Nasdaq is about to ring the bell, let's take a look back at Canaan Creative's three-year IPO journey

Source: Shallot

On November 21, local time in the United States, Bitcoin mining machine manufacturer Canaan Creative will officially ring the bell on Nasdaq, with the stock code to be CAN. According to media reports, Canaan Creative will raise $90 million through an IPO in the United States. Shao Jianliang, general manager of Canaan Creative's blockchain business unit, said that this witnessed the birth of a new species in the blockchain industry. The birth of a listed company represents the maturity of an industry. Canaan Technology's efforts over more than six years are finally about to usher in a highlight moment.

Canaan Creative's predecessor was the team of Beihang University Ph.D. Zhang Nangeng. In 2011, the team invented China's first Bitcoin mining machine, Avalon I, which was also the most powerful mining machine in the world at that time. In April 2013, Zhang Nangeng and his partner Li Jiaxuan officially founded "Beijing Canaan Creative Information Technology Co., Ltd." in Beijing. The story of Canaan Creative officially began from then on. Since 2015, Canaan Creative has started the research and development of artificial intelligence chips. After nearly two years of hard work, in December 2017, Canaan Creative pre-released the world's earliest artificial intelligence edge computing chip KPU.

Canaan Creative's roadmap is to rely on supercomputing chips to accumulate funds and technology, help enterprises occupy the leading position in the industry, and develop core hardware for artificial intelligence. Public data shows that Canaan Creative's annual net profit was 2.24 million in 2015, and the annual net profit reached 300 million in 2017, a 125-fold increase in two years. From manufacturing Bitcoin "mining" machines to developing chips in the fields of blockchain and artificial intelligence, this "small workshop" founded by a few technology geeks has now become an internationally renowned chip company.

According to data from Frost & Sullivan, an international authoritative analysis agency, as of the first half of 2019, Canaan Creative firmly holds the second place in the global designer and manufacturer of Bitcoin mining machines, and the computing power of Bitcoin mining machines sold by it accounts for 21.9% of the world.

However, as the world's second largest Bitcoin mining machine manufacturer, Canaan Creative's IPO road has been extremely bumpy. In the past three years, Canaan Creative has sought listing on major exchanges many times, but all ended in failure.

As early as 2016, Canaan Creative tried to "backdoor" to enter the A-share market. In June 2016, Luyitong (300423) announced that it planned to acquire 100% of Canaan Creative's equity for a total price of 3.06 billion yuan. At that time, Canaan Creative was a hot blockchain leader in the market. If the transaction is approved, this acquisition will be the largest acquisition in the blockchain field at that time. Canaan Creative can also go public in a disguised backdoor through major asset restructuring.

However, as the target of acquisition, Canaan Creative was quite questioned at the time. After repeated inquiries from the regulatory authorities, three months later, Luyitong announced the termination of the major asset restructuring plan to purchase 100% of Canaan Creative's equity for some reason.

In May 2017, according to reports from the investment community, Canaan Creative completed a 300 million yuan Series A financing round, with investments from institutions such as Bopu Investment, Jinjiang Group, and Tunlan Capital. The company's post-investment valuation was nearly 3.3 billion yuan. In August 2017, the world's second largest Bitcoin mining machine manufacturer applied to be listed on the New Third Board. After the company's financial information was disclosed, it was regarded by the outside world as "profiteering beyond imagination": nearly 100% of the company's revenue came from mining machine sales, and in recent years, more than 95% of sales revenue came from the domestic market. In 2017, the company's revenue exceeded 1.2 billion yuan and its profit exceeded 300 million yuan, which increased by 20 times and more than 100 times respectively compared with 5.5 million in revenue and 2.5 million in profit in 2015.

However, on September 4, domestic regulatory authorities began to step up efforts to rectify ICO and virtual currency chaos, and closed virtual currency exchanges in China. Amid the industry turmoil, the company also received multiple rounds of inquiries from the National Equities Exchange and Quotations. After three rounds of feedback from the National Equities Exchange and Quotations, Canaan Creative voluntarily gave up listing in March of the following year, and the listing plan was "shelved" again.

Things seemed to be turning around until April 2018. On April 24, 2018, Jiang Yang, vice chairman of the China Securities Regulatory Commission, and his team visited Canaan Creative. After learning about the details of the company's A-share mergers and acquisitions in 2016 and its latest listing plan, Jiang Yang said, "No matter what your chips are used for, you are still a chip company in essence. I hope you can go public in China."

In May of that year, Canaan Inc. began to submit a prospectus to the Hong Kong Stock Exchange, intending to list in Hong Kong at a market value of US$400 million. However, the listing plan was ultimately aborted six months later. In November, the official website of the Hong Kong Stock Exchange classified Canaan Inc.'s listing application as "invalid". According to relevant media reports, the Hong Kong Stock Exchange also had many questions about Canaan Inc.'s business model and prospects at that time.

On January 8 this year, Bloomberg reported that Canaan Creative was considering going public in the United States, planning to raise $1 billion in early stage, and could be listed on the U.S. stock market as early as the first half of 2019. However, on March 28, blockchain media CoinDesk quoted people familiar with the matter as saying that Canaan Creative was considering submitting a listing application to the newly established Science and Technology Innovation Board of the Shanghai Stock Exchange or the U.S. Stock Exchange, but no final decision has been made. Sources revealed that Canaan Creative has communicated with the New York Stock Exchange and the Nasdaq Stock Exchange, and may make a final plan before the end of the year. This undoubtedly casts doubts on the news of its upcoming listing in the United States that was revealed at the beginning of the year.

However, on July 31 this year, the media revealed that Canaan Creative, a bitcoin mining machine manufacturer, had secretly submitted an application for listing to the U.S. Securities and Exchange Commission (SEC) to raise $200 million. On October 10, according to relevant sources, Canaan Creative will disclose its prospectus around mid-to-late October, and will hold a public roadshow and subscription at the end of October, and will complete the listing by November 25 at the latest.

On October 28, local time in the United States, Canaan Creative officially submitted its initial public offering prospectus to the U.S. Securities and Exchange Commission (SEC). The prospectus shows that the company intends to list on the Nasdaq with the stock code CAN and has set a fundraising amount of US$400 million. The final fundraising amount, valuation and issue price per share are still uncertain. The document marks another attempt by Canaan Creative to go public. According to the disclosed Canaan Creative prospectus, Hangzhou Canaan Creative Information Technology Co., Ltd., which was registered with the Hangzhou Jianggan District Administration for Industry and Commerce on April 9, 2013, will choose "Canaan Inc." as the company name for this IPO.

In early November, Canaan Creative officially completed its roadshow, bringing the three-year-long IPO journey to a perfect end.