Shuming AI, the 'Algorithmic Disruptor' Outside Healthcare, Files IPO Prospectus After Securing Over RMB 100 Million Series A Round

VCBeat has learned that on March 9, AI algorithm company Shuming Technology announced the completion of its Series A financing round, raising over RMB 100 million. The round was co-led by Weilai Capital and Zeyue Capital. The funds will be used to invest in the research and development of AI algorithms and SaaS service platforms, as well as to expand the technical operations team.

Shuming Technology, founded in Shanghai in 2017, is an artificial intelligence algorithm company specializing in user behavior prediction and commercialization within the insurance and broader health sectors. Its core technology lies in leveraging AI algorithms to analyze and predict consumer behavior through the integration of multi-source data.

Shuming has transitioned from leveraging public-domain traffic to private-domain traffic. While providing technical capabilities, it reversely integrates fragmented private-domain traffic to further unlock user value and enable refined operations. Leveraging artificial intelligence algorithms, Shuming Technology has established two business lines:

First, by leveraging its proprietary “federated modeling” technology platform, it has redesigned the optimal insurance underwriting process and user-matching model, helping B2C customers identify the most suitable medical insurance plans/products tailored to their specific needs;

Second, provide tagging and structuring capabilities for the existing user data of traditional insurance companies and innovative internet insurance platforms, assist insurers in improving the secondary conversion rate and LTV (Lifetime Value) of their existing users, and collaborate with insurers to optimize and customize insurance products.

Health insurance companies in China are entering a phase of rapid development. Over the past five years, the compound annual growth rate (CAGR) of health insurance premium income in China has exceeded 30%. In the first three quarters of 2020, health insurance premium income reached RMB 666.6 billion, representing a year-on-year increase of 17.4%. According to documents released by the China Banking and Insurance Regulatory Commission (CBIRC) in early 2020, the scale of China’s health insurance market is expected to reach RMB 2 trillion by 2025.

The frequent introduction of policies also highlights the significant role of health insurance in the field of medical payment. Over the past six months, several major policies have been introduced, with the underlying policy logic being to improve the payment efficiency of the basic medical insurance fund and to increase revenue and reduce expenditures in its overall operation. Given China’s current aging population trend, there will be considerable pressure from the rapid growth of residents’ medical expenses in the future, which may lead to a substantial funding gap. This gap necessitates a new, diversified payment system that: first, effectively increases health security revenue; second, enhances the efficiency of health security payments; and third, achieves effective risk management through health services, thereby improving user experience. Due to its inherent advantages, commercial health insurance is bound to play an increasingly important role in the diversified medical payment system.

Shuming Technology has entered the health insurance industry by capitalizing on market trends, differentiating itself through services tailored for insurers to address challenges such as information asymmetry, low levels of specialization, and limited profitability. By integrating computing power, data science, and deep industry expertise, Shuming Technology connects consumers with insurance companies. Leveraging machine learning algorithms powered by nearly two decades of insurance behavior data, the company reimagines optimal processes to help individuals identify the best health insurance plans suited to their specific needs, thereby strengthening outreach to potential users, enhancing transparency, and providing greater choice.

Shuming Technology leverages its proprietary machine learning technology to identify, evaluate, and prioritize all user behavior data in real time. Meanwhile, the data generated from each user interaction creates a positive feedback loop that enhances Shuming’s marketing performance, potential customer conversion, and health insurance plan matching. By the end of 2020, Shuming’s annualized monthly premium volume had exceeded RMB 100 million, with a compound growth rate surpassing 100%.

The core team of Shuming Technology comprises experts with over 15 years of experience in artificial intelligence technology development and scenario-based applications. Founder Xiang Liang brings 15 years of internet industry experience and possesses extensive expertise in applying AI algorithms within the financial and consumer sectors.

To date, Shuming Technology has established three clear commercial monetization models, demonstrating strong profitability conversion capabilities.

First, acquire customers among healthy individuals through short-term insurance products and convert them to long-term insurance policies, while also earning a certain percentage of commission income through the cooperative model of “customer acquisition via proprietary products + innovative insurance service platform.”

Second, customer acquisition for insurance covering individuals with pre-existing conditions and conversion of supply chain products. Shuming Technology identifies distinct patient populations with pre-existing conditions—such as diabetes, hypertension, thyroid nodules, and reproductive health issues—and matches them with corresponding insurance products. It can also collaborate with insurers on product development and serve as the exclusive agent. More importantly, it provides Pharmaceutical Benefit Management (PBM) programs to these individuals, thereby generating excess returns from backend supply chain products.

Third, managed operations for private-domain traffic. On one hand, Shuming leverages its proprietary “federated modeling” computing platform to model and cleanse user data, tagging the existing user base of private-domain traffic operators. It then drives secondary conversions through telephone calls, SMS messages, and feed-based advertising, earning performance-based commissions. On the other hand, Shuming oversees overall marketing for the insurance segment, sharing commissions with private-domain traffic operators based on revenues generated from insurance conversions and the introduction of supply chain products.

Furthermore, as business volume increases, Shuming Technology’s AI algorithms will continuously acquire learning sample sets and real-world order conversion feedback, enabling comparison and calibration against predicted values to better align with actual business needs.

Shuming Technology stated that this round of financing will significantly enhance its capabilities in algorithm optimization, deployment scale, and market expansion, thereby driving substantial revenue and profit growth for its existing customer acquisition and promotion business. Shuming Technology projects that it will complete the implementation-level pilot operation of its SaaS service platform for the first batch of clients in the first half of the year.

Zhao Yang, a partner at Weilai Capital, stated that China’s healthcare industry is rapidly shifting from an in-hospital market to an out-of-hospital consumer market. The underlying business logic is transitioning from the traditional “enterprise user market” to the “individual user market,” where individual users have greater say in selecting appropriate healthcare and payment solutions. This shift is driving a fundamental transformation in the growth models of the pharmaceutical industry, distribution channels, and healthcare service scenarios. The forces propelling this change are diverse, ranging from top-level design by the National Healthcare Security Administration and the China Banking and Insurance Regulatory Commission, to cross-domain integration by innovative technology companies such as Shuming Technology.

“We posited years ago that the entities most likely to fundamentally reshape the ecosystem of China’s healthcare industry would be ‘algorithmic barbarians’ from outside the traditional healthcare sector. During our due diligence on Shuming Technology, we found this ‘possibility’ had become a reality. This is a highly capable technical team with precise mastery of underlying technological innovations and application scenarios. Their algorithmic models have accumulated extensive experience in the finance, gaming, and consumer sectors, while their mature strategies and strong team support enable rapid expansion into new fields. It is therefore easy to understand how a team with no prior background in insurance or healthcare could quickly become a top-tier traffic gateway in the insurance industry through algorithms, achieving a premium volume worth hundreds of millions of yuan in less than six months,” said Zhao Yang. “We believe the insurance sector is just the beginning. Shuming Technology is well-positioned to replicate its success in the insurance market within the pharmaceutical supply chain and medical services sectors, thereby tapping into new trillion-yuan markets.”

Lü Xiaoxiang, Founding Partner of Zeyue Capital, stated, “China’s health insurance sector is still in its early stages, characterized by low market share and low penetration rates, indicating immense growth potential for the commercial health insurance industry. Alongside the expansion of commercial insurance, AI-driven precision marketing firms like Shuming have boundless prospects. With a professional team, advanced technology, and an efficient business model, Shuming stands out as a leader in the industry.”

Weilai Capital is an industry-focused fund dedicated to early-stage investments in the healthcare and wellness sector, with By-Health Co., Ltd., a publicly listed company, as its cornerstone investor. Its investment strategy primarily centers on opportunities driven by business model and technological innovations in healthcare against the backdrop of industrial upgrading, including areas such as innovative medical payment solutions, new retail models in pharmaceuticals, and import substitution of medical technologies.

Zeyue Capital is a private equity firm specializing in the healthcare and wellness sector, co-founded by seasoned industry veterans with extensive experience. The firm boasts abundant industrial resources and a distinctive investment philosophy. Leveraging profound insights into China’s medical landscape and healthcare reform trends, the founders integrate resources across R&D, manufacturing, and marketing to identify entrepreneurial ventures globally that offer a “China perspective” and sustainable growth potential. Investment decisions are grounded in the creation of long-term value. Beyond capital infusion, Zeyue aims to serve as an “engaged” co-entrepreneurial partner, maintaining acute sensitivity to market opportunities and risks based on a deep understanding and judgment of industry development trends. Its portfolio covers high-quality projects in biopharmaceuticals, medical devices, and healthcare services.