ETComm (YiTiKang) Files IPO Prospectus Following $4.3M Series A from Matrix Partners China

 

Securing RMB 30 million in Series A financing from Matrix Partners China was, in the view of Zhou Po, founder and CEO of Yitikan, a natural progression.

Despite the widespread industry chatter that “internet healthcare has entered a capital winter,” Zhou Po remains unfazed. “The company has reached the stage where fundraising is necessary. Regardless of the external investment climate, this move must be made. From a longer-term perspective, this round of financing lays the foundation for the company’s rapid growth and higher valuation in the next phase. Time is more important than money.”

In the ECG monitor market, Yitakang has lower brand recognition compared to Zhongwei Laikang, which was established around the same time. After eight years in operation, Yitakang remains a startup. This also marks its first round of financing since its inception eight years ago. Having relied entirely on internal funding and undergone several business model adjustments to persevere until today, the hardships behind this journey are naturally difficult for outsiders to fully appreciate.

The Business Model Iteration of Yitikang

However, entering the healthcare industry was not originally part of Zhou Po’s life plan.

In a high-end office building overlooking Victoria Harbour in Hong Kong, 27-year-old Zhou Po is immersed in his bright visions for the future. He once believed that he would devote his entire life to his beloved telecommunications career.

Two years after graduating from university, Zhou Po had already become a department head at a well-known domestic internet communications company, achieving success at a young age. However, an unexpected twist suddenly emerged in his carefully planned future: the company was acquired. Faced with the choice of staying with the acquiring firm to continue his existing career or leaving to forge a new path, Zhou Po ultimately chose the latter.

During his stay in Hong Kong, Zhou Po observed the widespread popularity of the local “Safe Call” service for home-based elderly care. Operated by the Elderly Home Safety Association, this service provides 24/7 support. Users simply need to press a button on the main unit or a wearable remote control to summon assistance; emergency response personnel can then communicate with the user through the in-home device to assess their needs and provide appropriate services. This experience led Zhou to recognize the potential application of IT technology in the elderly care and health sectors. Coincidentally, his former graduate school classmates at the Chinese Academy of Sciences, Zhao Junlin and Kuang Jinghui, specialized in the acquisition and transmission of human physiological signals. The three quickly found common ground, thereby embarking on their entrepreneurial journey.

Survival is more important than anything else.

When Yitikang was first established, Zhou Bo’s vision was straightforward: to develop an ECG monitor capable of connecting to the internet. “It is definitely a trend to connect all home health devices to the internet using IT methodologies.”

At that time, there were no home-use medical devices in China for disease monitoring in cardiovascular patients, and traditional hospital electrocardiograms (ECGs) could only be interpreted by specialized physicians. Zhou Po believed that home ECG monitors would undoubtedly have substantial market demand.

Unfortunately, Yitai Kangsheng was born at the wrong time.

In 2007, when concepts such as “wearables,” “mobile health,” and “IoT (Internet of Things)” had not yet emerged in the Chinese domestic market, Yitijiankang developed China’s first-generation internet-based electrocardiogram (ECG) device.

“They envisioned connecting electrocardiogram (ECG) monitors to computers, using the computers to process ECG data. Not only would the computer screens be large enough for clear visualization, but the data could also be transmitted to physicians via the internet. ‘At that time, this was truly an exciting idea,’ said Mr. Zhao Junlin, Co-founder and CTO of Yitijkang, in an interview with VCBeat.”

A computer manufacturer suggested bundling electrocardiogram (ECG) monitors with computers for joint sales, leveraging its years of established distribution channels to ensure strong market uptake. However, reality delivered a harsh setback. First, the primary user base for ECG monitors consists of middle-aged and elderly individuals, among whom computer penetration is low, and the subset capable of using computers is even smaller. Second, single-lead ECG monitors have gained limited recognition among physicians. Consequently, the first-generation product suffered from severe sluggish sales.

“We produced 1,000 units of the first-generation ECG device, and more than 400 units remain in inventory to this day.” Zhou Bo stated that blind optimism led to the ultimate failure of the first-generation product.

“Failing to conduct market research, neglecting a deep understanding of user needs, and harboring blind optimism are critical challenges that entrepreneurs must overcome from the outset.” This is the lesson summarized by Zhou Po.

Recognizing the lack of distribution channels in the consumer (C-end) market, Yitijiankang began to adjust its business model, shifting its focus to the business-to-business (B-end) sector. By providing relevant health-related products and technical support to companies such as Neusoft Xikang, Winning Health Technology, and Founder Medical, it carved out a niche for survival.

“At that time, my biggest task was to keep the company alive,” Zhou Bo told VCBeat. At its peak, Yitikang had 32 different products on the market, some of which were primarily purchased by customers as demonstration units.

In retrospect, Yitikang’s rapid pivot to the B2B market proved to be a highly strategic decision. In contrast, Life Online, founded in the same year, persisted in exploring the B2C market and ultimately ended in failure.

Moreover, currently only single-lead ECG devices are available in the consumer market, but their practical value for users is limited. On one hand, the accuracy of single-lead ECG detection is not high; on the other hand, even if an electrocardiogram is obtained, ordinary users cannot interpret it.

In 2010, Yitijian developed the second-generation electrocardiograph (ECG), namely the HC-201 ECG device included in the currently marketed “Heart Care Kit.” Compared with Yitijian’s first-generation ECG, the core advantage of the second generation is the addition of a color display, enabling standalone operation without a computer and accurate recording anytime, anywhere. To date, nearly 50,000 units have been sold.

In October 2014, Yitijkang partnered with the Chunyu Doctor platform to launch an ECG monitor kit. This kit included a portable ECG monitor, a Health Companion gateway, and three months of complimentary VIP service on the Chunyu Doctor platform, officially initiating the exploration of a model that integrates medical hardware with online physician consultations.

The HC-201 portable ECG monitor offers two testing methods: handheld and external lead connections, and is equipped with a color display. In handheld mode, users can complete an ECG test in approximately 20 seconds by simply tapping “Start Test.” The first page displays heart rate and ST-segment monitoring results, while the second page indicates whether the results are normal. If abnormalities are detected, the device will prompt the user to consult a physician.

Although the partnership with Chunyu has brought Yitijian a certain volume of users and revenue, the maturity of its ECG monitor products in the consumer market remains low.

“At present, among domestic home medical devices, no other product has achieved the same high penetration rate as blood pressure monitors, because no other product offers such ease of operation and directly displays final results in numerical form,” said Kuang Jinghui, Co-founder and Production Director at Yitijkang. The 12-lead electrocardiogram (ECG) is the gold standard for cardiac monitoring, but its complex operation means that only physicians are interested in using such devices.

With the rise of internet-based healthcare, an increasing number of ECG devices have flooded the market. Zhou Po realized that collaborating with third parties to provide corresponding ancillary health products and technologies was not a sustainable long-term strategy. Yitikang had to forge a path of differentiated competition.

Seizing the Untapped Grassroots Market

As early as two years ago, Zhou Po identified certain issues in township health centers and rural clinics: after deploying devices such as electrocardiographs to these facilities, village doctors demonstrated low enthusiasm for their use.

First, village doctors do not use electrocardiographs in a standardized manner; second, they are unable to interpret electrocardiogram (ECG) readings, with no one available to assist them in this task. The most fundamental reason, however, is that there is no financial incentive for village doctors to perform these services, thereby eliminating any motivation to do so.

After conducting market research, Yitikang discovered that while electrocardiogram (ECG) devices are essential for village doctors, there is a stronger demand for 12-lead ECG machines rather than single-lead models. “Single-lead ECG devices cannot detect issues associated with certain specific conditions,” explained Zhao Junlin.

On the other hand, village doctors now have basic hardware infrastructure such as internet access and computers. They have an urgent need to improve their diagnostic and treatment capabilities, and the use of portable medical devices is one way to address this issue.

Zhou Po discovered that, compared with doctors at large hospitals, village doctors face greater medical risks; a single medical malpractice incident could potentially bankrupt them. Most of these medical risks are triggered by conditions such as atypical myocardial infarction. However, there is currently no 12-lead ECG system on the market specifically developed for the use cases of primary care physicians to provide timely risk alerts to village doctors. Yitijian Kang identified this as their opportunity.

First, Yitakang has customized products for village doctors at the primary care level; second, Yitakang collaborates with experts to provide timely ECG interpretation for primary care physicians through an internet-based platform.

In terms of business model, Yitijiankang adopts a revenue-sharing model to ensure doctors’ continued motivation to use the ECG devices. In terms of pricing, Yitijiankang’s 12-lead ECG device costs only RMB 2,000–3,000.



(The Yitijian ECG device requires only powering on and measuring; the data is then automatically uploaded. This user-friendly, straightforward operation is one of the hallmarks of an internet-based product.)

To address potential misuse of ECG devices by village doctors, Yitikang has implemented restrictive measures such as “lower subsidies and higher fees.” “Instances of village doctors misusing ECG testing are rare,” explained Zhou Bo. This is partly due to the unique neighborly relationships in rural communities, and also because village doctors operate as a highly market-oriented group. “Their income levels are determined by the quality of their medical skills and service.”

Yitijian also provides corresponding training for village doctors. Zhou Po introduced that village doctors have a strong desire to learn, and they cover their own accommodation and meals during the training. "If our training can help them, they will be motivated to learn; if they can earn money, they are willing to continue using Yitijian's products."

According to Zhou Po’s vision, village doctors, as a small B-end segment, actually represent a major channel, and Yitijiankang will play a role similar to that of a “virtual commercial company” in the future.

“Village doctors interact directly with patients; by leveraging their role, collaborations with pharmaceutical manufacturers, physical examination providers, and insurance companies can be facilitated.” In Zhou Bo’s view, using internet-based technologies to enable village doctors to conduct ECG monitoring is a relatively high-frequency activity, whereas low-frequency services such as physical examinations and insurance represent extended offerings. This creates a model in which high-frequency services drive the adoption of low-frequency ones. However, Yitijkang is still further exploring the specific forms of collaboration.

Currently, there are 1.35 million primary care physicians in China. If 100,000 of them adopt Yitikang’s products, it would unlock significant market potential.

From the current perspective, Yitijkang has differentiated itself from other similar products in terms of positioning: if home medical devices detect any issues, patients should definitely seek medical attention at a hospital first, whereas Yitijkang’s products are positioned to assist doctors in identifying problems for referral or providing some basic treatments.

Zhou Po candidly stated that equipping village doctors with ECG devices is merely the first step; enhancing their engagement to ensure sustained usage presents a new challenge for Yitijiankang. Once its ECG product line matures, Yitijiankang plans to launch additional customized products tailored to the specific workflows of village doctors.

Avoid tasks outside one's expertise.

According to Zhou Po, Yitikang had already achieved annual sales revenue exceeding RMB 10 million as early as two or three years ago, despite having a relatively small sales team. “We are a technology-driven company, with our core resources and efforts focused on product-related activities.”

Another major reason for not building a large sales force is that Zhou Po has positioned Yitikang to avoid asset-heavy business models. Moreover, operational management is not Yitikang’s core competency. Zhou Po hopes that the ECG devices specially tailored for village doctors will become “products that village doctors recommend to one another.” The path to achieving this goal lies in leveraging various internet-based promotion strategies and methods.

The gradual relaxation of policies on physicians’ multi-site practice has also created favorable conditions for Yitikang. The company is partnering with more physician groups rather than building its own physician team to serve the primary care market.

What brings Zhou Po the greatest satisfaction is that Yitijkang has successfully navigated the “seven-year itch” of its founding team. This team cohesion is also what Matrix Partners China values most: “The three co-founders have been together for nearly a decade without raising any external funding, yet they have managed to grow the company to its current stage. This not only demonstrates their capabilities but also highlights their strong cohesion,” said Yu Zhiyun, Investment Director at Matrix Partners China, in an interview with VCBeat.

Despite the arguments, conflicts, and even a crisis that nearly led to dissolution during this process, their original commitment to pursuing a perfect product has never wavered. Their initial vision of leveraging internet-enabled home medical devices to facilitate user health management is also being realized step by step.

Yitikang is also planning a business line focused on health management for corporate employees. By partnering with medical examination institutions and small hospitals, the company aims to transform medical check-ups—typically low-frequency events—into higher-frequency interactions. “We provide the corresponding technical services, while our partners, such as medical examination companies and hospitals, deliver the medical services,” said Zhou Po.

Monitor employees' post-examination health status and provide customized disease management through online tools such as mobile apps and WeChat; integrate team-building activities with mobile internet technologies to develop sustainable online-to-offline (O2O) engagement programs, thereby strengthening team cohesion and enhancing user stickiness.

Following the fundraising, Yitijiankang will enter a new phase of development, with its primary focus shifting to the grassroots market. Consequently, Zhou Po’s role will undergo certain changes. Previously serving as the company’s sales ambassador, he is now assuming more responsibilities akin to those of a product manager—a role that naturally requires spending more time engaging with users.

During the interview, topics were frequently discussed in the WeChat group of village doctors where Zhou Po was a member. He has become a friend to these village doctors, rather than maintaining a simple client relationship. For Zhou Po, visiting grassroots levels is a common occurrence, and he has long been accustomed to sharing meals and accommodation with village doctors.

Zhou Po once believed that starting a business was a straightforward endeavor. Before founding Yitikang, he had participated in the establishment of a cybersecurity company, which yielded substantial financial returns in a short period. However, developing internet-based healthcare products is evidently more challenging than working in cybersecurity. Pioneers in the digital health sector, such as DXY and Haodf.com, are still exploring viable business models. Once committed to this field, founding teams must possess unwavering determination and perseverance. At the same time, they need to remain flexible, learning through trial and error, and growing with each iteration.