Three years of losses totaling 2.2 billion yuan, with executive annual salaries of 400 million yuan. Jia Jiaya's subsidiary Simo Industrial Intelligence's IPO attempt raises doubts.

Ask AI · Will Executive High Salaries Affect IPO Confidence?

Image source: Company website

In this issue (chinatimes.net.cn), reporter Huang Zhinan and Zhang Bei, Shenzhen report

Backed by six years of fundraising experience, SmartMore is trying to bring an “initial capital test” for industrial AI agents to the Hong Kong stock market.

A prospectus disclosed by the Hong Kong Exchange in March shows that an industrial AI agent company, SmartMore Technology (SmartMore Inc., abbreviated as “SmartMore”), founded by Dr. Jia Jiaya, has formally launched an attempt to list on the Main Board of the Hong Kong Stock Exchange, seeking to win the title of “the first industrial AI agent stock,” and to promote the intelligent transformation of China’s manufacturing industry.

Founded in 2019, SmartMore has completed eight rounds of equity financing, including an angel round. Its latest pre-IPO valuation is 1.23 billion US dollars. Behind it, major institutions such as Songhe Capital and Guolian Zhaozheng Sci-Tech Innovation Fund have assembled.

For SmartMore, an IPO in Hong Kong is not only a capital-market validation of an industrial AI commercialization story, but also a crucial hurdle to resolve liquidity pressure and escape the vortex of losses.

Regarding questions about SmartMore’s profitability and executive compensation, the reporter reached out to the company through its official website. As of the time of publication, no response had been received.

Six Years of Eight Rounds

SmartMore, which is filing for a Hong Kong listing, stands at the top of the industrial AI agent track with a pre-IPO valuation of 1.23 billion US dollars. Behind the market’s enthusiasm for eight rounds of financing completed over six years, there are hidden continuous losses and liquidity risks, and these are driving debate in the market over the long-term value of this star startup.

In 2019, when players such as SenseTime, Megvii, and Yitu were trapped in a red ocean of homogeneous competition in the consumer-level computer vision track, Dr. Jia Jiaya—formerly a professor at The Chinese University of Hong Kong and an internationally top scholar in the computer vision field—registered and established Hyperspace Group Inc. in the Cayman Islands, with SmartMore’s operating entity, anchoring the startup’s focus on the industrial AI agent track, still at an early stage of commercialization.

Against the backdrop of an industry where valuation bubbles in the consumer-level CV track had burst and profitability was in a bind, this more defensible track—with higher technical barriers and more fragmented scenarios—is both a choice for differentiated breakthroughs and a long-cycle commercial bet.

In terms of equity structure, Jia Jiaya has absolute control over SmartMore. As of the signing of the prospectus, through entities such as Hyperdimension Holdings Limited and Space Travel Management L.P., which it wholly owns, it collectively holds 34.64% of the company’s issued shares, making it the ultimate controlling party.

This equity structure led by the company’s core technology driver is the key logic behind early capital’s bets: because the industrial AI agent track is strongly driven by technology, the technical boundaries of the core team effectively define the company’s product ceiling.

Having been established for six years, SmartMore has completed an end-to-end layout from technical R&D to commercialization. Its core business is providing industrial AI agents, covering robotic systems, edge AI sensor devices, and AI-agent software systems. It has achieved large-scale implementation in scenarios such as new energy, intelligent manufacturing, and semiconductors.

Among them, industrial AI agents are the absolute revenue pillar. In 2025, revenue from this product line was 853 million yuan, accounting for nearly 80% of total revenue.

But behind the impressive product layout and scenario deployments, the industry-wide challenge of scaling commercialization—still remains an obstacle that SmartMore cannot easily bypass.

In an interview with reporters from The China Times, Dr. Zhang Yi, chief analyst at iiMedia Consulting, said bluntly that the biggest bottleneck for industrial AI agent companies to scale deployment across industries and end-to-end scenarios is the dual overlap of downstream manufacturing digitalization maturity and the ability to adapt technologies to standardized requirements—both are indispensable. Among them, the digital foundation of downstream manufacturing is the prerequisite, and the capability to adapt technologies to standards is the key to achieving a scaled breakthrough.

In Dr. Zhang’s view, the weak digital foundation in traditional manufacturing directly leads to low willingness to pay for industrial AI agents, and the lack of motivation to invest in AI technologies and run trials—this is the underlying constraint for deployment across industries. Meanwhile, the process barriers vary drastically across different manufacturing industries; even if deployments are made across scenarios, if technology cannot be rapidly standardized across the entire industry, it will ultimately be unable to break through the category limitations of high-end manufacturing.

On the commercialization front, SmartMore has delivered a record of high growth. From 2023 to 2025, the company’s total revenue was 485 million yuan, 756 million yuan, and 1.09B yuan, respectively, with a compound annual growth rate of nearly 50%. In 2025, year-over-year revenue growth reached 43.8%. During a period when domestic demand for industrial intelligence was gradually being released, this validated its ability to execute and deploy.

However, the quality of this high growth is still facing market scrutiny. Regarding the common phenomenon among industrial AI agent companies of “rising both quantity and price, but insufficient capacity utilization,” Dr. Zhang said its essence is high growth driven by customized orders—not high growth driven by industry-wide scaled demand. The company’s current growth level still relies heavily on customized demand from a small number of top customers. It has not yet formed a market foundation that supports large-scale mass production, and the current trend of both higher quantity and higher prices is hard to sustain.

He further stated that the high unit price and high income of SmartMore’s robot products come from personalized customized orders from a small number of top customers. Such orders inherently have small batch sizes and non-standard demand, so the company does not naturally need to release large-scale production capacity. This is also the core reason why similar companies in the industry tend to have relatively low capacity utilization.

“Close to half of the capacity is idle, which precisely shows that aside from customized needs from a small number of top customers, the relevant products do not have industry-wide scalable market demand to support them. At present, growth is not coming from broadly applicable industry demand, and the business outlook for mass production has not yet been validated by the market.” Dr. Zhang said.

With customer structure continuing to improve, in 2023 a single customer accounted for 15.10% of revenue. In 2024 and 2025, there was no single customer with a revenue share exceeding 10%. Dependence on major customers has significantly decreased. In terms of business layout, the company’s almost all non-current assets and earnings come from mainland China, making it an intelligent company deeply rooted in local industrial manufacturing scenarios.

Strong fundamentals have attracted continued capital inflows. Since its establishment, including the angel round, SmartMore has completed eight rounds of equity financing. Investors include Hidden Hill Investment, Guolian Zhaozheng Sci-Tech Innovation Fund, Songhe Capital, Lingchuang Jishi, and several other well-known institutions.

Only from August 2024 to February 2026, it issued C-round preferred shares four times, raising cumulative funding of more than 240 million US dollars. In its latest financing round in February 2026, the issuance price was 2.32 US dollars per share, corresponding to a pre-IPO valuation of 1.23 billion US dollars, making it one of the highest-valued unlisted companies in the industrial AI agent track.

A Hong Kong IPO is a new milestone in SmartMore’s capital-market story. According to the prospectus, the proceeds from this offering will mainly be used for core technology R&D, product commercialization expansion, and global market layout, aiming to further widen the gap with competitors.

But what cannot be ignored is that the prospectus has not fully resolved the losses and liquidity pressures, which remain hanging over the company like the sword of Damocles. In the crucial period when the industrial AI agent track transitions from technology validation to scaled profitability, a high valuation requires continuous performance growth and a turning point to be supported by earnings—and this is the core answer SmartMore needs to deliver to the market in the future.

Risk Tucked in the “Doubling of Revenue”

SmartMore, aiming to be the “first industrial AI agent stock,” submitted an eye-catching set of results in its prospectus showing a doubling of revenue scale over three years. Yet it could not mask the growing “black hole” of losses behind the growth, nor the liquidity crisis hidden deep within its balance sheet.

The prospectus shows that SmartMore’s revenue grew from 485 million yuan in 2023 to 1.09B yuan in 2025, doubling over three years. However, it failed to reverse its loss situation. Over the same period, net losses were 546 million yuan, 735 million yuan, and 991 million yuan, respectively, with cumulative losses of more than 2.27 billion yuan over three years.

Even after excluding non-operating items such as changes in the fair value of preferred shares and equity incentive expenses, its main business still did not achieve profitability. Over the same period, operating losses were 427 million yuan, 425 million yuan, and 769 million yuan, respectively, with losses widening year by year.

For this performance record of “revenue doubled while losses expanded in tandem,” Dr. Zhang Yi analyzed for this reporter: the dilemma of “gross margin not covering expenses” is the combined result of both a general trend in industrial intelligence development and the company’s own operating deviations. While high R&D investment in the industry’s 0-to-1 stage is a common characteristic, the amplification of SmartMore’s losses stems primarily from an imbalance in its own expense management and an overly aggressive operating strategy—not a necessity or inevitable outcome of industry development.

He further explained that SmartMore’s equity incentives and administrative expenses were excessive; in 2025, its operating expenses exceeded the revenue of that period. In essence, this is a severe imbalance in expense management, compounded by an overly aggressive overall operating strategy. This directly drove the expansion in loss size. This issue is not an inevitable result of industry development, and it also reflects insufficient efficiency in how the company uses operating funds.

The core driver behind the expansion of losses comes from massive equity incentive arrangements just before the IPO. SmartMore introduced two rounds of equity incentive plans in 2022 and 2025, respectively. From 2023 to 2025, the share-based payment expenses it recognized were 15.66M yuan, 33.27M yuan, and 475 million yuan, respectively. In particular, in 2025, this expense surged 1328% year over year, directly consuming nearly half of the revenue for the period.

The core source of this expense is that in December 2025, SmartMore accelerated the vesting of 30.36 million unvested shares held by management. In one step, it recognized 336 million yuan in share-based payment expense, becoming the most direct reason for the jump in losses in that period.

Paired with the massive equity incentives is a compensation level that severely diverges from the company’s operating fundamentals. In 2025, SmartMore’s annual compensation for executive directors Lü Jiangbo, Li Ruiyu, and Liu Shu was 104 million yuan, 138 million yuan, and 163 million yuan, respectively. The three together received more than 405 million yuan in total compensation, with the vast majority coming from compensation related to equity incentives.

Even for founder and chairman Jia Jiaya, compensation in the same period reached 1.887 million yuan. For a company whose annual revenue just broke above 1 billion yuan and is still deeply in losses, such high management compensation has already become a central focus of controversy in the market.

Regarding market controversy caused by the massive equity incentives just before the IPO, Dr. Zhang Yi said that equity incentives centered on share-based payments are the industry mainstream and necessary means to bind a core team for an unprofitable hard-technology company. However, the scale of SmartMore’s equity incentives in this case is seriously out of balance with the company’s operating situation—its losses and tight cash flow. The operating boundaries are blurred, and there is suspicion of harming the interests of minority shareholders and engaging in value transfer.

“The core team is the core asset of a hard-technology company. In the startup stage, where the company is not yet profitable, cash flow is highly stressed, and the space for cash incentives is extremely limited, equity incentives centered on share-based payments are a necessary means to bind core talent, and also the mainstream approach in the industry.” Dr. Zhang said directly. But given the background that in 2025 the company’s net loss was nearly 1 billion yuan and cash flow was highly constrained, share-based payments issued only to management exceeding 400 million yuan already account for a significantly higher proportion of the period’s administrative expenses than a normal level for the industry. It can no longer be explained purely by “binding core talent.”

In his view, under circumstances of massive losses and cash flow pressure, issuing large-scale share-based payments to core management directly increases administrative expenses and enlarges the company’s losses. From the perspective of corporate governance, there is a possibility of harming the interests of minority shareholders.

Aside from the one-time impact of equity incentives, the dual high-investment model of the industrial AI agent track is the underlying reason SmartMore cannot get out of the loss cycle.

From 2023 to 2025, the company’s employee benefit expenses were 336 million yuan, 300 million yuan, and 737 million yuan, respectively, with compensation for R&D personnel accounting for more than 60%. Sales and marketing expenses were 160 million yuan, 236 million yuan, and 400 million yuan, respectively, with a compound annual growth rate of 58%, far exceeding the revenue growth rate over the same period.

More concerning than continued losses is the massive preferred share liability on the balance sheet and the fatal liquidity risk it brings.

Because the various rounds of preferred shares issued come with the right to convert at any time and redeem if an IPO has not been completed, according to International Financial Reporting Standards, all such preferred shares are classified as current financial liabilities. As of the end of 2025, SmartMore’s preferred shares and related financial liabilities had a book balance of 4.23 billion yuan, accounting for nearly 80% of total liabilities.

This liability directly caused its financial structure to worsen continuously. As of the end of 2025, total current liabilities were 1.89M yuan, while current assets were only 5.29B yuan. Current liabilities exceeded current assets by 3.34B yuan. The asset-liability ratio reached 256.9%, and net liabilities were 3.26B yuan.

Although SmartMore emphasizes that preferred shares will automatically convert after a qualifying IPO is completed, with no pressure of cash outflow, if it cannot complete a Hong Kong listing before August 28, 2029, preferred shareholders have the right to require it to redeem all shares by 100% of the issuance price plus a 10% compound annual interest rate. At that time, it would create significant pressure for cash settlement.

Continued cash burn from operating activities further amplifies liquidity risk. From 2023 to 2025, SmartMore’s net cash outflow from operating activities was 372 million yuan, 424 million yuan, and 327 million yuan, respectively. Over three years, cumulative net outflow exceeded 1.12B yuan. Day-to-day operations depend entirely on financing to fill the gap.

During the same period, net cash inflows from financing activities were 7.2M yuan, 558 million yuan, and 656 million yuan, respectively. As of the end of 2025, cash and cash equivalents stood at 949 million yuan. If operating cash flow cannot turn positive in the short term, existing cash reserves can only support the company’s operations for less than three years.

In addition, factors such as the risk of accounts receivable recovery, intensifying industry competition, and changes in tax incentives also add uncertainty to the company’s future operations. The long-term value of the industrial AI agent track is beyond doubt, but in capital markets, valuation ultimately anchors to the company’s profitability and the health of its cash flows.

For SmartMore, an IPO is only the starting point of its capital-market journey. How to maintain revenue growth while also achieving cost control, narrowing losses, and turning operating cash flow positive is the core answer it must provide to the market.

责任编辑：张蓓 主编：张豫宁