Quora Rival Zhihu Raises $523 Million in US IPO

By Adriaan Brits Friday, March 26, 2021

Zhihu, the China-based startup that runs the question and answer (Q&A) website under the same name, secured $523 million in its initial public offering (IPO) in the United States (US) after it sold its shares at $9.50 per unit.

Toy blocks spelling out 'I P O.'

Backed by Chinese Tech Business Giants

Zhihu, which is a Chinese version of the website Quora, sold 55 million American Depositary Shares (ADS) priced at the bottom of the previously-announced IPO range of $9.50 to $11.50, Reuters reports. Furthermore, the tech startup raised $250 million in funding from investors, headed by Alibaba and JD.Com affiliates.

The company opted for an IPO on the NYSE after the Securities and Exchange Commission’s (SEC) efforts to delist foreign companies that do not comply with the US auditing standards. Reports that the SEC decided to press ahead with those plans have sent Chinese companies’ stocks listed in the US tumbling in the past two days.

On the other hand, companies listed in China and Hong Kong have also seen their share prices tumble following China’s regulatory crackdown on the largest internet companies. Shares of Baidu dropped as much as 5.4% in Hong Kong on Friday, extending its two-day loss to 15%. Alibaba’s shares lost 2.35%, Netease fell 2.2%, while JD.com moved up by more than 1.8%.

The tech startup has raised a total of more than $800 million through the IPO and placements to investors. The Q&A website, similar to Quora, is targeting a business valuation of $6.4 billion in New York after managing to cut losses and double its business revenues thanks to an aggressive membership drive.

Zhihu, which means “do you know” in the classical Chinese language, was founded in 2011 by Victor Zhou and Li Shenshen. The idea was to offer industry insight and life hacks provided by China’s top minds.

A Quora rival quickly attracted major investors such as Tencent and Baidu and tried to monetize through advertising. Moreover, the company started ventures into online education, video streaming platforms, and ecommerce.

Last year, the tech startup doubled its business sales compared to 2019 and cut its losses in half to ¥518 million ($80 million). By employing an aggressive membership approach, the company nearly quadrupled its subscription payments while business revenues from advertising surged by 46%.

The company is now pricing its stock at 31 times 2020 sales, which is a very aggressive multiple, more than some other Chinese tech companies, such as Bilibili (21 times) and Weibo (7 times).

Zhihu justifying a price this high requires significant business growth from the company and the startup has already faced challenges in terms of scaling up, with a number of users complaining about the content quality.

Compared to 2019, spending on content and operations tripled in 2020, and Zhihu now has only 76 million active users. Furthermore, the online Q&A model is growing dim. Quora recently announced layoffs while ByteDance closed its own Q&A project.

One of the solutions could be making the transition from text to video. TikTok owner’s competitor Kuaishou is one of the company’s backers and could help in making this shift.


Chinese Q&A startup Zhihu, similar to Quora, raised $523 million in its US IPO. The company has secured more than $800 million from the IPO and placement to strategic investors and said that it’s aiming for a $6.4 billion business valuation.

About the Author

Headshot of Adriaan Brits

An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.

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