Lanchi Ventures' Chen Weiguang: Investing Only in Companies Solving Fundamental Problems

Founded in 1998, BlueRun Ventures China has invested in numerous well-known companies in the TMT sector. Its most famous overseas investment is PayPal, while its domestic portfolio includes Ganji.com, Changba, and Qufenqi.

In the healthcare sector, back in 2011 when most investors were still unfamiliar with internet-based and mobile healthcare, BlueRun Ventures China had already made angel investments in Chunyu Doctors and Xingshulin. After several years of rapid development, Chunyu Doctors achieved actual revenues of RMB 130 million in 2015 and established more than 300 offline Chunyu clinics across China. Meanwhile, Xingshulin completed a USD 32 million Series C financing round in January 2016, fully launching its commercialization and internationalization efforts.

BlueRun Ventures China has made a new move in the internet healthcare sector, completing a RMB 60 million Series A financing round for the “QuYun” app (Jiahao Technology). The “QuYun” app is a one-stop preconception care service platform targeting individuals facing difficulties in conceiving and bearing children. It aims to improve the success rate of assisted reproductive technology through doctor-patient interactions, peer support among patients, patient self-service tools, and big data analytics. This indicates that BlueRun Ventures China’s investment focus has shifted from the platform-based model represented by Chunyu Doctor in previous years to the vertically integrated model exemplified by “QuYun.”

Chen Weiguang, a partner at BlueRun Ventures China, joined the firm in 1998 and led its expansion into the Chinese market in 2005, spearheading a series of investments in the country. Notably, during the peak of the venture capital bubble in the first half of 2015, he accurately predicted the “capital winter” and the wave of startup failures that would unfold in the second half of the year.

VCBeat conducted an exclusive interview with Chen Weiguang, Partner at BlueRun Ventures China, to gain insights into his perspective on the major trends in the 2016 venture capital market and his investment philosophy for internet healthcare.

2016 Mobile Health Trends: Top-Ranked Companies Attract the Majority of Capital; Competition for Resources and Markets Intensifies

Chen Weiguang made predictions in 2014 and the first half of 2015, stating that China’s venture capital sector would experience a bubble in 2015, followed by a “capital winter” from the second half of 2015 through year-end, during which 70% of startups would fail at the Series B stage.

Events unfolded exactly as Chen Weiguang had predicted. The precision of his forecast stemmed from the fact that he entered the venture capital industry just in time to witness the burst of the Nasdaq tech bubble in 2001, experiencing a full bull-bear cycle of the sector. This has given him a profound understanding of the interplay between capital, entrepreneurship, and industry cycles.

Regarding mobile health in 2016, Chen Weiguang believes that venture capital firms will return to rationality and calmness when evaluating early-stage projects such as angel and Series A rounds. They will exercise particular caution with new investments, allocating more capital to support the continued development and sustainability of their existing portfolio companies.

Chen Weiguang also believes that leading companies in the mobile healthcare sector will absorb the majority of venture capital (VC) funding. This is because, in certain segments of internet healthcare, the competitive landscape has become relatively clear, and top-ranked players have begun to establish their competitive advantages. VC firms have moved past last year’s “spray-and-pray” phase of casting a wide net; when they see promise in a particular direction, they now concentrate their capital on companies with clear competitive edges and well-defined business models, as this approach offers higher odds of success and greater returns.

From a corporate perspective, capital activities of mobile health enterprises will increasingly tilt toward the secondary market. Chen Weiguang pointed out that there is in fact a linkage between the primary and secondary markets. The fervent venture capital investment in mobile health in 2015 reflected the recognition of the sector by early-stage investors. After establishing a preliminary industry ecosystem, business models, and public awareness, the secondary market, which has higher profitability requirements, will take over from the primary market, granting greater attention and recognition to mobile health.

Specifically, industrial capital in the secondary market will increasingly invest in and acquire mobile health companies, while these companies themselves will accelerate the dismantling of their VIE structures and actively seek domestic listings. Going public will establish financial advantages and financing channels for mobile health companies, thereby accelerating industry consolidation through mergers and acquisitions.

It is foreseeable that in 2016, competition among mobile health companies for various resources will intensify, and market concentration in the mobile health sector will increase significantly.

Focus Areas: Insurance and Vertical Segments to Become Key Priorities for Mobile Health in 2016

Regarding the key development priorities for mobile health in 2016, Chen Weiguang believes that the most noteworthy areas are the integration of commercial insurance with mobile health and the emergence of specialized vertical segments within the healthcare sector.

It has become an industry consensus that commercial insurance will play an increasingly important role in the healthcare sector. Chen Weiguang pointed out that under the traditional healthcare system, controlling medical insurance costs is quite difficult due to institutional and mechanistic issues. However, the integration of commercial insurance with mobile healthcare will create opportunities to address cost-control challenges.

Chen Weiguang believes that the significance of mobile healthcare lies in liberating physicians from long-entrenched interest chains and pricing their professional value through market-based mechanisms. The integration of commercial insurance with mobile healthcare will shift physicians’ financial incentives from alignment with pharmaceutical companies to alignment with insurers, thereby making physicians a direct factor in reducing healthcare costs. Chen Weiguang stated that the convergence of commercial insurance and healthcare has progressed from the conceptual and pilot-testing phase in 2015 to the stage of practical collaboration in 2016, and more substantive projects are likely to emerge in the coming year.

In 2016, another key focus for the development of mobile health, according to Chen Weiguang, lay in niche vertical sectors. This mirrors the evolution of e-commerce: after major platforms such as Taobao and JD.com established monopolistic competitive advantages, entrepreneurial opportunities in e-commerce shifted from platform-based models to vertical-specific ones.

Regarding niche verticals in mobile health, Chen Weiguang focuses on areas such as traditional Chinese medicine (TCM), elderly care, reproductive health, and medical big data. The portfolio companies continue to reflect BlueRun Ventures China’s distinctive insight. Taking Dajia Zhongyi App, a TCM-focused investment by BlueRun Ventures China, as an example, it is not the typical TCM O2O model with immediate monetization pathways commonly seen in the market; rather, it is a tool-based community app dedicated to structuring traditional Chinese medicine knowledge.

Chen Weiguang believes that Traditional Chinese Medicine (TCM) holds many treasures yet to be recognized by modern society. However, the field is fragmented into numerous factions, with knowledge distributed in a disorganized and closed manner, which significantly hinders knowledge sharing, inheritance, and the broader promotion of TCM. The Dajia Zhongyi (Everyone’s TCM) APP addresses this by organizing knowledge points related to TCM herbs, prescriptions, meridians and acupoints, renowned physicians’ case studies, proprietary Chinese medicines, and dietary ingredients. It facilitates knowledge updates and sharing through a community-driven, note-based interactive model. Compared to web-based BBS forums, the Dajia Zhongyi APP offers greater convenience for mobile users and achieves superior knowledge structuring.

Chen Weiguang is highly optimistic about the big data sector in healthcare, with a particular focus on the secondary application of data in areas such as assisted reproduction and chronic diseases related to population health. However, he points out that current hospital information systems remain closed and fragmented. Unlocking market potential will depend on breakthroughs in relevant policies and substantial progress in the opening and sharing of hospital data.

Investment Philosophy: Invest Only in Companies That Solve Fundamental Problems

Chen Weiguang told VCBeat that investors often discuss how investing in mobile health yields slower growth compared to sectors like O2O, the sharing economy, and social networking. Chen Weiguang believes that mobile health is a combination of mobile internet and healthcare. Given its inherent healthcare attributes, it cannot achieve growth rates as rapid as those seen in social or O2O projects, nor can it scale up its size and coverage simply by injecting capital, as is often possible in e-commerce.

This is because healthcare remains a low-frequency event in daily life, and its personalized nature creates a much higher barrier for matching users with doctors compared to social services. While a doctor’s good looks may help them thrive in mobile social circles, the same does not necessarily hold true in the mobile healthcare sector.

Applying e-commerce thinking to the operation of mobile healthcare requires great caution, as users will not purchase more medications simply because they are cheaper or delivered faster. Unlike traditional e-commerce, mobile healthcare must be closely integrated with physician consultation services; however, it is difficult to expect doctors to drive sales in the manner of e-commerce customer service representatives. Therefore, although mobile healthcare appears to be a gold mine attracting a rush of participants, it faces significant challenges.

Chen Weiguang believes that the right approach for mobile health entrepreneurs and investors is to start with passion and a sense of responsibility. They need to gain a deep understanding of the essence of China’s healthcare challenges, remain committed to their original intention of solving these problems, avoid seeking quick success, and not be influenced by other rapidly booming internet business models. Instead, they should proceed step by step at the pace appropriate for the healthcare industry. As Chen Weiguang stated, “Healthcare requires patience.”

Returning to the essence of investment, Chen Weiguang remains committed to focusing solely on companies that address core, fundamental issues. He does not expect portfolio companies to establish mature business models in the short term; however, they must tackle basic, systemic problems by transcending conventional industry wisdom and “challenging assumptions” to discover entirely new ways of solving problems.

This is most evident in the case of Chunyu Yisheng (Spring Rain Doctor). Throughout its development, Chunyu Yisheng has consistently sought to address users’ medical challenges outside the existing healthcare system. From its initial online light consultations to its current model of establishing offline clinics by leveraging underutilized clinic spaces and physicians’ idle time, the company has demonstrated a clear strategy: circumventing the institutional constraints of the current healthcare system while building a user-oriented medical service ecosystem.

Xingshulin and Dajia Zhongyi aim to address the core contradiction in China’s healthcare system—the insufficient supply of high-quality physicians. Both platforms promote the dissemination and updating of medical knowledge through physician-focused tools, as well as knowledge learning and sharing, thereby narrowing the professional gap between primary-care physicians and those at tertiary Grade A hospitals, enhancing the clinical capabilities of general practitioners, and ultimately improving the overall level of healthcare in China.

Chen Weiguang told VCBeat that his final and most important message to entrepreneurs is that BlueRun Ventures China always stands with them, fully leveraging its resources to support every founder, standing by their side through challenging times, and sharing the peaks of success.