IDG Capital Bets Early on MGI, Nanomodel Biosciences and Others: 12 Portfolio Companies Eye IPOs as Its Healthcare Investment Blueprint Unveiled

On September 9, 2022, MGI, the leading domestic manufacturer of gene sequencers, listed on the STAR Market of the Shanghai Stock Exchange. Its debut market capitalization of RMB 40 billion captured the attention of the entire industry, once again placing its early-stage institutional investors in the spotlight.

Among them was IDG Capital, an early investor in MGI. In late May 2020, MGI announced that it had secured $1 billion in Series B financing, led by IDG Capital. This round of financing set a record at the time for the largest private equity funding deal in China’s genomics sector.

When discussing the decision to invest in MGI, Liu Yikun, a partner at IDG Capital, stated that the team was deeply moved by MGI’s sense of mission to advance the development of life science tools in China. This led them to support the challenging path of independent R&D for life science tools. “This requires long-term, patient investment and steadfast support from investors. However, once successful, it will have a significant impact on China’s entire biotechnology industry and even on the global development of life sciences, creating substantial social value,” emphasized Liu Yikun.

In fact, for IDG Capital, investing in MGI marked a turning point in its underlying investment logic and served as a microcosm of its heavy bet on source innovation in life sciences. Over the past five years, this top-tier global private equity firm has made dozens of investments, building a diversified ecosystem for medical innovation.

“Changes in tools are a significant driving force in the development of life sciences,” pointed out Liu Yikun.

To this end, IDG Capital’s healthcare team has devoted substantial time to studying cutting-edge tools in life sciences innovation. Their vision aligns closely with that of BGI Group, led by Wang Jian: both believe that the cornerstone of China’s rapidly advancing domestic medical innovation lies in the independent development of high-quality, cost-effective life science tools.

In addition to investing in MGI and positioning itself in the domestic gene sequencer market, IDG Capital has also taken equity stakes in a large number of life science tools companies that excel in their respective niche segments, establishing itself as a major private equity investor in this industry.

Over the past few years, IDG Capital has successively invested in star projects in the life sciences tools industry, including Shanghai Model Organisms Center, Jingjie Bio, Suzhou Caike, and Cenglang Technology. Among these, Shanghai Model Organisms Center was listed on the STAR Market of the Shanghai Stock Exchange in December 2021; Jingjie Bio’s IPO application was accepted by the ChiNext Board of the Shenzhen Stock Exchange two months ago; while Cenglang Technology and Suzhou Caike have already achieved commercialization of their early-stage products. These investments are gradually entering a harvest period.

In November 2020, Jingjie Proteomics, a leading domestic player in the proteomics sector, completed a Series B financing round of RMB 530 million, led by IDG Capital. This investment left a deep impression on Yang Fei, Partner at IDG Capital. “Zhao Yingming, the founder of Jingjie Proteomics, is a top-tier international expert in proteomics and a tenured professor at the University of Chicago,” introduced Yang Fei. “The company holds a leading position in China across upstream reagent development, midstream biomarker discovery, and downstream technical services. We are confident that Jingjie Proteomics will continue to maintain rapid growth and its industry-leading status, both in terms of the depth of its original technology development and the scale of its business revenue.”

IDG Capital’s analysis posits that proteomics serves as the technological foundation of precision medicine. In this sense, proteomics is not only a powerful research tool but also holds broad applications in the discovery of disease biomarkers and the development of drug targets. As a leader in China’s proteomics sector, Jingjie Proteomics is poised to unleash significant momentum in the life sciences tools industry in the future.

In December 2021, one year later, IDG Capital made a significant additional investment in Suzhou Caike. Previously, IDG Capital had served as the lead investor in Suzhou Caike’s A-1 and A-2 financing rounds. As a leading domestic enterprise dedicated to the research and development of life science tools at the single-molecule level, Suzhou Caike has built multiple application platforms based on its core technology platform, μ-MPF (Micro-scaled Multi Physics coupled Force). These platforms enable various microscopic research and intervention capabilities, including ultra-high-sensitivity biomolecule detection, multiplex magnetic-fluorescent microsphere encoding for multi-analyte simultaneous testing, and high-throughput parallel manipulation of single cells for multi-omics studies. The company’s commercialized instruments were launched last month and have already been adopted by a number of antibody pharmaceutical companies in China.

Just two months ago, IDG Capital once again invested in a life science tools project, participating in the tens-of-millions-of-yuan Series A financing round of Cenglang Technology, an innovative company specializing in flow cytometry products. Flow cytometry is a technique used to measure protein or nucleic acid expression levels in individual cells and to analyze or sort specific cells from a population. It offers multiple advantages, including single-cell resolution, multiparametric analysis, high speed, high precision, and excellent accuracy, making it an essential tool widely utilized in scientific research institutions for life sciences research.

Currently, LayerWave Technology’s independently developed 2-laser, 8-color flow cytometer, MateCyte™, has obtained NMPA registration certification, making it the first product of its kind to receive medical device registration approval. Furthermore, all 26 models of the 3-laser, 14-color flow cytometer, LongCyte™, from LayerWave Technology’s high-end product line have obtained CE certification and are poised to receive NMPA approval. The company is also progressively developing and launching the FA3000L flow sample preparation system and reagents such as flow cytometry detection antibodies.

Furthermore, IDG Capital has also made strategic investments at an earlier stage in conventional scientific instruments, such as mass spectrometry systems. By backing companies that offer tool-based products with performance comparable to imported alternatives but at a lower cost, IDG Capital aims to promote the development of China’s life sciences sector to some extent. “Looking further ahead, IDG also hopes that the most outstanding products from these enterprises will expand into international markets, thereby building the global influence of Chinese-made products,” said Yang Fei.

In fact, IDG Capital’s history of investing in healthcare projects dates back to 2003. At that time, China’s healthcare industry resembled traditional manufacturing, where some companies could achieve success through relatively simple replication. Guided by market demand and a manufacturing-oriented analytical framework, IDG Capital made investments that yielded substantial returns.

The shift occurred in 2015. As regulatory authorities advanced reforms in the review and approval processes, innovation gradually became the central theme of China’s healthcare sector. “The driving force behind the entire industry has changed, shifting from manufacturing-driven to innovation-driven,” pointed out Liu Yikun. He noted that many products must not only achieve excellent quality comparable to imported counterparts but also demonstrate innovative differentiation.

Since then, IDG Capital’s investment strategy has shifted toward leveraging innovative technologies to address substantial unmet clinical needs, establishing a systematic underlying logic and framework that has yielded strong results across a broader portfolio of healthcare innovation projects.

Yang Fei explained that during this phase, IDG Capital’s investment methodology could be summarized as research-driven. Specifically, on the one hand, the team proactively conducts top-down thematic research based on technological advancements and market changes to identify potential targets. On the other hand, when encountering compelling projects in the market, they conduct bottom-up thematic research within the relevant niche sectors, and then select investment targets based on these findings.

Over the past four to five years, IDG Capital has strategically invested in approximately 70 projects, spanning high-potential niche sectors such as biopharmaceuticals, diagnostic devices, CXO, and AI-driven healthcare. In addition to the life sciences companies mentioned in the previous section, several portfolio companies have secured leading positions in their respective markets: Edigene and BioAI in biopharmaceuticals; ClearMed and Geneseeq in precision diagnostics; and Keya Medical and Dyingjia Technology in AI healthcare.

“On the one hand, we emphasize early-stage investments. The majority of healthcare projects in which IDG Capital led the first round of financing have gained recognition from other funds in the market and successfully completed subsequent funding rounds,” said Liu Yikun. “On the other hand, we also have a number of projects at a relatively later growth stage, which have gradually established their IPO timelines.” According to Liu Yikun, within the next 12 months, 10 to 12 healthcare portfolio companies of IDG Capital are planning to file for initial public offerings (IPOs).

At this point, IDG Capital’s investments in the healthcare sector have completed the transition from a focus on manufacturing-driven growth to one centered on innovation-driven development.

From the perspective of IDG Capital, the drive toward innovation in healthcare often necessitates integration with technologies from other disciplines. Consequently, in investment decision-making and post-investment services for projects that emphasize the convergence of healthcare with other fields, IDG Capital’s advantages as a comprehensive investment institution are particularly evident.

On one hand, IDG Capital boasts a comprehensive medical investment team with multidisciplinary backgrounds, including multiple PhDs in biology and physicians who have undergone clinical training. Most team members possess extensive experience in the biopharmaceutical industry, spanning from drug R&D to production and sales, enabling more precise judgments during early-stage technical assessments. On the other hand, when making investment decisions on healthcare projects that intersect with other industries, IDG Capital’s medical team collaborates with investment teams from diverse sectors to develop cross-disciplinary research insights. For instance, when evaluating investment opportunities in surgical robots or medical automation projects, IDG Capital engages its industrial investment team to jointly conduct analysis and decision-making.

“If the review is conducted solely by professionals with a medical background, they may possess deep expertise in medical technologies, yet often find that many healthcare scenarios require empowerment from other industries during post-investment value creation,” analyzed Yang Fei. “IDG Capital’s comprehensive, integrated team enables thorough research into cutting-edge interdisciplinary technologies. Meanwhile, the investment team’s accumulated experience, insights, and portfolio resources can provide deeper support to healthcare portfolio companies, generating significant synergistic effects.”

For example, in supporting MGI to overcome the challenges of developing high-difficulty gene sequencers, IDG Capital integrated various resources previously deployed in the semiconductor sector to efficiently deliver solutions. “Last year, we invited academicians and listed companies from the semiconductor field to hold an internal sharing forum specifically for MGI, exploring how we could provide them with necessary assistance and support in chip development,” pointed out Liu Yikun.

From MGI to Jingjie Bio and Model Organisms, and further to Suzhou Caike and Cenglang Technology, IDG Capital has demonstrated a distinct investment style in the healthcare sector: it typically acts as the lead investor, taking an active role in supporting portfolio companies’ growth. This approach entails conducting thorough research and engaging in comprehensive discussions for every investment, thereby strengthening its ability to evaluate relatively early-stage and niche opportunities.

At this stage, in the new funding environment, early-stage projects with significant technological advantages and innovative value have become the targets of investment institutions. For a time, the valuations of projects labeled with scientist entrepreneurship and disruptive innovation have soared. VCBeat recently conducted a specialized analysis of the hot phenomenon of scientists being fiercely sought after. Interestingly, as early as around 2015, IDG Capital had already begun facilitating the commercialization of original intellectual property (IP) created by scientists, becoming one of the earliest “pioneers” in China to support the translation of basic scientific research into practical applications. A representative example is Edith Gene, in which IDG Capital invested during its Series A financing round.

EdiGene is a commercialization venture stemming from the scientific research achievements of Professor Wei Wensheng at Peking University. After making an early-stage investment, IDG Capital spent considerable time assisting Professor Wei in identifying a suitable professional executive on a global scale. In IDG Capital’s view, the ideal CEO for EdiGene must not only resonate with Professor Wei in scientific research but also possess professional expertise in corporate management and operations.

One year later, they ultimately selected Wei Dong, Professor Wei Wensheng’s undergraduate classmate at Peking University. The two held each other in high regard. Wei Dong’s joining enabled Edith Gene to successfully secure financing at that time, allowing the company to steadily enter a phase of rapid growth. “As of this year, Edith Gene’s products have entered the clinical trial stage,” introduced Yang Fei.

In promoting the early-stage translation of scientific research achievements, IDG Capital has developed a comprehensive methodology that has been successfully replicated multiple times both domestically and internationally.

Yang Fei stated that when evaluating investment opportunities in early-stage healthcare projects, IDG Capital focuses primarily on two aspects: technological innovation capability and team execution efficiency. “We will provide the necessary support.”

In terms of technological innovation capabilities, IDG Capital emphasizes differentiated advantages. “Innovation is fundamental; innovative products must possess differentiation and a certain degree of leadership; otherwise, they can be easily caught up by competitors,” emphasized Yang Fei. “Of course, we also value scenario-based elements.” In other words, beyond technological innovation itself, IDG Capital also focuses on how the advancement of product technology can address unmet clinical needs.

Regarding team execution efficiency, IDG Capital believes that the ability to achieve efficient conversion is key to the success of early-stage projects, which requires building a strong management team. “After a project is launched, execution efficiency itself is one of the factors ensuring a leading advantage. Over the past 30 years, IDG Capital has accumulated a comprehensive framework for understanding entrepreneurs, establishing consistent standards for evaluating team efficiency.”

Now, with mature-stage projects such as MGI and Jingjie Biology going public one after another, and earlier-stage investments like Biocytogen and Cenglang Technology successfully closing the loop on their business models, IDG Capital’s innovation-driven investment thesis has been repeatedly validated. Their systematic portfolio strategy and forward-looking technological judgments will continue to facilitate the commercialization of more medical innovations. We await these developments with great interest.