"I'm very sorry. After all our debts are really paid off, we may make a documentary to commemorate this strange life journey. I have already thought of the name of this documentary, and it will be called "True Return"." Three years ago, at the "Talk Show" finals, Luo Yonghao talked about the 600 million yuan debt in a very "humorous" way, and said that it would be basically paid off within the next year. As he said, by the beginning of 2022, the information of Luo Yonghao's executed person has been cleared, the high consumption restrictions have also been lifted, and only part of the equity frozen information has been frozen.
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For a large number of "audiences", Luo Yonghao's "True Return" seems to have ended perfectly at the beginning of last year, and Luo Yonghao has completely turned around. However, the capital market is always full of drama. Just one year later, "True Return" has suddenly reversed, and the "finale" of this drama has become increasingly unpredictable.
On September 25, according to the Science and Technology Innovation Board Daily, 12 entities have submitted arbitration applications to the Beijing Arbitration Commission with Luo Yonghao as the respondent, involving 580 million yuan of investment from Smartisan Technology Fund.
It is reported that the subjects of this arbitration application include investors, partners and shareholders of Smartisan Technology. The reasons for their application mainly related to Luo Yonghao’s improper conduct during the investment process of Smartisan Technology Fund, including fraud and concealment of major facts. Some investors accused Luo Yonghao of falsely describing the risks and benefits of investment during the fund investment process, leading them to make wrong investment decisions.
After repaying 600 million, about 600 million more came. Where did Luo Yonghao's "huge debt" come from? What should I get in return?
01
Involving 1.5 billion investment funds
On September 4, a partner of Luo Yonghao's former friend Zihui Ventures posted a "little essay" in his circle of friends, criticizing Luo Yonghao and saying that he would go to court and "initiate arbitration this week."
Picture: Zheng Gang’s circle of friends
In the early morning of twenty days later, Zheng Gang posted again, stating that he had agreed to discuss repayment matters with Lao Luo and Smartisan Technology, but he once again encountered a temporary change of heart. Zheng Gang said angrily: "It was clearly agreed that we would discuss the specific repayment matters, so why did it change so quickly?"
What kind of complicated account is this? Everything will start in the second half of 2017.
At that time, Luo Yonghao's Smartisan Technology was facing a crisis of broken capital chain. Luo Yonghao searched for "new blood" everywhere to no avail. At the time of life and death, some of Smartisan Technology's previous investors once again helped Luo Yonghao resolve the crisis.
Of course, "old" investors naturally have some "requirements" "as a rule". For example, Smartisan Technology has stated a five-year repurchase clause in the financing agreement. To put it simply, if Smartisan Technology fails to go public within 5 years, it will have to pay back investors’ money after 5 years, and investors will also receive dividends at an annual rate of 5%.
As we all know, venture capital means that investors know that the investment they make carries huge risks and are willing to bear such risks. As long as the company does not mess around, even if it eventually spends all the money and goes bankrupt, the entrepreneurial team does not need to bear compensation or liability for the losses caused by the business. But this is a general situation, unless otherwise provided in the agreement.
It is worth mentioning that Smartisan Technology’s 2017 D-round financing agreement clearly mentioned that if the company is unable to pay the redemption payment, the founders shall bear joint liability for compensation. In other words, if Smartisan Technology cannot pay back the money by then, then Luo Yonghao will have to come forward to pay back the money.
Things have passed. By September 2022, this "bet" agreement has expired, Smartisan Technology has already "gone cold", and investors can only ask Luo Yonghao for money. According to Zheng Gang's estimation, once the investor initiates the repurchase, the repurchase amount and interest during the period may be around 1.5 billion yuan, of which Zihui Venture Capital, represented by Zheng Gang, accounts for approximately 175 million yuan.
In fact, asking Luo Yonghao to repay the "1.5 billion" was not only because of the provision that "the founder should bear joint and several liability for compensation." Zheng Gang had a rather firm tone in his previous "essay", saying bluntly that "I am determined, absolutely, and absolutely determined to initiate a repurchase of Luo Yonghao."
Right: Luo Yonghao Left: Zheng Gang
The reason is that Luo Yonghao gave Zheng Gang a "disgusting" plan, wanting to use the equity of his AR company Thin Red Line Technology to offset the 1.5 billion yuan investment previously accepted by Smartisan Technology. That is, the thin red line "0.69%" equity is used to replace Zheng Gang's 175 million repurchase right.
According to Zheng Gang's description, according to the current valuation of the thin red line, it is equivalent to using the new company's equity currently worth about 35 million yuan to offset the 1.5 billion yuan of investment previously accepted by Smartisan Technology.
35 million and 1.5 billion, the gap between the two is self-evident, and this can understand why Zheng Gang was so "angry". In Zheng Gang's words: "What makes me sick about this is not that he will repurchase or not at all. His attitude is extremely arrogant and he doesn't take us old shareholders seriously at all."
Zheng Gang also said: "You can't just tell us what kind of company this is, and suddenly throw in an agreement asking me to accept the equity of the VR company, and then cancel the repurchase right for me."
However, in the face of Zheng Gang's furious condemnation, Luo Yonghao himself has not responded yet.
02
From old friend to new creditor
It may be hard to believe that Zheng Gang and Luo Yonghao have been friends for many years and their relationship was once very close.
According to public information, Zihui Venture Capital participated in the Series A and Series B financing of Smartisan Technology in May 2013 and May 2014 respectively. According to a previous report by "Chinese Entrepreneur", Zihui Venture Capital invested 40 million yuan in the A round of Smartisan Technology, and increased its investment in the B round, with a cumulative position of more than 100 million yuan.
Source: Tianyancha
As the founder of Zihui Venture Capital and an early investor in Smartisan Technology, Zheng Gang has spoken out for the Smartisan mobile platform many times. Not only did he spend his own money to buy hundreds of Smartisan mobile phones and distribute them to his circle of friends for free, he also "personally" debated with Smartisan "black fans" and even mortgaged his real estate to raise funds for Luo Yonghao.
The most noteworthy one is the incident in which Zheng Gang “bombarded” Alibaba for Smartisan Technology.
In August 2017, Zheng Gang said in his circle of friends: "(Hammer Technology) was almost killed by Alibaba!! Knowing that the startup company could not afford it, I worked on it for half a year, and finally said no! If it weren't for Zihui's persistence, how could you have made 1 billion US dollars on Momo!!"
At that time, Wang Shuai, chairman of the Alibaba Market Public Relations Committee, responded remotely: "Investment is not a public welfare, nor is it charity or borrowing. Many projects, whether they invest or not, are a process of in-depth communication and understanding between the two parties, and they are all normal business behaviors. Any investment requires standardized and strict processes. This is basic common sense."
Including Luo Yonghao himself, he has publicly stated: "Mr. Zheng Gang and his organization have helped me more than once when I was having difficulties starting my business. I have also helped Mr. Zheng Gang more than once when his company and individuals encountered difficulties."
From the above, it is not difficult to see the close relationship between the two, but the capital market has always been driven by "interests", and there is no so-called "friendship" at all.By 2022, after Luo Yonghao gave an "unreasonable" "plan", the two completely broke up.
In fact, this is not the first time Zheng Gang has criticized Luo Yonghao. In January of this year, Zheng Gang posted an article on Moments to denounce Luo Yonghao, detailing Luo Yonghao's "three sins", including not holding shareholders' meetings and board of directors for three years, "snobbishness" to please US dollar funds, and a completely unequal compensation agreement.
Picture: Zheng Gang’s circle of friends
Regarding Zheng Gang's first "little essay", Luo Yonghao also promptly published a long article to "explain" the shareholders' meeting and the repurchase plan. However, Luo Yonghao's reply did not calm Zheng Gang's anger. Instead, it "added fuel to the fire." Zheng Gang quickly refuted in the circle of friends and revealed more details.
From being "old friends" along the way, to becoming new creditors, where will this debt tug-by between Smartisan investors represented by Zheng Gang and Luo Yonghao go?
03
What does Luo Yonghao use to repay his debt?
There is no doubt that this is an account that Luo Yonghao "cannot afford". After all, there is the fact that "thin red line shares are used to offset investment funds." But after the lawsuit, what will Luo Yonghao do to pay back the money?
A few years ago, Luo Yonghao paid off the 600 million debt through live streaming as an "Internet celebrity", but now, it seems a bit impossible to repay the debt through live streaming.
On April 1, 2020, Luo Yonghao's first live broadcast on Douyin had a good start. The cumulative transaction volume of the first live broadcast exceeded 120 million yuan and the cumulative number of views was nearly 48 million, setting a record for Douyin's live broadcast at the time. Since then, Luo Yonghao has maintained a high frequency of live broadcasts on Douyin, and in November 2020, he achieved the highest GMV of 520 million yuan, becoming a veritable "big brother" in promoting goods on Douyin.
With his fame, eloquence and other personal abilities, as well as the general trend of geometric growth of live broadcast sales, Luo Yonghao has made a lot of money. However, no one expected that on June 7, 2022, Luo Yonghao, who had basically paid off his debts, announced his official withdrawal from the management of "Make a Friend". The original Douyin account "Luo Yonghao" was renamed "Make a Friend Live Room", and his Weibo was also taken over by the "Make a Friend" company.
After that, Luo Yonghao only occasionally participated in live broadcasts of Make Friends as a host.
Less than two months after Luo Yonghao quit making friends, in August 2022, Century Sage Scientific signed an exclusive operating agreement with make friends. In the blink of an eye, in May this year, a subsidiary of Century Sage Scientific completed the wholly-owned acquisition of Make a Friend, and Huang He no longer served as the legal representative of Make a Friend. After acquiring Make a Friend, Century Sage Scientific, which had long wanted to transform, directly changed the company's name to "Make a Friend Holdings".
Make a friend and successfully achieve listing on the curve. There are infinite "possibilities" in the secondary market, but all this seems to have little to do with Luo Yonghao. The only thing left in his hands that can be seen by capital is the thin red line of "the last venture".
In June 2022, Thin Red Line founded by Luo Yonghao began to recruit cutting-edge talents to enter the AR track. Luo Yonghao once said: AR glasses are the next generation computing platform, and he is not optimistic about Apple's AR glasses, because when the platform revolution occurs, the overlord of the new world will never be the overlord of the old world.
AR eyes are regarded by countless people as the next generation of "computers" and a huge "hidden" outlet. Luo Yonghao's entry seems to be "correct" at least for now, but more than a year has passed and no one knows what Thin Red Line is doing, let alone launching the first AR glasses product.
Time waits for no one. Currently, Apple has launched VisionPro, XREAL has also launched the XREAL Air2 series of new products, and domestic Xiaomi, Thunderbird, PICO, etc. are also making continuous advances.
The so-called preemptive strike means that under the premise that technology and financial resources cannot be compared, the time left for the thin red line to "prepare" is obviously running out, and the hope left for Luo Yonghao to "turn around" again has become increasingly slim.
"Breaking up" with making friends, the thin red line "has a long road ahead", what will Luo Yonghao do in "True Story 2" this time?