally smooth, but its IPO process has been very slow. Where is the problem?

The official website of the Shanghai Stock Exchange shows that in October 2020, Insta360's application for listing on the STAR Market was accepted. After two rounds of inquiries, in September 2021, Insta360 successfully passed the board and submitted for registration in January 2022. However, more than two years have passed, and Insta360's registration has not yet taken effect.

In August of this year, Liu Jingkang posted in his circle of friends, "Sensitive shareholders are not in the audit position, and they paid the highest price at the time of investment (50% higher than Shenzhen Venture Capital), there is no interest transfer, and there is no concealment of shareholding." Some analyses believe that the sensitive shareholders mentioned by Liu Jingkang refer to Chen Bin, an indirect shareholder of Insta360 and a former employee of the China Securities Regulatory Commission (CSRC).

Public information shows that from August 1999 to March 2012, Chen Bin worked at the Shenzhen Stock Exchange, successively holding positions such as Senior Manager, Assistant Director of the Comprehensive Research Institute, and Deputy Director Researcher. From 2007 to 2009, Chen Bin was also seconded to the CSRC's Issuance Department and Listed Companies Department.

Starting from 2021, the regulatory authorities strengthened the supervision of former CSRC employees' shareholding in IPO companies. In May 2021, the CSRC issued the "Regulatory Rule Application Guide - Issuance No. 2", which mentioned that for companies applying for the first public issuance of stocks, depositary receipts, and applying for listing on the selected layer of the New Third Board, intermediaries should follow the requirements of this guide and do a good job in verifying the shareholding of personnel who have left the CSRC system.

The CSRC also requires that this regulation be implemented from June 1, 2021, and companies that have been accepted for review should follow the execution. The timeline shows that Insta360 went to the board for the first time in July 2021 (the result was temporarily postponed for review), which falls within the category of "companies that have been accepted for review should follow the execution."In fact, during the third round of inquiries prior to this, the China Securities Regulatory Commission (CSRC) had already demanded that Insta360 strictly comply with the requirements of the "Regulatory Guidelines on Disclosure of Shareholder Information for Companies Applying for Initial Public Offerings" to conduct due diligence on shareholder information. However, in the response documents, Insta360 did not disclose any information related to Chen Bin. Subsequently, in the first submission of the prospectus for the listing committee (the draft for the committee), Insta360 also failed to mention the existence of "shareholders who are former staff members of the CSRC system."

In November 2022, during the registration phase, the CSRC issued inquiries asking Insta360 to provide additional explanations regarding the indirect shareholder Chen Bin's holdings in the company at that time, the background and reasons for the external transfer of shares since the application, the payment of consideration, and the authenticity of the transfer, as well as whether there were any interest transfers or other interest arrangements. This was also the direct "naming" of Chen Bin by the CSRC.

Although not a direct shareholder, Chen Bin did indeed exist as an indirect shareholder of Insta360. Equity穿透 information revealed that Xiamen Fukai, which holds 3.7% of Insta360's equity, has Chen Bin as the chairman and general manager of its sixth-largest shareholder, Fukai Hai Chuang. Additionally, when Shenzhen Maigao, holding 1.3% of the equity, invested in Insta360, Chen Bin was also the chairman and actual controller of Maigao Shares, the controlling shareholder.

However, the shareholder equity of Shenzhen Maigao was subsequently changed. In March 2023, Hengxiang Investment replaced Maigao Shares to become the controlling shareholder of Shenzhen Maigao. In January of this year, Hengxiang Investment withdrew, and Hong Feng became the new controlling shareholder of Shenzhen Maigao. At the same time, Shenzhen Maigao also added a new shareholder, Shenzhen Yier Network. The actual controller of Shenzhen Yier Network is Liu Jingkang (holding 99% of the shares).

The latest policy indicates that the regulation for former CSRC system staff members becoming shareholders of companies planning to go public is becoming increasingly strict. In September of this year, the CSRC issued the "Regulatory Provisions on the Supervision of Former CSRC System Staff Members Becoming Shareholders of Companies Planning to Go Public (Trial)," requiring an expansion of the strict supervision scope for former staff members, an extension of the prohibition period for former staff members to become shareholders, and higher verification requirements for related IPO companies.

Ultimately, the impact of the tightening policies on Insta360's IPO and whether the registration will remain distant remains to be seen. Regarding the current IPO deadlock, Liu Jingkang stated in his social circle, "We will actively communicate with the regulators to change or withdraw the IPO plan."