Dr. Yu Fang, Founding Partner of Bencao Capital and 'Cytek Mom': Six Years of Companionship and Continuous Empowerment

In 2021, the global healthcare sector witnessed a surge in initial public offerings (IPOs). On July 23, Cytek Biosciences, Inc., a life sciences company and technological leader in the field of cell analysis, officially listed on the Nasdaq Stock Market (ticker symbol: CTKB). Its IPO price was $17 per share, with an opening price of $20.10 per share, representing an increase of 18.24% and a market capitalization of $2.633 billion.

Dr. Fang Yu is the longest-serving investor in Cytek Biosciences, having witnessed the company’s growth throughout its journey and earning the affectionate nickname “Cytek Mom” from its founders. In a recent interview with VCBeat, she recounted her connection with Cytek and emphasized that value investing is the core pursuit of 3E Bioventures. Drawing on Cytek’s success story, she introduced the “Three-Part Investment Thesis,” which fully embodies 3E Bioventures’ investment philosophy.

Prior to its initial public offering, Cytek completed four rounds of financing. As early as 2015, Fang Yu, then an investment partner at Fidelity Capital (now SD Capital), led Cytek’s Series A investment. After the establishment of 3E Bioventures, Fang Yu subsequently participated in the company’s Series B, C, and D funding rounds. With its continued increased investment, 3E Bioventures became the largest institutional investor with the highest shareholding in the company.

“When a company performs well, going public is a natural progression. As ‘Cytek Mom,’ I feel immense joy and pride,” Fang Yu told VCBeat. “I have known Cytek’s two founders—CEO Jiang Wenbin and CTO Yan Ming—for many years. I have accompanied the company throughout its journey, witnessing its growth from a two-person startup to a publicly listed enterprise with over 400 employees, as well as its continuous technological innovation and product iteration. The application of optical communication technology to the healthcare industry has innovatively addressed the pain points of multicolor flow cytometry. Currently, users are able to simultaneously detect up to 49 colors, ushering in a new era of high-throughput flow cytometric analysis! In recent years, Cytek has gradually moved to the forefront of the industry, becoming the number one provider of full-spectrum flow cytometers.”

Flow Cytometry Analyzers and Sorters are the primary instruments for conducting flow cytometry, enabling cell counting, cell identification, cell sorting, quality control, and single-cell analysis. These instruments are widely used in both scientific research and clinical diagnosis and treatment. Current applications include tumor immunology, allergy and autoimmune diseases, infectious diseases, organ transplantation, hematologic disorders, and immunodeficiency. Future applications may extend to antibody-drug conjugates and nanobiology.

As a leader in the field of instrument development, Cytek’s FSP platform includes full-spectrum flow cytometry analysis and sorting systems, reagents, software, and services, providing customers with comprehensive and complete solutions. Its core instrument, Aurora, enables up to 49-color multicolor analysis to meet complex detection needs, while offering ultra-high sensitivity and resolution, reducing costs, and improving efficiency.

Yan Ming was Fang Yu’s former colleague at BD Biosciences in the United States. When Yan Ming and his Fudan University classmate, Jiang Wenbin, decided to co-found an innovative spectral flow cytometry company, Cytoville (later renamed Cytek), they informed Fang Yu immediately.

In late 2014, the company initiated its Series A financing round, with Jiang Wenbin approaching Fang Yu first. At that time, the company had only two employees: Jiang Wenbin, a serial successful entrepreneur in the field of optical communications with extensive management and operational expertise, and Yan Ming, a seasoned R&D professional in the traditional flow cytometry industry who deeply understood the pain points of conventional flow cytometry. Their partnership brought about disruptive innovation by applying optical communication technologies to the flow cytometry sector, addressing unmet industry needs. Fang Yu believed that “in the early stages of a startup, investment is all about betting on the people!” She firmly championed leading the investment in Cytek.

In 2016, Cytek initiated its Series B financing round, in which the already-established 3E Bioventures participated. “At that time, Cytek already had its own products, and the comparative test data between its prototypes and those of leading industry brands were highly favorable, demonstrating that innovative full-spectrum flow cytometry represented a technological upgrade over traditional flow cytometry. This reinforced our determination to invest in Cytek,” said Fang Yu.

In June 2017, at the CYTO conference held in Boston, USA, Cytek officially launched its first commercial product—the Aurora spectral flow cytometer—breaking through the technical bottlenecks of traditional flow cytometry in multicolor detection.

Cytek created a sensation at the CYTO conference, a scene that still leaves a deep impression on Fang Yu: “I rarely witness such a scenario, with long queues of research users from hospitals and universities eager to learn about the Aurora platform and its operational procedures. A large number of users also brought their own samples for testing on the demo units. The company secured numerous orders on-site during the conference.”

The long queue waiting for the Cytek lecture

With the launch of the company’s new products, bottlenecks in instrument production have gradually come to light. “3E Bioventures has always been fully committed to serving its portfolio companies. Providing capital is only the first step; we must continuously connect these companies with resources to empower their growth,” stated Fang Yu. As an investor in Cytek Biosciences, 3E Bioventures assisted the company in selecting a site and establishing a manufacturing facility in Wuxi, leveraging China’s industrial chain and cost advantages to further expand the scale of instrument production. Currently, the majority of Cytek’s instrument modules are sourced from its Wuxi production base and shipped worldwide for final assembly and sale.

In 2018, Cytek had begun to scale up, and several large U.S. companies extended acquisition offers. CEO Jiang Wenbin faced the most critical decision since founding the company: should he continue moving forward independently, or accept an acquisition and secure a substantial financial payout?

At that time, Fang Yu accompanied Deng Feng, a partner at Northern Light Venture Capital, on a visit to Cytek’s U.S. headquarters. Deng Feng remarked, “Every man should aim to have at least one publicly listed company in his lifetime.” This statement resonated with Jiang Wenbin and Yan Ming, leading the company to ultimately decline the acquisition offer and pursue independent growth. Subsequently, Cytek initiated its Series C financing round, co-led by Northern Light Venture Capital and 3E Bioventures. In hindsight, the decision proved to be correct.

In 2020, the company had grown into a hotly sought-after quasi-unicorn enterprise with high growth in both revenue and profits. After launching its Series D financing round, it attracted investments from institutions including RA Capital and Hillhouse Capital, while 3E Bioventures chose to further increase its stake.

Why Did 3E Bioventures, Which Had Already Invested in Cytek Biosciences Through Two Rounds, Continue to Invest in Its Series D? Fang Yu Provided a Very Straightforward Answer, Giving Us Further Insight into 3E Bioventures’ Investment Logic.

She stated, “Value investment is the pursuit of 3E Bioventures, and Cytek is a typical case under our value investment philosophy. High-quality projects can generate profits for investors participating in each round within the primary market, and continue to deliver returns to investors after listing on the secondary market. Over time, the value of companies with strong fundamentals will continue to grow.”

According to data from MarketsandMarkets, the global cell analysis market was valued at $16 billion in 2019 and is projected to reach $23 billion by 2024, with approximately $5 billion coming from hospitals and diagnostic laboratories and $1.5 billion from the U.S. market.

Full-spectrum flow cytometry has transcended the existing application scenarios of traditional cell analysis technologies. It can be utilized in fields such as tumor immunology, infectious diseases, immunodeficiencies, bioprocessing, and minimal residual disease (MRD) detection. Highly complementary to next-generation sequencing (NGS) technology, it holds the promise of unlocking a larger potential target market.

Cytek’s Aurora and Northern Lights are the world’s first full-spectrum flow cytometers that distinguish fluorescent signals by leveraging full-spectrum fluorescence signatures from multiple lasers. As core products, Aurora and Northern Lights constitute the company’s primary revenue source; according to the prospectus, sales of these two products accounted for 91% of revenue during the reporting period.

Cytek Product Portfolio

Driven by rising market demand and the strong market performance of Aurora and Northern Lights, the Company’s revenues were $57.9 million, $92.8 million, and $24.3 million in 2019, 2020, and the first three months of 2021, respectively, representing a compound annual growth rate (CAGR) of 112% from 2018 to 2020. In terms of instrument sales, Cytek’s full-spectrum flow cytometers have reached an installed base of 751 units, serving 620 customers.

In the future, Cytek will continue to innovate by consistently launching new instruments, reagents, software, and services, while further expanding its sales team to provide customers with best-in-class spectral flow cytometry solutions that meet the growing market demand for cell analysis. Meanwhile, the company will accelerate the adoption of full-spectrum flow cytometers in clinical markets, including disease diagnosis and therapeutic monitoring.

3E Bioventures, established in 2015, is a specialized fund dedicated to investing in globally leading life sciences and healthcare companies. The 3E Bioventures team, with offices in Beijing, Shanghai, and Silicon Valley, manages two RMB funds and two USD funds, focusing on identifying innovative projects from a global perspective. The firm primarily invests in two key areas: innovative pharmaceuticals and cross-disciplinary cutting-edge technologies. Since its inception, 3E Bioventures has adhered to the philosophy of “investing in hard technology, pursuing global deployment, and providing operational incubation,” and has invested in 65 high-quality projects in the innovative healthcare sector.

Drawing on the experience of accompanying Cytek’s growth and the company’s successful IPO, Fang Yu introduced 3E Bioventures’ three-part thesis for investing in the life sciences tools/IVD sector:

1. From a technological and product perspective, preference is given to investing in companies that offer complete solutions comprising instruments, reagents, and software;

2. From a commercialization perspective, preference is given to companies that prioritize research before clinical application. Products are validated in the research market and generate certain revenue before obtaining clinical registration certificates to enter the clinical market;

3. In terms of sales, preference is given to companies with global distribution capabilities. Multi-dimensional sales strategies drive sustainable revenue growth.

Guided by its three-stage investment thesis, 3E Bioventures has invested in multiple innovative projects in the life sciences tools and IVD sectors, such as Genotix, a high-sensitivity single-protein detection company incubated by 3E Bioventures, and Gewu Zhihe, a single-molecule multi-omics company.

Notably, Fang Yu has also been a long-term partner of Aierbo Medical, leading and participating in its Series A, Series B, and Pre-IPO financing rounds. Today, Aierbo Medical (688050.SH) has become a leading innovator in ophthalmic products, with a market capitalization exceeding RMB 30 billion. In the future, 3E Bioventures will see more outstanding companies go public.

Cytek is one of the successful investment cases in the cross-innovation sector of 3E Bioventures. Its full-spectrum flow cytometer now supports up to 49 colors, a feat that was hard to imagine when Fang Yu invested in its Series A round six years ago. As the interview drew to a close, this “Cytek Mom” remarked with emotion, “CEO Jiang Wenbin and CTO Yan Ming have led their team in continuously upgrading and iterating their products to meet emerging needs in scientific research and clinical practice. This is a team dedicated to perfecting their product. Having accompanied Cytek all the way from a two-person startup to its public listing, I feel that this ‘child’ has now come of age.”