Weilai Capital Completes Fundraising for Phase II Healthcare Fund, Advancing Toward a Comprehensive Industrial Investment Platform

On the evening of July 1, Weilai Capital announced the completion of fundraising for its new medical industry fund (hereinafter referred to as the Phase II Medical Fund). The proceeds from this Phase II Medical Fund will be primarily used for equity investments in innovative medical technologies, including medical devices, diagnostic technologies, improved new drugs, and precision medicine.

Founded in 2018, Weilai Capital currently manages nearly RMB 8 billion in assets. In the early stages of its fund establishment, Weilai Capital primarily focused on investing in early-stage companies in sectors such as commercial health insurance, new retail in pharmaceuticals, and medical devices. Its portfolio includes companies such as Xiyou Health, Maibo Medical, Tailai Biotechnology, Weituo Biotechnology, Shuming Technology, and Danhuang Technology.

Compared to the Phase I healthcare industry fund, the newly raised Phase II healthcare fund features greater diversification in its limited partners (LPs) and investment focus.

Regarding limited partners (LPs), the announcement indicates that contributors include By-Health, Chengcheng Investment, and the Changzhou Xitaihu Emerging Industry Investment Fund, among others. The investor base is more diversified, comprising listed companies, government industrial funds, family-owned enterprises, and high-net-worth individual investors.

In terms of investment direction, the Phase II healthcare fund will continue to adhere to its innovation-driven investment strategy, while placing greater emphasis on medical devices, digital therapeutics, and improved new drugs applied in the treatment of major diseases such as cardiovascular and endocrine disorders. The investment stage will also expand from early-stage to mid- and late-stage opportunities.

This fund is the second industrial fund raised by Weilai Capital within a month. Zhao Yang, a partner at Weilai Capital, revealed that the firm has been committed to building a comprehensive, multi-industry investment platform. The recently established Phase II Healthcare Fund and the Consumer Industry Fund launched last month are just the beginning. Weilai Capital plans to set up additional funds targeting sectors beyond healthcare and consumer goods, with related work expected to be completed this year.

“Although the pandemic has posed significant challenges to the domestic market, China still holds substantial long-term growth potential. In particular, valuation levels are highly attractive in sectors driven by innovative technologies, such as healthcare, advanced consumer goods supply chains, and high-end manufacturing,” said Zhao Yang. “As a comprehensive industrial investment firm, Weilai Capital will firmly seize diverse investment opportunities, including structural adjustments in the manufacturing sector, import substitution of medical technologies, opportunities arising from rapid transformations in the consumer goods market, and spin-off and M&A opportunities involving large healthcare and consumer goods enterprises.”

The landing location of Weilai Capital’s Phase II Healthcare Fund is Changzhou, which is also where Weilai Capital will focus its next efforts to build a healthcare industry cluster.

Zhang Jiutao, Head of Fundraising at Weilai Capital, stated that the commitment to building industrial clusters stems from the fact that centralized establishment benefits not only medical, consumer, and high-end manufacturing enterprises but also helps leverage the agglomeration effects for technology-driven companies and improve the efficiency of allocating essential corporate resources. Changzhou, undoubtedly, meets these conditions exceptionally well.

In 2021, Changzhou’s GDP reached RMB 880.8 billion, with per capita GDP exceeding RMB 160,000, surpassing provincial capital cities such as Jinan and Changsha, and ranking seventh nationwide.

Changzhou attaches great importance to the development of the biopharmaceutical and medical device sectors. Located in the southwest of Changzhou, the West Taihu Lake Science and Technology Industrial Park boasts significant locational advantages and offers substantial support in terms of policies, talent, and other resources essential for the growth of the healthcare industry.

Upon its establishment, the Changzhou Xitaihu Science and Technology Industrial Park introduced a series of supportive policies: in terms of startup funding, it provides financial grants of RMB 1 million or RMB 2 million; regarding talent policies, it offers “Talent Loans,” “Interest-Subsidized Loans,” and “Su Ke Dai” (Jiangsu Science and Technology Loans) ranging from RMB 50 million to RMB 15 million; for financing incentives, special rewards are granted based on the amount of financing secured. Furthermore, for enterprises in the medical device sector, Xitaihu provides targeted support, offering subsidies and rewards across various stages, including R&D incubation, product registration, bidding and tendering, and market sales.

West Taihu Lake is located at the geometric center of the Yangtze River Delta region, with extensive transportation networks. It serves as a key convergence zone for the lakeside development belt, the Shanghai-Nanjing development belt, and the Yangtze River development belt. Major arterial highways, including the Yanjiang Expressway, the Shanghai-Nanjing Expressway, and the Changtai Expressway, provide connectivity to core cities in the Yangtze River Delta such as northern Jiangsu, Nanjing, Suzhou, Wuxi, and Hangzhou. The Beijing-Hangzhou Grand Canal, the Beijing-Shanghai High-Speed Railway, and the Yangtze River intercity railway traverse the area, supported by well-developed public transportation infrastructure.

These advantages align closely with Weilai Capital’s investment strategy and implementation roadmap.

According to Zhang Jiutao, after four years of development, the early-stage projects invested in by Weilai Capital have moved past the initial phase of technological R&D and are now facing the expansion of new pipelines and the mass production of mature ones. Meanwhile, Phase II of the fund will focus more on investing in projects at a mature stage, thus creating a more urgent need for industrial implementation. The industrial foundation, policy support, and locational advantages of West Taihu Lake have provided assistance to such enterprises as they enter this new stage of development.

According to relevant reports from VCBeat, the West Taihu Industrial Park currently hosts more than 500 medical device-related enterprises, forming six major sub-industry clusters: orthopedics, dentistry, in vitro diagnostic equipment and consumables, sanitary materials and supplies, surgical equipment and operative consumables, and rehabilitation aids and consumables.

West Taihu’s direct participation as an investor in the establishment of the Weilai Capital Phase II Healthcare Fund also demonstrates the increasing diversification of local governments’ investment promotion strategies. By collaborating with leading market-oriented industry funds to build industrial clusters, they are joining forces to support the steady development of healthcare companies.

If the diversification of LPs and investment directions represent two changes in Weilai Capital’s Phase II Healthcare Fund, then focusing on innovative technologies has been the overarching investment logic that Weilai Capital has adhered to since its inception.

However, upon closer examination, the commercial viability of innovative technologies has become a key focus for future capital investment.

Zhao Yang stated that Weilai Capital rarely makes investment decisions based on technological frontier status or sector hype; instead, it prefers to devote time and effort to evaluating the practical application of innovative technologies, such as emerging medical devices, improved new drugs, and consumer goods supply chains. The firm pays particular attention to whether innovative technologies can generate incremental demand for the industry or achieve significant cost optimization, thereby delivering sustained excess returns for enterprises.

“Superior technology will invariably deliver sustained excess returns,” Zhao Yang revealed. “From another perspective, we place greater emphasis on commercial viability. This focus is dictated by our DNA as industrial capital and reflects our long-standing commitment; it is the key to ensuring that our investment portfolio withstands economic cycles.”

VCBeat Capital has also put this philosophy into practice.

In the healthcare sector, Weilai Capital adheres to the foundational logic of “single-disease patient entry point + supply chain,” and has strategically invested in projects within the diabetes field, including Xiyou Health (innovative channels), Hechun Medical (insulin pumps), Shuming Technology (insurance for individuals with pre-existing conditions), and Zhongke Huisheng (insulin drug-delivery platform).

In the consumer goods sector, Weilai Capital has adhered to an investment thesis centered on scarce supply chains within major markets, sequentially acquiring stakes in multiple upstream supply chain companies specializing in functional foods.

Moreover, its strategic presence across distribution and payment channels not only enables Weilai Capital to promptly grasp industry shifts but also confers a competitive edge in its investment activities.

Distribution channels are indispensable infrastructure for corporate development. For startups, Weilai Capital’s grasp of market dynamics helps clarify and adjust product strategies. For companies in later stages, Weilai Capital’s extensive market presence enables rapid product sell-through and accelerates commercialization.

However, the value-add that capital provides to portfolio companies is not limited to the channel side.。One can glean some insights from Weilai Capital’s post-investment management.

Unlike conventional post-investment management, Weilai Capital regards post-investment activities as a phase of value recreation following value discovery.

According to Bi Cheng, Head of Risk Control at Weilai Capital, the firm advocates adopting an entrepreneurial mindset to jointly explore the possibilities of post-investment management with portfolio companies.

In terms of talent allocation, Weilai Capital established a diversified and comprehensive talent team from its inception: first, a technical team with strong backgrounds in technology and biomedicine; second, a financial team with experience in the management of listed companies as well as financial auditing.

In terms of risk control mechanisms, adhering to the philosophy that "a continuously evolving organizational structure and an independent, systematic risk control framework are the cornerstones of fund operations and the primary factor in maximizing LP interests," Weilai Capital has established braking mechanisms and a multi-dimensional risk control system across all stages of fundraising, investment, management, and exit. The risk control department holds veto power at every stage of project evaluation.

The diversification of LPs inevitably leads to the diversification of investment empowerment, namely more professional development advice, broader industry resources, and more diversified post-investment management pathways.

“A diversified LP base reflects investors’ recognition of Weilai Capital,” said Zhang Jiutao. “The investor composition of Weilai Capital’s current fund has become even more diversified, attracting investments from government guidance funds, industrial investment institutions, and financial investors. This demonstrates that investors in the Chinese market increasingly recognize the value of investment firms with strong industrial backgrounds. In an environment where policy and market conditions are becoming increasingly volatile, a diverse investor base will help us penetrate niche sectors more precisely, thereby significantly enhancing our overall control and management capabilities over portfolio projects. Looking ahead, Weilai Capital will continue to leverage its industrial empowerment system—built around technology, distribution channels, and supply chains—to deliver more stable and predictable investment returns to its investors.”