Sherpa Investment: Consistently Guiding Innovators in Life Sciences with Unwavering Strategy

Recently, New Horizon Health issued a performance forecast announcement, stating that its 2022 revenue is expected to increase by 252.7% to 267.7% compared to the same period in 2021, with gross profit anticipated to rise by 313.2% to 324.5% year-on-year. Such outstanding results further validate Sherpa Capital’s discerning investment acumen.

Ouyang Xiangyu, Founding Partner of Sherpa

Sherpa Capital, named after the Sherpa people who reside on both sides of the Himalayas and provide mountaineering guidance, rescue, and logistical support to Everest climbers, is a globally recognized symbol of mountaineering, representing wisdom, courage, loyalty, strength, and experience.

Ouyang Xiangyu, Founding Partner of Sherpa Healthcare Partners, stated,Sherpa’s mission is to serve as the Sherpas for entrepreneurs scaling the Everest of life sciences, guiding them to the summit., making valuable contributions to the health and well-being of society.

As an investment firm that has long focused on the healthcare sector, its perspectives on the changes in 2022 and the trends in 2023 are worth noting.

VCBeat: If you were to summarize 2022 in one word, which word would you choose?

Sherpa: Ouyang Xiangyu: Challenge!

VCBeat: Did Sherpa’s investment strategy change in 2022?

Sherpa: Ouyang Xiangyu: Sherpa has always beenUpholding Long-Standing Principles, therefore, in healthcare investment, we have consistently maintained the consistency of our investment strategy without any fundamental changes.

Investing in True Innovation, we invest exclusively in products that deliver clinical value, possess high technological barriers, and address unmet clinical needs. Furthermore, we remain grounded in China, aligning with the various stages of the Chinese market’s development to support leading enterprises capable of representing the Chinese healthcare industry in international competition, as well as innovative biotech companies with the potential to become industry leaders.

Investing in innovative enterprises and accompanying them through their growth—this is the investment strategy and philosophy that Sherpa has long upheld and adhered to.

While maintaining consistency in its core strategy, the connotation of this strategy may evolve over time. For instance, the definition of innovation ten years ago differs from today’s, where innovation is increasingly evaluated against international standards such as “First-in-Class” and “Best-in-Class.”

Certainly, the three years of the pandemic have also brought some new changes to the entire industry.

In addition to vaccine development and the establishment of primary healthcare protection systems, it also encompasses changes in the overall industrial landscape, particularlyBiopharmaceuticalUpstream Supply Chain. Some key equipment, raw materials, consumables, and research tools and instruments closely related to scientific research have undergone significant changes in the past few years. This is also a change brought about by the development of China's medical industry reaching a new stage, foreshadowing that this industry should have greater and better development opportunities in the next decade.

VCBeat: What were Sherpa’s major investment achievements in 2022?

Sherpa: Ouyang XiangyuSherpa has maintained a consistent investment pace year after year, remaining unaffected by market fluctuations, as we continue to focus on investing in innovative projects at the early stage. Over the past decade, our team has adhered to this investment style and achieved excellent results.

Since its inception in 2018, Sherpa has invested in a total of 90 projects. Even in 2022, we invested in more than 10 new projects, excluding additional investments in existing portfolio companies. From 2021 to the present, five of Sherpa’s portfolio companies have completed initial public offerings (IPOs), and four have exited through mergers and acquisitions. Additionally, several other projects are in the IPO pipeline and are expected to go public in 2023.

It is worth highlighting New Horizon Health. In 2016, Dr. Cai Daqing led the company’s Series A financing round and joined its board of directors. Sherpa Healthcare Partners continued to increase its investment in New Horizon Health during its two subsequent funding rounds in 2019 and 2021. The company went public on the Hong Kong Stock Exchange in 2021. Recently, it released its earnings forecast, projecting total revenue of RMB 750 million for 2022, representing a year-on-year growth of over 250%, with gross profit exceeding RMB 630 million, a year-on-year increase of more than 313%. Such robust growth amid the pandemic fully underscores New Horizon Health’s leading position in the cancer screening sector, demonstrates the team’s strong commercialization capabilities, and attests to the high user stickiness of its products.

To date, New Horizon Health has thoroughly demonstrated its excellence across every link of its complete industry chain—from R&D and regulatory approval to commercialization. This also validates our initial expectations regarding the company’s long-term growth potential when we first invested in 2016, followed by several rounds of additional investment prior to its IPO.Sherpa has closely accompanied New Horizon Health from its inception to the present. This is a quintessential case that illustrates Sherpa’s investment style and characteristics.。

In addition to New Horizon Health itself, Dr. Chen Yiyou, a founding member of the company’s team, has also collaborated with Sherpa on other innovative drug projects. Therefore, weCollaboration with entrepreneurs is not a one-off transaction but a long-term, ongoing partnership, particularly for outstanding serialEntrepreneur, which is also a distinctive feature of Sherpa.

Over the past decade, our team has invested in 150 healthcare projects. A significant number of these entrepreneurs have emerged as industry leaders, and the companies they founded have become sector frontrunners. Thus, this kind ofLong-term, extensive, and in-depth collaboration constitutes the core strengths and capabilities that Sherpa will continue to deepen and strengthen in the future.。

VCBeat: Which niche sectors are likely to receive greater attention in 2023?

Sherpa: Ouyang Xiangyu: The pandemic has fostered broad consensus across many sectors, such as those we have consistently invested inThe CGT (Cell and Gene Therapy) sector will continue to command significant attention in the future.Our portfolio company, Xinnian Medicine, has achieved strong results and continues to conduct validation studies as it advances its clinical programs.

In addition to technological innovations and new therapies, we will also compareFocus on the Upstream of the Industry Chain。

Following the rapid overall advancement of China’s industries, a growing number of high-quality enterprises have emerged in the upstream segment of the supply chain. These companies not only provide critical equipment and products to biopharmaceutical firms within China but also compete in the international market. We have recognized this emerging opportunity.

Furthermore, following the relaxation of pandemic control measures, we have gained a clearer understanding that addressing the health needs of the elderly population is a critical area for healthcare investors to prioritize in the future. This includes home-based medical services, as well as products and convenient services focused on health protection and diagnosis for older adults. These areas warrant greater attention and investment.

VCBeat: How should companies respond to market changes in 2023?

Sherpa, Ouyang Xiangyu: The primary market has begun to diverge. Over the past few years, many companies have received investment; some have successfully secured new rounds of financing, while others have faced significant difficulties or substantial challenges, which we describe as encountering “headwinds.” To gain recognition from investors in either the primary or secondary markets, the key factors under consideration are essentially the same.

First, is your scientific foundation sufficiently robust? Does it possess differentiated characteristics, and does it have the potential to be Best in Class or First in Class?

Second, the team’s execution capability. Expectations for teams are becoming increasingly stringent, particularly for companies that have entered or are on the verge of entering the commercialization phase; these organizations require teams with strong execution capabilities.

Third, the founder’s ability to assess the situation and maintain overall control. The special circumstances of the pandemic in 2022 severely tested entrepreneurs’ execution capabilities. In an environment of uncertainty, how founders strategically focus on key value-driving segments and plan strategic directions, as well as implement cost reduction and efficiency enhancement measures to boost company value.

In the future competitive landscape, only the top few companies in any given niche sector are likely to stand out. As these companies are better positioned to deliver superior investment returns, they attract greater favor from investors. Resources, talent, capital, and commercial market demand will increasingly converge toward these leading enterprises, resulting in ever-more pronounced market stratification.

For startups, in addition to having excellent products, it is even more critical to have a cohesive team with strong execution capabilities to lead the company in weathering challenges from a harsh external environment and standing out amidst competition. In other words, the threshold for corporate fundraising will continue to rise in the future.

VCBeat: Do you have any advice for entrepreneurs?

Sherpa: Ouyang Xiangyu: Based on over a decade of experience investing in the healthcare sector, we believe that truly successful entrepreneurs share several key traits.

First, original intention. They are not opportunistic in their approach; rather, they are genuinely passionate about what they do. Their goal is not merely to capitalize on market trends, but stems from a sincere commitment to excel in their work.

Second, accumulation. A considerable period of accumulation is required before starting a business. Entrepreneurs need to have built up sufficient experience and a track record of past performance to support their venture. It takes not only passion but also capability, and the two must be well aligned.

Third, fundraising capability. This involves how to communicate with investors, how to attract those who understand and support the founder and can provide tangible assistance, and how to collaborate with them to integrate resources across the upstream and downstream of the industry, thereby helping the company recruit talent needed at various stages of development.

Certainly, there is also the aforementioned execution capability, ensuring that every necessary task is carried out thoroughly. China’s healthcare industry has now entered a new historical stage. Enterprises must not only become industry leaders within China but also expand overseas to engage in international competition. Therefore, no room for negligence exists at any stage or critical juncture of the entrepreneurial journey.

VCBeat: What are Sherpa's investment goals for 2023?

Sherpa | Ouyang Xiangyu: Not only in 2023, but also in every year to come, we will continue to uphold the principles we have adhered to over the past decade and more"Consistently upholding the philosophy of professional and focused healthcare investment.", we continuously support innovation. Like the Sherpas, we aspire to be the Sherpas behind the entrepreneurs scaling the Mount Everest of life sciences, joining them in their ascent to make valuable contributions to human health and society. From focusing on healthcare investment in 2011 to founding Sherpa Capital in 2018, we have been dedicated to this mission for over a decade. Looking ahead, we will continue our efforts, staying true to our original aspiration.