How to Navigate the 'Dark Forest' of Digital Healthcare Investment: Insights from Fan Bo of CKY Capital

In recent years, investment in the healthcare industry has surged, driven by population aging, rising demand for medical and health services, and the government’s continuous promotion of healthcare reforms. Amidst the “black swan” event of the pandemic, the healthcare sector’s strong counter-cyclical resilience has drawn unprecedented attention. Many investment institutions have begun to “jump on the bandwagon” and invest in healthcare, while some funds had already positioned themselves in this sector early on.

China Creation Ventures began investing in the digital health sector in 2018, entering from a TMT perspective. Leveraging its unique insights, the investment firm successfully backed star healthcare companies such as Shukun Technology, Yunhu Technology, and Nuoxin Chuanglian.

China Creation Ventures was founded by Wei Zhou, former Managing Partner of KPCB China, along with his TMT team, with whom he had worked for many years. The team’s early investments included companies such as JD.com, CreditEase, Rong360, Ximalaya, and JD Digits, achieving a success rate whereby 30% of its projects became unicorns within ten years of early-stage investment. Furthermore, within less than a year and a half of establishing the new brand, the firm realized its first IPO from an early-stage portfolio company.

What New Horizons Emerge When Viewing Healthcare Investment Through a TMT Lens? How Does China Creation Ventures Achieve Precise Positioning in the Digital Health Industry? With These Questions in Mind, VCBeat Conducted an Exclusive Interview with Fan Bo, Director at China Creation Ventures.

Prior to joining China Creation Ventures, Fan Bo closely monitored the trends and fluctuations in the technology sector. He believes that waves of new technologies—such as big data, artificial intelligence (AI), cloud computing, and the internet—will ultimately reshape every traditional industry, healthcare included. Moreover, the innovative integration of healthcare and technology will bring about significant opportunities.

China Creation Ventures began investing in digital health in 2018. In fact, due to the significant challenges of implementing AI in healthcare and the longstanding commercialization difficulties faced by internet-based medical services, external enthusiasm for digital health was waning at that time.

“Around 2018, AI appeared to be on a downward trajectory across various industries, but this was a normal phenomenon. The emergence of new technologies often leads to inflated expectations; as application scenarios become clearer and related challenges gradually surface, the gap between reality and expectations becomes evident.”

However, this will not affect China Creation Ventures' judgment on the long-term trends in the healthcare sector, ""As long-term investors, we focus on long-term trends; short-term challenges do not affect our judgment. China Creation Ventures has always believed that technology is the driving force behind medical innovation, which is why we have firmly chosen to invest in the digital health sector."“Fan Bo said.

In fact, when selecting a sector, China Creation Ventures first examines whether market dynamics are shifting. In the absence of such changes, it is difficult for new entrants to distinguish themselves from established players. In China’s healthcare market, the aging population and rising living standards have driven rapid growth in demand for high-quality medical services. However, the uneven and imbalanced distribution of medical resources has long remained a core pain point. With the continuous emergence of new technologies such as AI, big data, and cloud computing, new market opportunities are beginning to arise.

China Creation Ventures believes that the incremental value brought by technological transformation is undoubtedly the best means to resolve the “trilemma” of simultaneously achieving a widely covered healthcare system, low consumption of social resources, and an advanced pharmaceutical industry.

The core resource of healthcare services is, in fact, physicians. To secure high-quality healthcare, the shortage of excellent physicians must be addressed. On one hand, this can be tackled by increasing supply, i.e., raising the number of physicians; however, the lengthy training cycle for physicians makes it difficult to keep pace with the rapidly growing demand in the healthcare market.

Another approach is to pin our hopes on technological advancements, using machine-assisted diagnosis to replace unnecessary manual labor and enhance physicians’ treatment efficiency. Alternatively, we can penetrate every link of the healthcare process, leveraging various technical means—including image analysis based on visual recognition and medical record documentation powered by speech recognition—to boost treatment efficiency. “Technology is not intended to replace doctors but to assist them, freeing them from low-value, repetitive tasks so they can devote their energy to high-value, creative work. This is how China Creation Ventures positions the value of technology,” Fan Bo emphasized repeatedly in the interview.

In the healthcare sector, China Creation Ventures possesses a unique understanding of the medical market. The firm identifies four key characteristics of China’s healthcare market.

First, it is widely acknowledged that the healthcare industry is inherently serious and conservative.Because healthcare is an industry centered on human life, it demands greater rigor compared to many other sectors. New technologies and products require more extended periods of validation before entering this field. Healthcare is a slow-moving industry, requiring greater patience from both entrepreneurs and investors.

The second point is that the magnitude of the clinical value of new products and services determines their market value.

“Many people believe that the core milestone for the commercialization of AI in healthcare is obtaining a Class III medical device registration certificate from the National Medical Products Administration (NMPA). However, we argue that securing such certification does not automatically guarantee commercial viability. While a Class III certificate demonstrates the product’s medical value, it is essential to evaluate whether this value translates meaningfully into real-world clinical practice, including physicians’ acceptance of its utility in daily workflows and its ease of integration with existing medical equipment systems. Only when these conditions are met can new products and technologies be gradually implemented and generate commercial value,” said Fan Bo.

Third, the most critical aspect of investing in healthcare services is to focus on physicians themselves.When screening investment targets, China Creation Ventures first examines whether the product can truly help doctors.

Take Shukun Technology, a medical AI company invested in by China Creation Ventures, as an example. While investment in the medical AI sector has been heavily concentrated on pulmonary nodule imaging assessment, China Creation Ventures chose not to invest in companies specializing in this area. This decision was not based on anticipating subsequent homogenization and commercialization challenges, but rather on the belief that pulmonary nodule imaging assessment is merely one step in the clinical workflow. Often, procedures such as needle biopsy are still required after imaging assessment, meaning the product offers limited value and does not substantially reduce physicians’ workload or stress.In contrast, Shukun Technology entered the market through cardiovascular care, given that cardiovascular diseases rank first in mortality and disability rates among all disease categories, with clear and significant demand from both patients and healthcare providers. Unlike pulmonary nodules, coronary CT angiography (CTA) is a critical imaging modality for diagnosing coronary heart disease. However, the examination involves a cumbersome process including scanning, 3D reconstruction, image interpretation, diagnostic evaluation, report writing, and review. Even experienced attending physicians typically require around 30 minutes to produce results, and patients usually need to wait 2–3 days to receive their reports. As one of the first companies in China to develop AI products for cerebrovascular and cardiovascular applications, Shukun’s core product, AI-powered Coronary CTA, fully automates the entire diagnostic workflow, reducing the time to approximately five minutes. This achieves a closed-loop diagnostic process, genuinely helping physicians save time and improve efficiency.

Therefore, in the short term, relevant policies may drive rapid advances in certain niche segments; however, it is ultimately the value that products deliver to physicians that determines market boundaries.

Fourth, focus on the potential of China’s primary healthcare market.

“Over the past decade, a large number of innovative companies have emerged in the healthcare industry, mostly focusing on the digitalization and internet-based transformation of medium-to-large public hospitals. However, we cannot ignore that more than half of the 1.4 billion people in China still seek medical care at the primary level. Although this market is fragmented, it holds significant potential. Strengthening primary care has always been the core of national healthcare reform policies.”

As the smallest unit within China’s healthcare system, primary care is fragmented and relatively weak, yet it is not merely a scaled-down version of tertiary hospitals; despite its small scale, it operates within its own distinct ecosystem. In the primary care market, in addition to assessing whether solutions truly address physicians’ needs, China Creation Ventures also places emphasis on the differentiation of these solutions.

China Creation Ventures first selected Yunhu Technology.As a primary care medical testing service platform, Yunhu Technology leverages its self-built cold-chain logistics system to rapidly transport test samples to laboratories, enabling primary healthcare institutions to quickly access test results via a cloud platform. The investment in Yunhu Technology exemplifies the investment philosophy of China Creation Ventures.

“Yunhu Technology has resolved the challenges of laboratory testing at the primary care level through its differentiated solutions, and we believe it is well-positioned to emerge as a leader. Currently, Yunhu Technology is demonstrating strong growth momentum and is expected to serve nearly 10,000 medical institutions this year,” said Fan Bo.

China Creation Ventures’ presence in the primary healthcare sector is far from superficial; within the “pharmaceuticals” segment of the three core pillars of primary care—“pharmaceuticals, diagnostics, and testing”—it has invested in Nuoxin Health.

After extensive research and observation of the market, China Creation Ventures has found that the primary healthcare pharmaceutical market had long been overlooked due to constraints on return on investment. However, the market for medications at the primary care level is by no means small, and many physicians have a strong desire for professional development and learning. Establishing robust connections between primary care physicians and pharmaceutical companies remains a significant challenge. Traditional offline conferences and manual promotional efforts are inadequate to address this issue. “Nuoxin Chuanglian leverages internet-based approaches to connect a large number of dispersed primary care physicians and enhances efficiency through technological means. At its core, it is a technology-driven company that uses technology to solve the problem of medical education in the primary healthcare pharmaceutical market. This is what we value,” said Fan Bo.

As a boutique VC firm with a heavy focus on TMT genes, how did China Creation Ventures manage to swiftly invest in star healthcare companies such as Shukun Technology, Yunhu Technology, and Nuoxin Health?

Fan Bo and VCBeat shared the “group hunting” strategy, a summary of the China Creation Ventures team’s years of investment experience—First, determine the near-term investment direction; then mobilize the entire team to conduct in-depth research on the industry, identify key inflection points worthy of investment, and finally target the leading companies at these pivotal nodes.

Hunting wildebeest often requires the coordination of several cheetahs, and the unique approach adopted by China Creation Ventures also discourages going it alone.

The "Cheetah-Style" Hunting Strategy of Rapid Pursuit, Flanking, and Interception Enables Quick Pivoting Across Tracks, Iterating Perspectives, and Capturing Trends in More Niche Segments.

“China Creation Ventures adopts a team-based approach, rather than having individuals spend extensive time on research. We place greater emphasis on the collision of diverse perspectives. This strategy has proven effective across multiple sectors over the past decade, with successful ventures such as JD.com, CreditEase, Himalaya Media, Tantan, Rong360, Venustech, Yixia Technology, and IceKredit emerging,” said Fan Bo.

At the end of the interview, Fan Bo also shared China Creation Ventures’ perspective on investment: what investors fear most is not cyclical fluctuations, but rather how to navigate the “Dark Forest.”“In the dark forest, you discover a promising project but remain uncertain whether superior companies will emerge in the future. To alleviate the anxiety stemming from this uncertainty, the only recourse is to strive for a more comprehensive understanding of the dark forest, thereby dispelling the darkness. Although it is impossible to eliminate all obscurity, one can still achieve 70%–80% cognitive clarity.”

Overall, China Creation Ventures combines strategic flexibility with tactical prudence. As a fund renowned for its expertise in TMT investments, its expansion into the healthcare sector is poised to uncover more outstanding medical enterprises. As a young fund, China Creation Ventures is committed to providing long-term support to entrepreneurs, a positioning and level of patience that will transcend cyclical fluctuations. For them, while the external world is constantly changing, the most steadfast element remains their own determination.