Congratulations to 360 Finance on Its Successful NASDAQ Listing | FreeS Fund IPO News

On December 14, Eastern Time, 360 Finance officially listed on the Nasdaq Stock Exchange under the ticker symbol "QFIN," with its IPO priced at $16.50 per share. The first fintech IPO from a major Chinese internet company was born.

On its listing day, 360 Finance's three founders — Liu Wei, Xu Jun, and Wu Haisheng — wrote to all employees: "Entrepreneurship is the shared value our diverse team believes in. Some companies fall behind even in a bull market, while unicorns are born even in a bear market. We cannot predict how the capital markets will shift, but as the saying goes, hardship refines us. We believe in long-term value. Take the long view, and the market will eventually reflect a company's true worth." (Full text of the internal letter appended at the end.)

In 2015, FreeS Fund invested in the angel round of Youdao Wealth and facilitated its merger with 360 Finance. After the merger, FreeS Fund became one of 360 Finance's shareholders, witnessing its growth into a leading technology platform connecting borrowers with financial partners.

Huan Zhang, partner at FreeS Fund, said, "Congratulations to 360 Finance on its overseas listing, becoming the first listed fintech company backed by a major domestic internet company."

Zhang believes that 360 Finance has achieved a strong balance between its funding and asset sides, with clear advantages on both. On the funding side, backed by 360 — an internet giant connected to over one billion devices — 360 Finance has natural traffic and customer acquisition advantages, allowing it to rapidly scale its capital base. On the asset side, Xu Jun, founder of Youdao Wealth and CEO of 360 Finance, and his team have deep roots in the financial industry, with profound understanding of its patterns, trends, historical evolution, and industrial chain resources, combined with strong willingness to innovate and explore new financial businesses through internet technology. The team also operates with meticulous attention to detail, strict risk control, and regulatory compliance. "Such teams are not easy to find," Zhang said.

Another key reason 360 Finance rose from zero to the top tier is that it seized the historical opportunity of rapidly growing consumer loan demand among Chinese residents and individuals during the country's economic restructuring. According to analysis by Oliver Wyman, based on loan facilitation volume in Q2 2018, 360 Finance ranked among the top five online lending platforms backed by major internet technology companies in China, just behind the BATJ-affiliated fintech companies — Ant Group, WeBank, JD Finance, and Du Xiaoman Financial. Jinrongjie reported that compared to WeBank and JD Finance in terms of historical funding rounds, business scale, and growth potential, 360 Finance's valuation is underestimated, with substantial room for future growth.

From a medium- to long-term perspective, the core competitive advantage in finance lies in risk control. Zhang said, "360 Finance is backed by Qihoo 360, the world's largest security company. Data and security are in its DNA, giving 360 Finance strong competitiveness in data accumulation and risk control methodologies."

Feng Li, founding partner of FreeS Fund, added, "Before starting his own company, Xu Jun was a partner at McKinsey & Company responsible for financial clients in China, with deep thinking about the financial industry. It was our good fortune to collaborate with him when he had just started out. At the time, I happened to have invested in many finance-related companies, and when we discussed models and directions, we immediately saw eye to eye. Over the past three years, FreeS Fund has invested in several fintech companies that have all developed well. Looking at them today, they align with the direction China's economic development needs. Although investing in fintech may not be as hot as it once was, we take the opposite view — we've been discussing for the past two months that now is a good opportunity to refocus on investing in financial startups. We want to express this intention here and hope to find more outstanding financial entrepreneurs."

360 Finance Co-Founders' Letter to All Employees: Keep Building, Keep Moving Forward

To all 360 Finance colleagues:

Today is an exciting and inspiring day for all of us! Today, 360 Finance officially lists on the Nasdaq Stock Exchange in the United States. From this point on, the company enters a new stage of development and a new journey of entrepreneurship! Thank you to every 360 Finance colleague for your day-and-night dedication and selfless commitment — this honor belongs to all of you!

360 Finance was conceived in 2015 and formally established in 2016. For over three years of entrepreneurship, we have kept a low profile, staying away from media attention. Since publicly filing our prospectus in October this year, we have been under the media spotlight for the first time.

Who is 360 Finance? What makes 360 Finance different? How did 360 Finance withstand the winter and successfully go public? These are the questions the media cares about, and they are questions we need to answer. These are questions every 360 Finance person needs to think about, and they are also the first expectation from the three of us co-founders — that everyone should carefully review how we have come this far, step by step, over the past three years.

The founding of 360 Finance was itself an arduous entrepreneurial journey.

Going back to May 2015, several colleagues at 360 with dreams of technology answered the company's call for internal entrepreneurship, formed a project team, and recruited talent widely to explore how to apply 360's accumulated expertise in internet security technology and security big data to empower the financial industry — extending from internet security into financial risk control and anti-fraud. In July 2016, breaking new ground and focusing on empowering internet consumer finance, 360 Finance was formally established. In response to 360's "aircraft carrier fleet" strategy, 360's financial business segment (360 Financial Services) was spun off from 360 to pursue independent development. In September 2018, 360 Finance Group was spun off from Financial Services, marking an important milestone in the company's development. Incubated by 360, 360 Finance has step by step carved out a path from the unknown.

Yes, we have risen from zero to the industry's top tier, and our business has maintained high-speed growth and strong momentum.

Believe in Long-Term Value, Take the Long View

From the outside, it looks like we reached a U.S. listing in just over three years. But we at 360 Finance know that our three years have been about rapid strategy formulation, rapid decision-making, and rapid execution. We moved faster, and we outran time.

360 Finance is a young company, but this young organization has been open and inclusive, attracting top talent from different backgrounds and fields. People come from different corporate cultures, yet they converge and integrate into the 360 Finance family because entrepreneurship is the shared value our diverse team believes in.

In our roadshow presentation, there is a slide introducing our business model: users on the left, financial partners on the right, and 360 Finance in the middle, playing the role of a technology platform — this is our clear self-positioning. Based on our technology cooperation with 360, 360 Finance has independently developed a full-process AI-based risk control technology platform, including the Argus intelligent risk control engine, the Cosmic Cube risk pricing engine, and the Cloud Bank system. Three years of entrepreneurial experience serving financial partners has made it very clear to us that our core competitive advantage is — big data and artificial intelligence technology.

At the 2018 China Enterprise Leaders Annual Meeting, Zhou Hongyi predicted: "In the foreseeable era of the Internet of Everything over the next five years, competition over core technologies will continue to intensify. Whoever achieves key breakthroughs in artificial intelligence and big data will be able to execute dimensional reduction attacks."

360 Finance's success in going public after three years of entrepreneurship has many causes: the trust that massive numbers of users place in our brand, and our unbreakable team distributed across Beijing, Shanghai, Shenzhen, and other cities. What makes 360 Finance different is that we are a technology-driven company, a true technology company with AI and big data capabilities, and we have proven this with data. In communications with investors, they were astonished by the risk control capabilities we demonstrated: too good to be true.

As of September 30, 2018, 360 Finance's M3+ delinquency rate for facilitated loans was 0.6%. Compared to listed internet finance companies, our risk control capabilities are significantly ahead, and this lead in risk control technology has laid a solid foundation for the high-speed growth of all our business indicators.

Some companies fall behind even in a bull market, while unicorns are born even in a bear market. We cannot predict how the capital markets will shift, but as the saying goes, hardship refines us. We believe in long-term value. Take the long view, and the market will eventually reflect a company's true worth.

As a public company after listing, 360 Finance bears greater responsibility and challenges, and we will hold ourselves to higher standards. Of course, we will also gain more opportunities and resources to enhance company value, motivate our team, reward shareholders, and push us to operate with even greater compliance, playing the role of a technology assistant to financial partners, and contributing to inclusive finance and the real economy.

This year, the government has continuously introduced policies to promote consumption, and consumption will become a new engine driving economic development. This is a great era that also brings great challenges. As a technology company, 360 Finance must find its proper positioning, with technology and innovation as our driving forces, working hand in hand with financial partners to improve the quality and efficiency of consumer financial services, putting fintech to work for the real economy in concrete ways, and contributing to China's economic transformation, upgrading, and healthy development.

Listing is only a beginning. Every 360 Finance person should not forget our original aspiration, continue to move forward, embrace new challenges. The journey is long, and we share glory and hardship together!

Liu Wei, Xu Jun, Wu Haisheng

December 14, New York