Battle Between Scientists and Investment Banks: Pure Technical Contest or Behind-the-Scenes Rivalry?

The First Day Back at Work After the Lunar New Year Holiday,Dr. Zhao Yishen (pseudonym)He woke up early, but instead of his usual routine of reading academic articles first, he chose to open his phone and share a news item on his WeChat Moments. Meanwhile, thousands of miles away from Zhao Bo,Zhang Xiaoran (pseudonym)He did the same thing, only in his capacity as an investor.

In fact, what the two individuals reposted was a piece of news about financing. The content stated that a startup focused on brain science had completed its angel round of financing. The reason why Zhao Bo and Zhang Xiaoran both reposted it simultaneously is because they both played important roles in this financing event:Dr. Zhao is one of the leading experts in neuroscience in China and also the founder of this funded enterprise.；Zhang Xiaoran is a seasoned investor who has focused on early-stage healthcare over the past one to two years, and he has been following Zhao Bo’s project all along.

But the story of the two is far more complex than can be captured in a single financing news report,From the initial “mutual respect,” through the intermediate balancing of interests, to the final sealing of the partnership, which encapsulates the shared anxieties and growth of Zhao Bo as a scientist and Zhang Xiaoran as an investor. Coupled with the broader context of 2022, where the surge in scientist-led startups clashed with the winter downturn in the healthcare industry, “anxiety” and “growth” have taken on greater significance than ever before.

So, where should this story begin?

In 2022, influenced by multiple factors including pandemic control measures, the entire healthcare industry exhibited a downturn. However, mentioning scientists seemed to instantly reignite public enthusiasm, so“VCs Scramble to Snap Up Scientists,” “VCs Crowd University Gates”It is not an exaggeration, but rather the general trend.

The core logic is that follow-on innovation in China’s healthcare industry is nearing its end, with original innovation and the commercialization of research findings emerging as the prevailing theme.To drive breakthrough original innovation, there is a tacit consensus to place our bets on scientists.Thus, in the past year or two, a wave of “scientist-led startups” has been making waves in the healthcare industry.

Amidst this wave, Zhao Bo and Zhang Xiaoran were inevitably swept up in the tide. As an expert at a leading Chinese university, Zhao Bo focuses on brain science—a hot sector in the current industry—and benefits from technological leadership, making him highly attractive to capital markets. Zhang Xiaoran, as an early-stage investor, has KPIs that require engagement with scientists, so he naturally would not “let go” of Zhao Bo. However, for these two individuals with different professional identities to connect, Zhang Xiaoran needed to take a more proactive approach.

To establish direct contact with Zhao Bo, Zhang Xiaoran has two options. The first is the more conventional approach: sending an email or seeking an introduction through mutual acquaintances. The second, less conventional method is “staking out”—creating opportunities for chance encounters at venues where scientists are likely to appear. For instance, some investors will even purchase a flight ticket specifically to strike up a conversation with a scientist in the airport lounge, spending half an hour chatting before departing.

Fortunately, Zhao Bo was not yet in high demand at the time, so Zhang Xiaoran did not need to take any “excessive” measures. By having a few friends “pass along the message,” he managed to add Zhao Bo on WeChat within a single day. After a brief online exchange, the two agreed to meet in person three days later. AndTo avoid awkwardness, both parties should make some “preparations” for their first meeting from the moment the appointment time is confirmed.

As an investor, Zhang Xiaoran’s first step was to review the articles previously published by Zhao Bo. He then proceeded to conduct industry research on Zhao Bo’s field, examining factors such as current trends in the sector, future opportunities, core pain points, and the landscape of benchmark companies within the industry. Since neuroscience has only emerged as a hot investment track in the past year or two, Zhang Xiaoran needed to prepare extensively and acquire substantial knowledge during the due diligence process.

After gaining a thorough understanding of the technological and industry landscape, the final step is to identify Zhao Bo’s most pressing current needs, such as securing financing, building his team, or obtaining product approval. Successfully addressing this will quickly establish a relationship of trust with Zhao Bo. If time permits, Zhang Xiaoran will also look into Zhao Bo’s “personal background,” including his prior educational and professional experiences, and even ascertain whether he is married and, if so, gather basic information about his spouse.

On the other hand, unlike Zhang Xiaoran’s seasoned and methodical approach, Zhao Bo was relatively inexperienced in his “preparations” as it was his first time meeting with investors. He made minor revisions to his previous project presentation materials and rehearsed his pitch anew. To appear more “savvy,” he also specifically sought advice from colleagues who had prior experience in securing financing.

But this consultation revealed a problem. His colleague told Dr. Zhao,When chatting with investors, never make it feel like a lecture. While technology is certainly important, they are more interested in hearing about your business plan. The purpose of entrepreneurship is to generate profits and create market value, which follows an entirely different logic from scientific research that purely pursues technological innovation.

Zhao Bo took his colleagues’ advice to heart. After discussing with his team members, he incorporated numerous business elements into the originally “purely technical” project materials and commissioned students to transform the previous textual documents into a polished PowerPoint presentation, making everything appear quite professional.

However, in addition to refining his own capabilities, Zhao Bo also conducted due diligence on the institution where Zhang Xiaoran is based. He focused on understanding its past investment portfolio and the key sectors it is currently prioritizing, and he prepared anticipated responses to questions that Zhang Xiaoran might raise.

Once all preparations are complete, both parties can only wait patiently for each other's arrival.

The long-awaited day of the meeting finally arrived. Zhang Xiaoran was busy catching an early morning flight, while Zhao Bo, on the other hand, was preoccupied with grooming himself. Having spent most of his time in the laboratory and rarely interacting with outsiders, Zhao Bo typically dressed very casually, with T-shirts, sweatpants, and slippers being his usual attire. However, to meet the investor, he made a special effort to get a haircut and put on a suit that had remained unworn for a long time.

Finally, the appointed time for their meeting arrived. Zhang Xiaoran arrived early at the gate of Zhao Bo’s university, but due to pandemic control measures, he could only wait outside for Zhao Bo to come out and escort him in. Soon, Zhao Bo appeared at the gate. After a brief exchange of pleasantries, Zhang Xiaoran began his operation during the short walk from the entrance to the laboratory.

He began by asking Zhao Bo about his recent work, then moved on to the main topic, focusing on his university’s policies regarding the commercialization of research outcomes and its stance on scientists launching startups. This information was crucial, as it would determine how difficult it might be to recruit Zhao Bo from academia into the industry sector.

After entering the laboratory, Dr. Zhao briefly introduced the basic equipment and team members. The two then proceeded to the conference room for a one-on-one interview. Dr. Zhao took the lead, following conventional logic by first discussing the innovation and value of the technology itself, before moving on to the product’s subsequent commercialization pathway and financing plans.

As Dr. Zhao delivered his presentation, Zhang Xiaoran, seated in the audience, was certainly not idle; throughout the session, his mind remained in a state of rapid contemplation. On one hand, brain science is a highly frontier field with relatively limited available data, and Dr. Zhao, being an expert in this area, presented highly professional content. Even if no collaboration ultimately materialized, there was still much to be learned. On the other hand, this provided a more intuitive understanding of Dr. Zhao and the progress of his project. Meanwhile, Zhang was also formulating questions he intended to raise during the Q&A session.

During the Q&A session, Zhang Xiaoran began to fire off a series of long-held questions at Dr. Zhao. He started from a technical perspective, inquiring about the implementation pathways and underlying logic, while also requesting current experimental data with a particular focus on its robustness and standardization. Through these inquiries, Zhang Xiaoran aimed to assess Dr. Zhao’s grasp of the fundamental technical principles as well as the innovativeness of the technology itself.

After clearing the technical hurdle, Zhang Xiaoran’s focus in the second phase shifted to technology ownership and equity allocation. This issue is critical, as any ambiguity regarding whether the technology belongs to Zhao Bo or to the university or other parties would inevitably lead to significant complications in subsequent profit distribution and commercialization efforts.

If the first two points are satisfactory, the discussion then shifts to potential technical application scenarios and future market opportunities. At this stage, Zhang Xiaoran focuses on the integration of technology with clinical needs, current progress, and the rationality of the commercialization pathway.

After discussing “technology,” Zhang Xiaoran finally turned his attention to the “people.” On one hand, as the technical lead, how strong is Zhao Bo’s commitment to entrepreneurship, and does he possess the core competencies required when evaluated as a “founder”? On the other hand, regarding the team behind Zhao Bo, have key positions been filled? And if Zhao Bo is not in a position to leave and start a venture, is there a technical manager in place to oversee the company’s operations?

Like Zhang Xiaoran, Zhao Bo also had some questions he hoped to get answered by Zhang: on one hand, as the technology holder, what position did he hold within the company and what benefits would he receive—in other words, how much control did Zhao Bo have over the enterprise, and what were the company’s valuation and equity distribution? On the other hand, how much support would the investment institutions provide to Zhao Bo in the future? This was not merely a matter of funding, but also encompassed R&D, commercialization of the technology, team building, and more.

For Zhang Xiaoran, answering these questions is not difficult. Although he has been in the early-stage healthcare market for less than two years, driven by the industry’s momentum, he, as an early-stage investor, has already met with nearly 300 scientists in person. He has answered similar questions hundreds of times; therefore,In response to Zhao Bo’s question, he only needed to consider how to craft his answer in a way that would resonate more deeply with Zhao Bo.

The second question regarding “post-investment value-add” is clearly an opportunity. As a scientist, Dr. Zhao has been actively engaged in the academic community in the early stages, resulting in relatively limited understanding of the industry. Moreover, his multifaceted capabilities as an entrepreneur are not yet fully developed. Coupled with a scarcity of talent and market resources, he will heavily rely on investor support at this stage. Additionally,Brain science is a burgeoning yet highly competitive field, where technological leadership is merely a prerequisite; it is the ability to advance rapidly and steadily that will determine whether Zhao Bo can stand out among his fellow scientists.In this process, investors, as “co-founders,” play a crucial role.

Zhang Xiaoran’s investment firm recognized this early on, so it has been expanding its service boundaries in recent years. At present, the firm has established a mature post-investment service system that provides scientists with support in areas such as technology research, team building, product approval, and market promotion. As an investor, Zhang Xiaoran has also remained active: he is not only deepening his technical expertise but also cultivating his own post-investment service capabilities, striving to assume the role of a “technology manager.”

After a round of mutual “open inquiries and discreet investigations,” both parties were largely satisfied, so they tacitly eased their tension and began to pleasantly discuss dining together, signaling that this initial encounter was drawing to a close.

All stories must come to an end. As the two stood at the laboratory door bidding farewell, neither knew whether this encounter would be the first of many future meetings or the last, for that would depend on the choices they made together going forward.

Generally, there are typically three options for this choice:First, neither party was interested, so they mutually and tacitly parted ways; second, one party chose to decline—typically, investors are more experienced; third, both parties were mutually interested, yet still needed to undergo a period of further negotiation and due diligence.

Judging by the final outcome, Zhao Bo and Zhang Xiaoran clearly fall into the third category, though there are some intriguing stories behind this.

In fact, after leaving the laboratory, Zhang Xiaoran, as an investor, already had a rough answer in mind. However, he could not make an immediate decision and needed to return to his team for a more comprehensive evaluation. After all, while brain science is at the forefront of research and Zhao Bo’s technology is impressive, its ability to realize market value still requires key data for validation.

Unlike Zhang Xiaoran's openness,Zhao Bo felt somewhat anxious after the conversation.He felt that he had not clearly articulated his technological advantages, nor had he adequately addressed the investors’ questions. Moreover, after a heated “battle” with Zhang Xiaoran, he was no longer as optimistic about his own technology as before and began to reflect on the future direction of subsequent research and technological development.

But beyond anxiety, Zhao Bo also felt surprise. On one hand, he was impressed by the thoroughness of the investor’s preparations; on the other, he marveled at the investor’s deep understanding of the technology—during their conversation, Zhang Xiaoran was even able to engage with Zhao Bo in academic-level discussions. Moreover, Zhao Bo gained a deeper understanding of venture capital and investment. Previously, he had believed that investing in a project was not particularly complex: as long as the investor liked what they saw, they would simply secure funding and make the investment.

But the reality is not so, especially in 2022 when the primary market of the medical industry was generally sluggish, it was not easy for investors to get money. So in the past year, as an investor, Zhang Xiaoran "rejected" many scientists,However, how to decline gracefully is an art for investors.

Generally, Zhang Xiaoran’s “rejection script” typically follows several key steps: first, he thanks the scientists for taking their valuable time to communicate with him and expresses that he has learned a lot from the interaction; then, he praises the scientists’ technology. After this, he transitions into the rejection phase, with the most diplomatic rationale being that “we are currently unable to meet the scientists’ needs.” Finally, he expresses his hope to maintain contact with the scientists for potential future collaboration.

However, when dealing with more open-minded scientists, Zhang Xiaoran’s “refusal rhetoric” would not be as formal as described above; instead, he would explicitly point out the current issues faced by scientists and offer feasible suggestions. This is not the norm, however. In most cases, Zhang Xiaoran prefers to decline in a dignified manner, as this approach both respects the scientists’ self-esteem and helps maintain positive relationships with them.After all, not being selected now does not mean there will be no opportunities in the future.

Having examined the domestic landscape, we now turn our focus to the United States, where the healthcare venture capital market is exceptionally vibrant. In this context, what exactly is the relationship between scientists and investors, how do they communicate, and does it differ from the situation in China?

To this end, we have identifiedDr. Gong Enhao, Founder of Deepwise Medical. He is a serial entrepreneur from Stanford. In 2017, he founded Subtle Medical. A year later, the company became the first medical imaging enterprise with Chinese background to have an AI imaging product receive FDA clearance and enter the U.S. market. In November 2022, Subtle Medical completed a Series B financing round worth tens of millions of U.S. dollars, attracting investment from several leading venture capital firms in both China and the United States.

In Gong Enhao's view,The Greatest Difference Between Chinese and American Scientists and Investors Lies in Their Backgrounds. American scientists have generally been exposed to business courses during their formative years and maintain closer ties with the industry; American investors share some similarities with their Chinese counterparts, as most now come from technical backgrounds. However, unlike in China, the investor community in the United States also includes many entrepreneurs.

It is precisely for this reason that the relationship between American scientists and investors tends to be more straightforward, making scenarios such as “investors besieging scientists” highly unlikely.Both sides have developed a certain level of tacit understanding during the protracted battle.

For instance, regarding the understanding of technology, both parties agreed thatThe latest and most cutting-edge scientific research technologies do not necessarily translate into industrial value. Instead, they acquire true translational value only when they align closely with clinical needs and ultimately evolve into entrepreneurial opportunities.

Following this logic,U.S. scientists typically begin engaging with investors at the point when their technologies genuinely require commercialization.. Furthermore, the consensus logic among American scientists and investors is that,Technology commercialization must be led by scientists, not investors.Therefore, “forced operations” are unlikely to occur in the U.S. venture capital market.

However, this does not mean that U.S. scientists are independent of investors. Beyond capital, they place greater emphasis on an investment firm’s understanding of the entire industry and its experience in technology translation.

Unlike the rationality of American scientists, American investors tend to be relatively more aggressive. This is because they do not expect every portfolio company to become an industry unicorn; instead, they place their bets on one or two promising ventures, as the success of just these few can generate substantial returns for the fund. Therefore, in the United States, as long as a technology offers sufficient imaginative potential, many investors are willing to take the risk—even if it is merely an idea or a patent.

However, U.S. investors are not merely driven by frenzy; they exhibit a predominantly rational approach. As previously mentioned, their deep understanding of technology and industry, along with their emphasis on the value scientists bring to the technology commercialization process, represents one aspect. Additionally,Their emphasis on scientists and the teams behind them.

For U.S. investors, the prestige of a scientist’s title is not their primary concern; rather, they place greater emphasis on whether the scientist is fully committed (“all in”). Additionally, scientists are expected to possess a deep understanding of their technological domain, including insights into practical applications and key pain points. Finally, the team backing the scientist must be professional, demonstrate strong execution capabilities, and share a common vision.

Overall, in contrast to the currently imbalanced relationship between scientists and investors in China, the dynamic between scientists and investors in the United States resembles more of a “transaction.” Both parties generally operate on an equal footing, engaging only when there is mutual willingness to “buy and sell,” and strictly adhering to “market rules.”

It is evident that we are currently standing in the golden age of medical innovation in China. On one hand, driven by policy incentives, many scientists are stepping out of their laboratories and moving closer to industry; on the other hand, investment institutions have largely reached a consensus, extending their focus toward early-stage healthcare ventures over the past year or two.

Yet amidst the bustle, there were also struggles,The most critical reason is the significant information asymmetry that currently exists between scientists and investors, leading to considerable unnecessary waste and inefficiency in communication.Among the scientists interviewed by VCBeat, one founder met with more than 100 investors in person during the first six months of launching their startup.

However, this is all normal. After all, our medical innovation has only just entered its initial stage, and a developmental process is inevitable. Regardless, scientists and investors should reach certain consensus at present—for instance, in understanding technology, the focus should not be on the technology itself, but rather on its realized value within the industry.

There is also the perception of the relationship between both parties; being a scientist does not necessarily grant one a slightly higher standing in negotiations with investors.On a smaller scale, scientists and investors share a “transactional relationship”: you bring the technology, I provide the capital, ensuring fairness and mutual benefit without either party taking advantage of the other. On a larger scale, the two parties should foster a “collaborative partnership.” Particularly in the current environment of intensifying competition within the healthcare industry, scientists and investors should work in closer alignment.

Note: This article features interviews with five scientists and investors from China and the United States at various stages of their careers. At the request of the interviewees, their real names are not disclosed; instead, the pseudonyms “Dr. Zhao Yishen” and “Zhang Xiaoran” are used. Through these two individuals, we aim to highlight some of the common characteristics shared by the majority of Chinese scientists and investors today.