“Science and Technology Innovation Board Daily”, August 7 (Reporter Chen Mei) Recently, there was news that 3D design software manufacturer Group Nuclear Technology plans to conduct an initial public offering (IPO) in Hong Kong as soon as this year, and it is estimated that the fund-raising scale may reach 0.2 billion US dollars. Currently, the company has hired CCB International and J.P. Morgan Chase as underwriters to advance the listing plan.

In response, the Nuclear Technology Department told the “Science and Technology Innovation Board Daily” reporter, “No comment.”

Previously, Qun Nuclear Technology submitted a listing application to the US Securities and Exchange Commission in June 2021. However, in November of the same year, the “Science and Technology Innovation Board Daily” reporter learned that Qun Nuclear Technology is considering shifting its listing location from the US to Hong Kong, and has received an additional investment of 0.2 billion US dollars. At the time, an investor familiar with Qun Nuclear Technology revealed, “This round of additional investment is mainly followed up by existing shareholders.”

According to CIFA Venture Capital Connect data, Qunnac Technology completed pre-IPO financing in November 2021, amounting to 0.2 billion US dollars.

During the exchange, another person familiar with the matter said, “Qunnac Technology is indeed applying for an IPO, but the latest developments so far are unclear.”

IDG, Jiyuan, Shunwei, and Gao Lin together hold nearly 50% of the shares

Group Nuclear Technology was founded in 2011 by Huang Xiaohuang, Chen Hang, and Zhu Hao. They are graduate students at UIUC (University of Illinois at Urbana-Champaign).

Among them, Huang Xiaohuang is the chairman of Qun Nuclear Technology (Cool Kara), Chen Hang is the CEO (CEO), and Zhu Hao is the Chief Technology Officer (CTO).

Qun Nuclear Technology is a cloud design software platform and SaaS service provider. It owns 4 major brands: Cool Carat, COOHOM, Modelo, and Meijian. Among them, Cool Carrefour is the flagship product and a 3D cloud design platform for the fields of home improvement, public decoration, real estate, etc.

Since its establishment, Qun Nuclear Technology has gone through 8 rounds of financing. In the process of actively preparing for a US stock IPO, the company is “favored” by US dollar funds.

According to financing data, IDG Capital, Shunwei Capital, Jiyuan Capital, and Gao Lin are important shareholders. In 2013, IDG Capital took the lead in participating in Group Nuclear Technology's multi-million dollar Series A investment; in 2014, the agency once again joined Jiyuan Capital, Linear Capital, Mingshi Capital, Jingwei Venture Capital, etc. to participate in the 10 million dollar B-series financing of Qunnac Technology; in 2016, the aforementioned institutions took another step and participated in Series C financing of tens of millions of dollars. Since then, the valuation of Qun Nuclear Technology has climbed to 0.5 billion US dollars.

Since then, Qun Nuclear Technology's valuation has made great strides. In 2019, it completed a D+ round of financing of more than 0.1 billion US dollars, and the valuation jumped to 1 billion US dollars, and promoted to the industry's unicorn. As one of the important funders, Gao Yin participated in it.

By March 2021, Gao Lin and Coatue Management took another step. Qunnac Technology completed strategic financing, and the company's post-investment valuation reached 2 billion US dollars, and news soon broke that it would go public in the US.

According to the prospectus submitted by Qun Nuclear Technology on the SEC website, before the IPO, the four major institutions mentioned above held nearly half of Qunnac Technology's shares, with a total shareholding ratio of 48.5%. Among them, IDG holds 16.5% of the shares; Jiyuan Capital holds 14.4% of the shares; Shunwei Capital of Xiaomi Lei Jun Holdings holds 10.7% of the shares; and HH SUM-I of Gao Lin holds 6.9% of the shares.

The path to listing took 3 years, with continuous losses before

From submitting a prospectus to the US Securities and Exchange Commission in 2021 to a diversion to a Hong Kong stock IPO, Qunnac Technology's listing journey has taken 3 years.

The “Science and Technology Innovation Board Daily” reporter noticed that in October 2019, Qun Nuclear Technology appointed Shen Bei as the new CFO. Up to now, Shen Bei is still a core member of Group Nuclear Technology, specifically responsible for Cool Kara's strategy formulation, finance, investment and financing, and legal affairs.

According to his resume, before officially joining Group Nuclear Technology, Shen Bei served as the executive director of Goldman Sachs's China Investment Banking Division, and was responsible for corporate cases such as NIO's US listing, Qijia.com's Hong Kong listing, and Brilliance Auto's sale of part of its shares to BMW. Among them, Qijia.com is also a design platform company.

According to the prospectus, from 2019 to the first 3 months of 2021, Qun Nuclear Technology's revenue was 0.28 billion yuan, 0.35 billion yuan, and 1 billion yuan, respectively; the corresponding net profit was -0.26 billion yuan, -0.296 billion yuan, and -1.169 billion yuan, respectively.

In terms of gross profit, Group Nuclear Technology achieved 0.194 billion yuan, 0.239 billion yuan, and 0.669 billion yuan respectively during the same period, but its R&D, sales and marketing expenses continued to grow at a high rate, making it difficult for net profit to cover its expenses.

It can be seen from this that Group Core Technology, which specializes in home cloud design software platforms and SaaS services, is not profitable. However, due to multiple rounds of financing, Qunnac Technology's cash flow was abundant, and the amount of funds (cash and cash equivalents) in 2021 reached 6.743 billion yuan.

Group Nuclear Technology stated in its prospectus that the funds raised will be used to expand interior design, decoration and construction services, accelerate international market expansion, and strengthen R&D and technology investment.

An investor told the “Science and Technology Innovation Board Daily” reporter that currently, home improvement and formal decoration SaaS companies need continuous technological innovation in order to maintain their technological leadership. “As far as home improvement and public decoration are concerned, there are many SaaS companies in this vertical field. There are not only established home improvement platforms, but also many emerging SaaS service providers and cross-border Internet giants, so competition is fierce.”

Under competition, a number of home improvement and official decoration SaaS companies have also emerged in China that have received institutional investment, such as Don Quixote, Toba Rabbit, Qijia.com (Qiyi Technology), SkyVision Technology, and INCRATE.

Among the companies mentioned above, only Qijia.com (Qiyi Technology) successfully listed in Hong Kong stocks, but its current stock price is HK$0.227/share, making it a fairy stock. Tuba Rabbit, on the other hand, submitted a GEM application in 2021. It plans to raise 0.7 billion yuan, and eventually the listing came to an end.

The investors mentioned above said that personalized and customized services are at the core of the industry. Although the industry is striving to integrate engines, industrial SaaS, and supply chains through a one-stop service model to improve service quality and efficiency, customer fragmentation is still a challenge. As a result, improving retention rates and customer acquisition efficiency is particularly critical in a huge market.