How this former rising star of the China tech scene now finds itself close to collapse

Royole, once a high-flying start-up that makes flexible mobile screens, is reportedly on the edge of financial collapse after a failed initial public offering attempt in Shanghai, in a cautionary tale about China’s fast-moving entrepreneurial landscape.

Known as the world’s first commercial foldable smartphone maker, Royole has not been able to pay wages for the last six months due to a cash shortage, according to a Friday report on a social media channel run by local media outlet Chengdu Economic Daily.

The report was in line with previous media reports that the Shenzhen-based company has suffered from a funding crisis after failing to complete a US$22 billion IPO in Shanghai in early 2021.

A former executive at the company, who declined to be identified, told the Post the company had been in dire financial straits ever since its IPO plan failed.

Screenshots have circulated on Chinese social media indicating that Royole’s finance department emailed all employees in February to inform them that the company was working on new funding and that some financing had been delayed.

Royole, which was created a decade ago, did not reply to a request for comment from the Post on Friday.

While it is not unusual for hot tech start-ups to fail, Royole’s fall from grace is surprising given the hype that surrounded its early days.

Its founder Bill Liu, or Liu Zihong, has a doctorate from Stanford University, and his venture received the blessing of a long list of big name investors, including IDG Capital, Green Pine Capital Partners and Shenzhen Capital Group.

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Its flexible screen technology was touted as a leader in the field and its first foldable phone, the FlexPai, was unveiled in 2018.

The Chinese company also arranged for several spectators at the 2018 Fifa World Cup Final in Russia to wear top hats equipped with its flexible display broadcasting the soccer final live.

But the product never took off and according to its latest financial data, the company made a loss of 961 million yuan (US$151 million) in the first half of 2020, after a 1.1 billion yuan loss in 2019 and an 802 million yuan loss in 2018.

Royole filed an application to list on the STAR board of the Shanghai Stock Exchange on New Year’s Eve 2020, but it retracted the application a month later following public and regulatory scrutiny of its ownership structure.

In its prospectus, the company said it was in the process of dismantling its Variable Interest Entity (VIE) structure and unregistering its shell companies outside of China as it had decided to list at home.

The VIE-structured company was not allowed to list on domestic exchanges until September 2021, when US-sanctioned artificial intelligence firm Megvii got the nod for a home listing.

TV on a top hat now a reality thanks to China unicorn Royole

Its latest round of financing took place in the summer of 2020, and it has raised a total of over 6.6 billion yuan in at least 10 rounds of funding, according to information on enterprise-tracking firm Tianyancha.

In one social media post on December 21, 2021, Liu wrote that “in the darkest moment, there’s no use expecting anyone to deliver coal on a snowy day; the only thing that can be done is to carry on”.