As Entrepreneurship Enters the 'Age of Scientist Founders,' What Should We Focus On?

Since 2021, a growing number of scientists have stepped out of their laboratories and into the marketplace.

This is not mere speculation, but is backed by real data. According to statistics from VCBeat’s Orange Fruit Bureau, between January 1, 2021, and March 15, 2022, a total of 81 early-stage investment and financing events (seed and angel rounds) occurred in China’s healthcare sector, with total financing exceeding RMB 3.5 billion. More than 100 investment institutions participated, including Sequoia Capital, Matrix Partners China, SoftBank China, Sinovation Ventures, Bohe Angel, and YS Capital.

Behind this investment fervor, we have observed new trends in early-stage medical projects, the most prominent of which is that these founders generally possess scientific backgrounds.

For instance, Dr. Chen Chang, founder of Jinguan Technology, which completed a RMB 200 million angel financing round; Dr. Shi Jiahai, co-founder of Kemexin, which secured over RMB 100 million in seed financing; and Xige Biotech, which raised approximately RMB 60 million in angel financing, with its founding team hailing from Harvard University’s Dana-Farber Cancer Institute. Other notable entrepreneurs include Dr. Wang Yongzhong, founder of Ruizheng Gene; Dr. Chen Yuejun, founder of Yuesai Biologics; and Dr. Zhang Xin, founder of Xinwen Biologics, among others.

This also aligns with the fundamental principles of entrepreneurship in the current healthcare sector. On one hand, research institutes have vigorously encouraged scientists to launch startups in recent years, creating a favorable entrepreneurial environment that has, to some extent, motivated a cohort of scientists to step out of their laboratories. On the other hand, the healthcare industry is increasingly shifting towards deep tech, meaning that today’s startups require “hard” technological capabilities more than ever before, thereby raising the bar for founders.

In reality, the entrepreneurial journey for scientists is a process of “survival of the fittest,” with only a very small minority achieving true success. Admittedly, there are “bottlenecks” along the way, and these obstacles are diverse in nature.

First, from the perspective of research institutions and universities: Have they created a favorable environment for scientists to launch startups, and can the ecosystems they provide truly address the challenges faced by scientist-entrepreneurs? Second, from the standpoint of investment firms: As “early-stage investing” becomes a new trend, how should investors identify high-potential targets, and how can they empower scientists from an investor’s perspective? Finally, returning to the scientists themselves: How far are they from becoming entrepreneurs, and how should they bridge the current gaps in their capabilities?

These are real and thorny issues, but they must ultimately be resolved. To identify the industry’s “breakthrough point” and unlock pathways for innovation in healthcare, VCBeat Orange Bureau specially convened the “Forum on Translation of Scientific Research Achievements” at the 6th Future Healthcare Top 100 Conference held this April. Starting from the perspective of driving industrial transformation, and with medical centers, research institutions, investment firms, and corporate innovation centers as core stakeholders, the forum aimed to pool collective wisdom and jointly explore a “China-specific pathway” for promoting the translation of medical innovations.

As the source of innovation, research institutions and universities should shoulder significant responsibilities in this “sprint.” However, constrained by systemic barriers and cognitive biases, most Chinese research institutions and universities are still in the early stages of medical innovation and translation, with limited existing scientific achievements and generally low incubation success rates.

There are certainly reasons for this. Taking medical institutions as an example, the primary issue they need to address is physicians’ initiative. Due to a shift in the focus of performance evaluations, the vast majority of physicians in China currently concentrate their efforts on clinical practice, with only a small minority genuinely willing to engage in scientific research.

Secondly, there is a lack of original innovation capability. Since most doctors in China have long been working in a closed environment centered around hospitals, their accumulation of engineering knowledge is quite limited, and they lack a comprehensive understanding of the market. As a result, scientific research outcomes that can truly be applied to the market are "minimal."

Then there is the lack of a clear commercialization pathway. The translation of medical innovations is extremely complex; in addition to proactive participation and efforts from physicians, corresponding policies, platforms, and resources must also keep pace. However, to date, domestic healthcare institutions have not yet established a robust incubation system, causing many innovative achievements to fail to transition out of the laboratory and largely fall into the “valley of death” of innovation.

Finally, there is ambiguity in the allocation of intellectual property rights. Given that innovation and commercialization in the medical field are particularly challenging, scientists navigating this arduous path deserve greater rewards. This necessitates the establishment of a clear and reasonable system for delineating intellectual property rights within medical institutions, ensuring that all participants receive fair benefits.

These issues are not unique to healthcare institutions; in fact, they also exist within the technology transfer departments of universities, research institutes, and translational centers that focus on medical research outcomes.

So, how can we break through this impasse?

At the “Forum on Translation of Scientific Research Achievements,” Dongmai Chengguo Bureau specially invited seven institutions—the Global Health Industry Innovation Center of Tsinghua University’s Institute of Industrial Research, the Peking University Medical Science and Technology Innovation Center, the Suzhou Institute of Biomedical Engineering and Technology, Westlake University, the National Technology Innovation Center of the Yangtze River Delta, the Translational Medicine Center of West China Hospital, and the UCSF Medical Center—to jointly participate in a roundtable discussion. The participants engaged in an in-depth exploration of the topic “Practical Models and Trends in the Translation of Medical Achievements from Research Institutions.”

Currently, a growing number of investment institutions are turning their attention to early-stage healthcare projects.

To some extent, this is a “forced” change. In recent years, the trend toward younger listed companies has become increasingly pronounced. Taking 2020 as an example, among 71 newly listed companies, 27 had been established for less than 10 years, indicating a significant compression of the previously typical 15–20 year IPO cycle in the healthcare industry.

As going public becomes increasingly “easy,” the overall pace of investment and financing is accelerating accordingly. In the past one to two years, both the number of financing deals and the total amount raised in the primary market for the healthcare sector have seen significant increases compared to previous periods.

In such a “rapid-matching” investment environment, investment institutions are compelled to focus on early-stage projects. This is primarily because, as the pace of IPOs accelerates, the boundaries between investment stages become increasingly blurred. Institutions that previously focused exclusively on mid- to late-stage investments find it difficult to identify suitable entry points at intermediate stages, leaving them with no choice but to cultivate companies from “ground zero.”

Nevertheless, for investors, the challenges of “moving earlier” are also evident.

First, there is the challenge of precisely accessing scientific talent. Research projects at domestic academic and research institutions are relatively insular, making it difficult for investors to gain entry without a “bridge.” Second, there is the issue of evaluating scientist-led projects. Unlike mid-to-late-stage investments, which involve relatively mature ventures that have already been validated by the market, early-stage medical projects exhibit high uncertainty, resulting in more numerous and complex evaluation criteria. Finally, there is the matter of supporting the rapid growth of startups. For early-stage ventures, capital may not be the sole critical factor; more importantly, investment firms must provide the necessary post-investment services, which often prove more effective than money alone.

So, how should investors “keep pace with the times”?

At the “Forum on the Translation of Scientific Research Achievements,” VCBeat’s Orange Fruit Bureau specially invited Innovation Works, Mint Angel, BlueRun Ventures, Yisheng Capital, Northern Light Venture Capital, and Eggshell Capital to jointly participate in an investor roundtable, engaging in an in-depth discussion on the topic of “How Capital Empowers Innovative Research Findings to Accelerate Their Growth into Industrial Applications.”

As previously stated, investors find it difficult to connect with scientists at this stage, and correspondingly, scientists also struggle to reach investors.

The “touch” herein encompasses three layers of meaning:

The first level is intuitive: both parties lack a platform for face-to-face communication. The second level targets investors: how to screen out innovative projects with original innovation capabilities that can truly address clinical needs. The third level targets scientists: how to communicate effectively with investors and precisely match suitable investment institutions.

Based on this, the Artery Orange Fruit Bureau has established a project roadshow session at the "Research Achievement Transformation Forum." Using key criteria such as technological innovation, market potential, and founding teams, it will select ten cutting-edge innovative projects from research institutions across China. Through a format of "presentation + Q&A," the initiative aims to bridge the gap between the scientific community and industry while providing precise incubation services for early-stage startups.

Wang Jie, founder of Xinmai Medical, once offered this advice to scientists aspiring to become entrepreneurs: “As a physician or university professor, if you choose the path of entrepreneurship, you must carefully manage the ‘starting point’ and ‘critical junctures’ of innovation. If you fail to clearly define your innovation’s ‘starting point,’ or lack the capability or resources to navigate these critical ‘junctors,’ the more efforts you make, the more troubles you will encounter. Consequently, your likelihood of failure will increase, and so will your costs.”

The “Forum on the Translation of Scientific and Technological Achievements” exists to reduce the failure rate of scientists’ entrepreneurial ventures within a controllable cost range.