All Entrepreneurs Deserve Respect: Insights from Liu Ying of SoftBank China

“2019, the capital winter has been echoing in our ears, but in fact, whether it is a cold winter or not, it will not affect the development trajectory of excellent enterprises. The leading institutions all have their normal fund-raising, investment and exit rhythms. The economic cycle will have an impact, but there are also countermeasures.” At the 2019 Future Medical Top 100 Forum hosted by VCBeat and VCBeat Research Institute, Ms. Liu Ying, partner of SBCVC, said so.

According to data from Zero2IPO Research, the total amount of capital raised in China’s private equity market reached RMB 1.08 trillion in the first 11 months of 2019. This figure represents only a 10% year-on-year decline, a relatively modest drop that indicates ample liquidity in the capital market.

Compared to the "capital winter," a more pronounced trend in 2019 was the gradual flow of capital toward high-quality VC/PE firms, and subsequently into more stable industries and outstanding enterprises. In China's equity investment market in 2019, investment amounts in the financial sector dropped by 85%, and in culture and media by 78%, while the healthcare sector bucked the trend with a 10% growth. More capital flowed into the healthcare sector, which is characterized by its counter-cyclical resilience. However, the influx of substantial capital, reforms in the healthcare payment system, and accelerated technological iterations have introduced greater uncertainty into this relatively stable sector.

As early as 2006, SBCVC established a healthcare investment team. Over the past decade-plus, SBCVC has achieved remarkable success in the healthcare sector, with standout portfolio companies including BGI Genomics, Dian Diagnostics, Edan Instruments, and Lifotronic Medical. As an institution that has been deeply engaged in the healthcare field for over 13 years, how does SBCVC view the transformations and opportunities in China’s healthcare market? VCBeat conducted an exclusive interview with Ms. Liu Ying, Partner at SBCVC.

The healthcare sector is a relatively stable investment domain, but stability does not imply stagnation; innovation is essential for survival. At the Future Healthcare Top 100 Forum, Liu Ying stated that the healthcare industry is undergoing rapid transformation. For SBCVC, research into the impact of healthcare reform policies on the industry typically begins five years in advance, enabling proactive portfolio positioning.

Through forward-looking strategic positioning, SBCVC has become a pragmatic cultivator rather than a trend-chaser. In Liu Ying’s view, healthcare investment should not focus solely on hype cycles and popular sectors; instead, it should prioritize addressing pain points rather than merely chasing hot topics. New technologies and approaches must tangibly help patients, physicians, and hospitals solve problems, thereby compelling them to pay, rather than engaging in empty talk about technology and concepts.

“Healthcare investment is unlike the TMT sector, where valuations may differ significantly from one year to the next. Healthcare investment is a process of gradual growth. As a diversified fund, we monitor trends and hotspots, but we do not rigidly adhere to sector-specific allocation strategies; instead, we emphasize timing, development stage, and underlying investment logic.”

Market trends are fleeting, but strategies can transcend cycles. At present, SoftBank China Capital’s healthcare investment strategy can be summarized by dualism: high-tech healthcare and low-cost healthcare.

“Within China’s medical insurance payment structure, approximately 20% of the urban population accounts for nearly 80% of total expenditures, whereas 70%–80% of the low-income population consumes only 20%–30% of such spending, reflecting a significant imbalance. Although China’s healthcare system is extensive, with a dense network of medical institutions at various levels—including township health centers, maternal and child health hospitals, and village clinics—there remains substantial room for improvement in service quality. Enhancing healthcare standards through cost-effective approaches has become an inevitable trend.”

“Meanwhile, cost-effective healthcare also encompasses the state’s increased investment in public health. Cost containment within medical insurance is no longer merely a healthcare reform policy; it has been tangibly implemented in operational practices, thereby transforming many grassroots operational models and giving rise to more IT support systems, medical big data operation companies, and even payment solutions.” For example, Pumen Medical, a portfolio company of SBCVC, has closely aligned its wound repair products with community healthcare and national rehabilitation medical policies.

Liu Ying pointed out:Low-cost healthcare may be more about model-driven innovative companies.High-tech healthcare, on the other hand, caters to the differentiated medical service needs of high-income groups.

She explained that health insurance reimbursement is designed as a universal coverage scheme, which has already met the medical needs of the urban population to the greatest extent possible. However, some high-income individuals are willing to pay higher prices for superior medical services rather than accepting standardized care at a universal price point. In this context, new biotechnologies, novel treatment modalities, and high-quality medical service technologies and environments that provide differentiated, premium healthcare services to affluent populations represent worthwhile investment opportunities with rapid growth potential. Take Anhan Medical, a portfolio company of SoftBank China Capital (SBCVC), as an example. Its magnetically controlled capsule gastroscope system is the world’s first controllable swallowable capsule endoscope. Unlike traditional gastroscopy, it requires neither intubation nor anesthesia, thereby addressing the pain and risks associated with conventional gastric examinations.

She added, “Looking at international developments, healthcare institutions provide differentiated medical services to various socioeconomic strata with the support of commercial health insurance. China’s healthcare system will also transition from providing egalitarian medical services to establishing a tiered healthcare service model. Of course, this cannot be achieved without improving the payment system.”

In the process of differentiated development within the healthcare system, commercial insurance plays a crucial role. The government-led social medical security system will likely only be able to provide “basic coverage” for a considerable period in the future. SBCVC will continue to focus on innovations in healthcare payment solutions; however, Liu Ying currently believes that the profit model for commercial insurance remains unclear, and it will take time for market-driven forces to effectively address healthcare payment—a critical livelihood issue.

With over a decade of experience in healthcare investment, Liu Ying maintains a sense of reverence toward both investment projects and founding teams. In addition to the sharp acumen common among investors, she also possesses the candidness and magnanimity unique to women.

In 2009, Liu Ying joined the healthcare investment team at SBCVC. Prior to transitioning into her role as an investor, Liu Ying had extensive experience in corporate management, having held key positions at Comsense Medical Group, Shenzhen Runtong Communications Company, and Guangdong Yingtong Network Technology Company. She also brought with her a highly successful track record as an entrepreneur.

When she entered the field, the venture capital industry was not yet oversaturated. At that time, possessing experience in corporate management, industry expertise, and entrepreneurial ventures was one of the entry requirements for investors.

Liu Ying stated, “When our team selected investors, we prioritized those with entrepreneurial experience, as this enables effective communication with founders and a deeper understanding of the industry. Additionally, we generally chose candidates with backgrounds in science and engineering, requiring proficiency in technology, management, and corporate operations to facilitate effective communication and comprehensively understand all aspects of a company’s internal workings. I have essentially experienced most of what life has to offer, with investment being the only area I had not yet explored; therefore, I decided to give it a try.”

Liu Ying recalled that on her first day at work, her boss did not share insights on how to identify great companies like Alibaba; instead, he told her that all entrepreneurs deserve respect.

In Liu Ying’s view, investors play a supporting role behind entrepreneurs. All entrepreneurs burn their bridges and stake everything on their ventures, whereas for investors, 20% of projects may generate 80% of the returns. She believes that any entrepreneur striving forward on their journey is a hero in the eyes of investors.

However, respect does not imply indulgence; it stems from an understanding of the difficulties inherent in entrepreneurship. Liu Ying stated candidly, “On the path of entrepreneurship, almost every route has been traversed by others—even pitfalls have been stepped into before. Only by leveraging their unique capabilities and perseverance can entrepreneurs stay ahead. Looking back at the development of China’s venture capital and private equity industry, the first two decades were an era of ‘wild growth’; today, however, we are in an age of full competition, with corporate management becoming increasingly professionalized. Investors can only provide resources to entrepreneurs, but the tough battles must be fought by the entrepreneurs themselves.”

To this day, Liu Ying, a partner at SBCVC, stated that she still goes to the front lines to communicate with entrepreneurs. “Someone once asked me, ‘Why do you still go out to evaluate projects?’ I countered, ‘Why shouldn’t I?’ Our founding managing partners continue to engage deeply with founders at the enterprise level and remain actively involved in post-investment management. Otherwise, our investment decisions would lack genuine insight.”

For the profession of investor, many people emphasize intuition. However, Liu Ying believes that investment is the one field where one cannot rely solely on innate talent. Investment is an industry that heavily depends on experience; only through extraordinary diligence, prolonged and repetitive contemplation, and the review of hundreds of cases can one accumulate what is known as “intuition.” An excellent investor develops a discerning eye only after navigating a vast array of experiences. As Hemingway said, “No man is an island, entire of itself; every man is a piece of the continent, a part of the main.” One must first become the most solid island in the world before becoming part of the mainland.