2014 China Internet Healthcare Investment and Financing Report

According to statistics from the VCBeat Internet Healthcare Research Institute’s investment and financing database, there were 103 financing events in China’s internet healthcare industry throughout 2014, with a disclosed total financing amount of USD 141.79009 million. Among these, there were 30 angel-round financing events with a disclosed amount of USD 9.6991 million; 48 Series A financing events with a disclosed amount of USD 20.99738 million; 10 Series B financing events with a disclosed amount of USD 14.0275 million; and 10 Series C financing events with a disclosed amount of USD 68.7323 million. The distribution by investment round aligns with the pattern observed in the internet healthcare industry over the past five years (2010-2014 YTD China Internet Healthcare Investment and Financing Report), there are fewer Series B, C, and later-stage financing events, with most still in the early stages.

Wearable Devices Lead Internet Healthcare; Gene Testing Attracts Highest Investment
An analysis of internet healthcare investment and financing data for the full year reveals that capital primarily flowed into ten subsectors. Wearable devices led the investment trend, with 28 companies securing funding and a disclosed total investment amount of USD 198.6086 million. Although wearable device companies accounted for the largest number of funded entities, they did not secure the highest total investment volume. Instead, the genetic testing subsector took the top spot, attracting USD 321.26 million in investment. This outcome was largely driven by BGI Medicine, which introduced 19 institutional investors across three rounds in May and June, raising RMB 2 billion. The pharmaceutical e-commerce sector was similarly impacted; in January, CITIC 21 Century received a USD 170 million investment from Alibaba Capital and Yunfeng Capital, propelling the entire sector to second place in the annual rankings.

Hotspots for Financing Projects – Beijing
In terms of geographic distribution of investments throughout the year, internet healthcare investments primarily covered 13 provinces and municipalities across China. Beijing recorded 35 investment deals, accounting for 38% of the total number of deals; the disclosed investment amount was USD 236.8842 million, representing 16.7% of the total investment value. Shanghai had 16 deals, accounting for 24% of the total number of deals; the disclosed investment amount was USD 84.751 million, representing 6.0% of the total investment value. Guangdong reported 22 deals, accounting for 24% of the total number of deals; the disclosed investment amount was USD 556.4186 million, representing 39.2% of the total investment value. The remaining investments were distributed as follows: Zhejiang with 7 deals; Jiangsu, Shandong, Sichuan, and Tianjin with 2 deals each; and Anhui, Fujian, Shaanxi, Hong Kong, and Taiwan with 1 deal each.

The Most Active Investment Firm—Sequoia Capital
In 2014, the most active investors in the internet healthcare sector included Sequoia Capital China, Matrix Partners China, SoftBank China, Bertelsmann Asia Investments, Ceyuan Ventures, K2VC, and Inno Angels. Sequoia Capital was the most active this year, with its investment activities concentrated primarily during the summer of 2014. Its portfolio companies included Xingren Doctor, Gengmei (formerly known as Perfect Clinic), Dayima, Shengnuo Yijia, and Beijing Universal Jiaping Medical.

Annual Financing Ranking (Disclosed Financing Amounts)

The companies on this list are those that have disclosed their financing amounts, spanning multiple sub-sectors including medical devices, online communities, health applications, wearable devices, pharmaceutical e-commerce, and mobile health apps.

Quarterly Investment and Financing Comparison
Q1 Financing: Wearable Devices Attract the Most Attention
In the first quarter of 2014, there were 26 financing events in China's internet healthcare industry, with a disclosed total funding amount of USD 294.2425 million. Among these, there were 11 angel rounds with a disclosed funding amount of USD 4.3615 million; 8 Series A rounds with a disclosed funding amount of USD 33.275 million; 4 Series B rounds with a disclosed funding amount of USD 26.606 million; 1 Series C round with a disclosed funding amount of USD 20 million; 1 acquisition event with a disclosed transaction value of USD 104.41 million; and 2 IPO or post-IPO financings with a disclosed funding amount of USD 210 million.

This quarter, wearable devices stole the spotlight, marking 2014 as the inaugural year of wearables and shaping investment trends in internet healthcare. The wearable sector saw 11 deals totaling $24.6602 million, ranking third in financing volume for the quarter. Healthcare services followed closely with 8 deals amounting to $62.028 million. Pharmaceutical e-commerce topped the list in financing volume this quarter, driven by CITIC 21st Century’s $170 million funding round from Alibaba and Yunfeng Capital, which significantly boosted its momentum.

Q2 vs. Q1: Increase in Financing Deals and Amounts
In the second quarter of 2014, there were 19 financing events in China’s internet healthcare industry, with a disclosed total funding amount of USD 591.2214 million. Among these, there were five angel-round financings totaling USD 2.4096 million; eight Series A financings totaling USD 67.1418 million; one Series B financing totaling USD 21 million; four Series C financings totaling USD 396.26 million; and one acquisition deal valued at USD 104.41 million. Compared with the first quarter, although the number of financing events decreased, the total investment amount increased by USD 18.6664 million, largely driven by BGI Medicine’s receipt of RMB 2 billion in investment.



In terms of the proportion of investment deals by sub-sector, internet healthcare investments in the second quarter exhibited the following changes compared to the first quarter:
(1) Financing events for wearable devices decreased but still ranked first;
(2) The number of financing events in medical services also declined, with three cases recorded, the same as for health apps and mobile healthcare apps;
(3) One financing round each was secured in the medical device and web portal sectors;
(4) The online community failed to attract attention in the second quarter.

Q3Compared with the previous two quarters: an increase in financing events, with the total financing amount returning to Q1 levels

In the third quarter of 2014, there were 29 financing events in China’s internet healthcare industry, with a disclosed total funding amount of $209.98 million. Compared to the previous two quarters, mobile health applications made a comeback and wearable devices saw steady growth, leading investment trends in internet healthcare. The mobile health application sector saw 6 investments totaling $68.423 million. The wearable device sector recorded 8 investments totaling $41.405 million. Online communities are also making a strong resurgence, with 4 investments totaling $75.326 million, primarily driven by DXY.cn’s $70 million investment from Tencent in early September. Sensors and big data broke the ice compared to the previous two quarters, each securing one round of financing. Meanwhile, medical services, e-commerce platforms, and general health applications followed the trends of the preceding two quarters, remaining lukewarm.

In terms of the proportion of investment volume by sub-sector, internet healthcare investments in the third quarter exhibited the following changes compared to the first two quarters:
(1) The wearable sector continued its steady rise, with the number of investment deals in this field increasing to eight in the third quarter, accounting for 27.6% of total investments during the period and maintaining its leading position.
(2) The mobile health application sector is experiencing rapid growth, with five more deals than in the previous two quarters, making it the second hottest investment area in the third quarter.
(3) The proportion of investments in health applications remained stable, while internet healthcare portals failed to attract attention this quarter.

Q4 vs. First Three Quarters: Investment Proportion Increased
In the fourth quarter of 2014, there were 22 financing events in China’s internet healthcare industry, with a disclosed total funding amount of $228.6464 million. Among these, there were 6 angel-round financings with a disclosed amount of $1.6394 million; 10 Series A financings with a disclosed amount of $19.881 million; 4 Series B financings with a disclosed amount of $91.063 million; and 2 Series C financings with a disclosed amount of $116.063 million.

Compared with the first three quarters, wearable devices have consistently led the trend in internet healthcare investment. Ranking first in both the number of financing deals and total funding amount, the wearable sector saw 8 deals with a total investment of USD 100.882 million. The mobile healthcare application sector has shown steady growth, maintaining stable momentum, with 6 deals totaling USD 104.3178 million. Meanwhile, medical services finally gained significant traction in the fourth quarter, breaking into the top three, with 5 deals amounting to USD 7.223 million.

In terms of the proportion of investment deals by subsector, internet healthcare investments in the fourth quarter exhibited the following changes compared to the first three quarters:
(1) Balanced development in the wearable device sector, maintaining its leading position.
(2) Mobile health applications showed steady growth in the fourth quarter;
(3) Healthcare services exhibited a “V”-shaped recovery, rebounding this quarter with five financing and investment deals.
(4) Volatility trends in the online community sector, characterized by periodic disappearances and reemergences;
(5) Health applications, big data, and medical devices failed to attract attention this quarter, becoming “cold spots.”

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