Amid Funding Winter, Panlin Capital Raises $2.1B to Double Down on Innovative Biopharma and Healthcare Investments

Amid the widespread chill in the venture capital and private equity industry, another fund has successfully completed a counter-trend fundraising.

Recently, Panlin Capital announced anotherHealthcare Venture Capital Fund—Hangzhou Panlin Xukang Fund Announces Completion of Second Closing and Paid-in Capital RaiseIt is worth noting that this is the second venture capital fund announced by Panlin Capital this year.

From a data perspective, Panlin Capital has raised over RMB 1.5 billion in total funds in the past two years, an achievement that is particularly remarkable against the backdrop of widespread fundraising difficulties in the industry.This outcome stems from Panlin Capital’s long-term focus and significant investments in the two major sectors of healthcare, To-B, and technology.

Taking healthcare as an example, Panlin Capital primarily invests in the prevention, diagnosis, and treatment of major diseases with unmet clinical needs.Innovative Drugs and Innovative Medical DevicesR&D enterprises, as well as derivative opportunities in life sciences and biotechnology. In recent years, a series of achievements have been realized: industry leaders such as Kangtai Biological (300601) and Hybribio (300639), which are already listed on the main board, represent an impressive track record delivered by Panlin Capital during its early development stage. Furthermore, by reviewing public information on star enterprises in various niche sectors in recent years, VCBeat has found that Panlin Capital frequently appears in the financing records of companies such as Ribo Life Science, Syntekabio, GenFleet Therapeutics, QinheLi, Fenuo Jian Biotech, Jinshi Bio, and Kesarui Bio. According to rough estimates based on VCBeat’s statistical data,Panlin Capital achieved substantial paper returns through multiple rounds of investment in these high-profile projects.

In addition, VCBeat also found thatCGT Sector, iPSC Regenerationin emerging and hot sectors such as domains, the name of Panlin Capital also prominently appears on the shareholder lists of early-stage projects such as Zhixin Haozheng, Zhishan Weixin, Dina Yuansheng, Xingyi'ang, Chengdu Xianyan, and Lingbo Bio.

“This outcome reflects Panlin’s strategic deployment across different stages, guided by a consistent underlying logic. The companies invested in during Panlin’s early phase successfully listed on the A-share market, laying a solid foundation for its healthcare investment growth. In the second phase, portfolio companies helped practice and shape Panlin’s healthcare VC investment methodology, with many now progressing through IPO processes. Meanwhile, half of the early-stage companies positioned by Panlin in the third phase over the past two years have already completed one or even two subsequent financing rounds,” added Li Yuhui, Founding Managing Partner of Panlin Capital. “This has established a robust, stepwise evolution of Panlin’s healthcare VC investment strategy and a virtuous cycle of investment returns.”

In fact, from the perspective of investment stages and trajectories of portfolio companies,Panlin Capital can sense the shifting tides of the industry ahead of its peers and has the courage to take the lead in “pioneering new frontiers.”: In early 2018, Panlin Capital was the first in the industry to publicly propose “Spring Has Arrived for Innovative Drug Investment”. Around this year, Panlin Capital again proposed “The Time Has Come to Invest in China’s “Source Innovation””. Panlin Capital’s investment judgments and practices were ultimately validated by the industry’s subsequent mainstream trends. Such qualities are of paramount importance in the venture capital and private equity sector—It not only demonstrates the institution’s professionalism but also enables it to secure a strategic position ahead of emerging trends, ultimately yielding substantial returns.

Following an interview with Li Yuhui, Founding Managing Partner of Panlin Capital, VCBeat has gained a clear understanding of the medical investment journey of this fund, which has been in operation for nearly 14 years and successfully navigated two investment cycles, and has perceivedThe Underlying Logic Behind Panlin Capital’s Ability to Accumulate Resources Against the Tide During the Downturn and Secure a Prominent Position in China’s Healthcare Investment Sector, Particularly Within the Innovative Biopharmaceutical VC Circle: Professional Insight, Methodology, Team Track Record, and the Steadfast Support and Trust of Investors and the Industry Ecosystem.

“Although innovative drugs are currently in a downturn cycle of capital, with many investors adopting a wait-and-see attitude, butThe long-term investment thesis for healthcare remains unchanged; biopharmaceuticals represent a true “long slope with deep snow.”“Li Yuhui said confidently.”

It must be acknowledged that the prolonged venture capital winter, coupled with the sluggish performance of the healthcare sector in the secondary market, has led to spreading pessimism across the entire healthcare investment landscape. Many investment firms and limited partners (LPs) have begun to reduce or even completely withdraw from healthcare investments.

However, Panlin Capital "went against the current,"Not only did it successfully raise funds against the current market headwinds, but it also chose to deepen its commitment to healthcare investment, particularly in the field of innovative drugs.

“We didn’t deliberately pick a specific timing for fundraising; instead, we have been proceeding according to our established development rhythm,” Li Yuhui told VCBeat. In the field of healthcare investment, Panlin Capital’s investment strategy has evolved through several key milestones: from its early days, when it invested in Kangtai Biological and Hybribio based on growth-stage logic, to its transformation into a venture capital firm in 2014, making early-stage healthcare investment one of the two core directions of Panlin VC, and then in 2018, ahead of the industryBetting on Innovative Drugs Entering Their “Spring”, and currentlyFocusing on China's "Source Innovation"Bio-tech Opportunities.

In Li Yuhui’s view, China’s vast population base, particularly the unmet clinical needs driven by aging, is the primary force propelling the continuous development of China’s innovative biopharmaceutical and medical device industries. Meanwhile, advances in life sciences and biotechnology are driving ongoing progress in the research and development (R&D) of innovative drugs and medical devices. Concurrently, domestic policy support encourages continuous innovation in biopharmaceutical and medical device R&D; entrepreneurship and innovation among overseas-returning and locally trained scientists are gaining momentum; and the continuous enhancement of domestic talent pools and industrial infrastructure, such as contract research, development, and manufacturing organizations (CXOs), are collectively enabling the sector for innovative drugs and medical devices in China to gradually achieve breakthroughs.

“From a long-term perspective, the healthcare sector—particularly innovative drugs and medical devices—boasts enduring industry prospects, harboring significant investment opportunities. This is a classic case of ‘a long slope with thick snow’ (i.e., a business model characterized by sustainable growth and strong competitive moats). The long-term certainty of this investment outlook remains unaffected by short- or medium-term market fluctuations.”

Regarding the “chilling cold” currently felt in the industry, particularly in the innovative drug sector, Li Yuhui analyzes that this reflects the objective laws governing the development of the innovative drug industry: “It is a natural correction following a wave of high growth, which is entirely normal.” This trend should not be simplistically attributed to the suppressive impact of policy changes such as volume-based procurement (VBP). “On the contrary, policy shifts are conducive to allowing truly innovative drugs to stand out.” Coupled with headwinds in the capital market, the industry is indeed exhibiting characteristics of a “winter” marked by a double downturn. Nevertheless, against this market backdrop, domestic innovative drug R&D continues to achieve breakthroughs. China is demonstrating parity with Europe and the United States in areas such as CAR-T cell therapy and iPSC-based regenerative medicine. Meanwhile, in fields including tumor immunology (ADCs), autoimmune diseases, novel tumor immune targets (KRAS, CSF-1R), small nucleic acid technology platforms, and AAV gene therapy pipelines, Chinese companies are continuously securing overseas clinical trial approvals and forging commercial collaborations with major international pharmaceutical firms, indicating that the level of China’s innovative drug development is gaining recognition from global peers.

“The road is long and arduous, yet perseverance leads to arrival; continuous effort promises a hopeful future.” Panlin Capital firmly believes that the past three years have witnessed the gradual subsiding of market clamor and the clearing of bubbles, marking a return to rationality within the industry. Three years have passed,As the market clamor gradually subsides, professional healthcare investment funds are seizing the optimal moment to carefully select their investment targets in the aftermath.

However, Li Yuhui pointed out, “Unlike the period from 2016 to 2019, the current shifts in the broader landscape of innovative drugs have raised the bar for both entrepreneurs and investors in this field.。”

Specifically in the field of innovative drugs, the local healthcare industry has witnessed a wave of innovation drug development in China, with many outstanding scientists possessing extensive industry experience embarking on entrepreneurial journeys. “In the past, a large number of ‘me-too,’ ‘me-better,’ and ‘best-in-class’ products/companies emerged; later came ‘first-in-class’ innovations; now the requirements are even higher,”Enterprises need to advance toward more challenging technological origins and frontiers.“, which is what we refer to as investing in ‘source innovation,’” said Li Yuhui.

Therefore,What remains unchanged? The long-term investment thesis for the healthcare and biopharmaceutical industries remains intact. What has changed? The bar for innovation and investment criteria has been raised, and the targets of investment are undergoing substantial shifts.

It is precisely based on the aforementioned insights and prior practices that Panlin Capital can accurately perceive trends and make informed judgments, thereby earning continuous recognition from its limited partners (LPs).Taking the Panlin Xukang Fund, which recently completed its fundraising, as an example, it has garnered support not only from existing investors of Panlin Capital but also from a series of new institutional investors.

From the list, it includes: Hangzhou's municipal and district-level industrial guidance funds--Hangzhou Sci-Tech Innovation Group, Hangzhou Xiaoshan International Venture Capital, state-funded platform Chengdu Science and Technology Innovation Investment Group, state-owned market-oriented financial institution Zhongyuan Trust (proprietary funds); listed companies HitGen (688222.SH), Leo Group (002131.SZ), I-Mab (IMAB.US); market-oriented financial institution Chunshi Capital; In addition, Panlin’s existing LPs, represented by high-net-worth individuals and entrepreneurs, joined as cornerstone investors, with a reinvestment rate exceeding 40%.

From government-guided funds and state-owned enterprises to listed companies and market-oriented financial institutions, the diverse investor base not only demonstrates widespread recognition of Panlin Capital but also underscores how its differentiated cognitive advantages meet the varied demands of all stakeholders.

Li Yuhui attributes the foundation of all this to “prioritizing early-stage performance and cognitive alignment.”

So, with ample “ammunition” secured, how will Panlin Capital’s new fund deploy its strength next?

In the selection of niche segments,Panlin Xukang Fund will focus on “source innovation” by strategically investing in niche sectors such as cell and gene therapy (CGT), iPSC-based regenerative medicine, central nervous system (CNS) disorders, tumor immunology, high-value cardiovascular consumables, and innovative in vitro diagnostics (IVD).

Panlin Capital believes that domestic basic scientific research has gradually become more solid, the industrial chain is being progressively perfected, and high-end scientific research talent continues to return. These factors have provided robust infrastructure for the medical sector, particularly for the implementation of innovative biopharmaceuticals. China itself possesses a favorable ecosystem and soil for “source innovation,” leading to the continuous emergence of numerous companies focused on such original innovation.This presents huge market opportunities for Panlin Capital's "source innovation",” pointed out Li Yuhui.

Panlin Capital has provided its own definition of “source innovation.”

Li Yuhui pointed out that in the past, many startups introduced targets or drug modalities already validated abroad into China; now, many domestic founding teams, leveraging their solid scientific research accumulation in specific fields over many years, are able to translate their achievements into new technology platforms or novel drug modalities, thereby addressing major clinical pain points and meeting unmet clinical needs.These novel drug formulations and technologies are in their very early stages, closely mirroring the development phases of comparable foreign companies. Moreover, many of their technical features and mechanisms of action stem from scientists’ original research findings, with virtually no direct counterparts abroad.

With these definitions and personas clearly established, a clearer direction emerges.

“WeStill starting from rigid demand“Over the past few decades, the disease spectrum has shifted sequentially from infectious diseases and cardiovascular diseases to malignant tumors, autoimmune diseases, neurodegenerative diseases, and other conditions. Our source innovation must be translated into clinical applications targeting specific indications, whether for innovative drugs or medical devices,” said Li Yuhui.Following the evolution of indications, Panlin Capital has, over the past two years, leveraged source innovationIt has successively invested in early-stage companies such as Zhixin Haozheng, which treats type 1 diabetes with regenerative islet technology; Zhishan Weixin, which treats genetic and neurodegenerative diseases using rAAV technology; and Xingyiang, a developer of iPSC-CAR-NK cell therapy products.

as the lead investor announced by Panlin Capital in NovemberLingbo Biotechas an example—this is a platform-based enterprise focused on the R&D of regenerative tissue engineering and artificial organs, founded by Professor Kong Deling, Director of the State Key Laboratory of Medicinal Chemical Biology at Nankai University.

From a product perspective, Lingbo Biotech’s bioengineered artificial blood vessels achieve an organic integration of polymer materials with bioactive decellularized matrices, offering superior biocompatibility and long-term patency rates, thereby significantly reducing the incidence of vascular stenosis and occlusion.The current R&D progress is internationally leading, and success will hold significant industry implications.

Another example is the exclusive investment announced by Panlin Capital in OctoberDina YuanshengThe company focuses on the development of novel nucleic acid self-assembly technologies, leveraging them as carriers to create organ- and cell-targeted nanomedicines, thereby enabling precise, efficient, and safe delivery of various therapeutic modalities—including nucleic acid drugs, small-molecule drugs, and protein therapeutics—within the human body.

It is particularly worth noting that in the field of small nucleic acid drug delivery, Dinayuan Sheng’s next-generation drug delivery platform, “DNA Nanocarrier,” has demonstrated significant potential by combining safety with targeted delivery.Promising to address the industry-wide pain point of extrahepatic targeted delivery for oligonucleotide therapeutics.

As is evident from the above, Panlin Capital tends to invest in technologies that feature high technical barriers, have been thoroughly validated in academia, and remain in a blue-ocean stage within the industry.

However, given the higher barriers and greater risks associated with source innovation, Panlin Capital faces a critical challenge: beyond making precise trend judgments, how to grow alongside founders and their startups within a relatively limited investment horizon, how to accelerate the translation of technology into products, and how to drive the industrialization of R&D-focused enterprises, thereby achieving timely investment exits.

Under the spotlight, pioneering biopharmaceutical innovation projects have captured widespread attention, yet the journey from a mere seed to sprouting and ultimately growing into a towering tree is by no means easy.

“As companions to innovation and entrepreneurship projects, investors’ ability to evaluate, identify, and make investments is only one aspect; what is even more critical is having the patience to accompany enterprises through their long-term growth,” Li Yuhui told VCBeat.“Early recognition, strategic positioning, meticulous cultivation, long-term partnership, and multi-round capital injections to transform dark horses into white horses constitute the investment methodology that Panlin Capital has distilled from years of practice. This approach is particularly crucial in healthcare investments.” This is vividly demonstrated by Panlin’s early successful investments in Kangtai Biological Products and Hybribio, two companies supported during the early stage of Panlin’s healthcare investment development. Data shows that Panlin completed three rounds of investment in each of these enterprises prior to their IPOs.

Taking Ribo Life Science, which focuses on innovative small nucleic acid drugs, as an example, Panlin Capital has continuously increased its investment since participating in the company’s Series A financing in 2015, followed by additional investments in its Series B, Series C1, Series C+, and the Series E1 round launched in 2022, thereby supporting the enterprise from its early stages through to the mid-to-late stages.

Another example is Qinhe Li, a company with a drug development platform responsive to the tumor microenvironment. Panlin Capital led its Series A round, helping the company restructure its angel-round equity holdings that were ill-suited for startup growth, and subsequently made additional investments when a large state-owned investment institution led the Series B round. For Funuo Jian Biopharma, an innovative oncology drug developer, and GenFleet Therapeutics, a developer of “global-first” small-molecule drugs, Panlin Capital made substantial follow-on investments in two subsequent rounds after its initial investment in each company.

Another example is Jinshi Bio, an innovative R&D enterprise specializing in high-end medical devices for structural heart disease. This was a project that Panlin Capital identified early on and waited patiently for the right opportunity to invest in, later making significant additional investments in its Series C round led by Sequoia Capital.

It is understood that within Panlin Capital’s overall investment portfolio, projects subject to substantial follow-on investments account for more than 45%.

“Furthermore, in the early development of biopharmaceutical companies, apart from the main thread of financing, KeScience and Technology / Transforming Early Discovery into Products, Transitioning R&D Products to Industrialization, and Converting Scientists into Entrepreneurs“are the three biggest challenges for early-stage innovative startups,” introduced Li Yuhui. And this is precisely the key focus that Panlin Capital, which has long been dedicated to biopharmaceutical investments, has consistently emphasized and strived to help portfolio companies achieve.

To better support enterprises and help them avoid pitfalls in achieving the “Three Transformations,” Panlin Capital has assembled an investment team grounded in professional and industrial expertise, supplemented by internal senior investors and external scientific advisors. This team possesses a composite background integrating “industry, investment, and international perspective,” enabling a profound understanding of industry consolidation and capital markets.

“This enables us to resonate strongly with our portfolio companies.” said Li Yuhui.

In addition to the academic and industry expertise of its investment team, Panlin Capital has also established a dedicatedPost-Investment Management Committee, to track corporate development trends, address development challenges and business needs, and complement the project investment team by facilitating resource integration, providing strategic guidance, offering advisory services, and delivering emergency support.

“From Panlin Capital’s perspective, post-investment support encompasses multiple dimensions, including industry resources, management expertise, and investment banking services. Leveraging our industrial background and ecosystem, we strive to connect portfolio companies with relevant industry resources. This is particularly valuable when founders face strategic decisions or uncertainty; in such moments, the experience of investors from other mature enterprises or different sectors becomes invaluable. At these times, Panlin Capital is committed to sharing its insights generously and responding promptly to corporate needs. Drawing on our investment banking background and experience, many founders of companies preparing for IPOs proactively consult us on their listing strategies. Additionally, when companies undergo organizational upgrades and seek to recruit Chief Strategy Officers (CSOs) or Chief Financial Officers (CFOs), they often approach Panlin Capital’s directors or partners for candidate recommendations or interview assistance. Furthermore, as many innovative pharmaceutical companies navigate site selection for industrialization during commercialization, we take the lead in facilitating connections with government industrial parks and other related resources.”

“But if a company’s fundamentals—particularly its product R&D progress—are sound, yet financing is delayed due to the broader market environment, leading to temporary difficulties, investors then face the question of ‘whether or not to help,’” said Li Yuhui.Panlin Capital’s answer is affirmative. “We may consider continuing our investment, or helping the company strengthen its financial planning to navigate temporary financial difficulties.”

“Of course, many VC firms engage in these activities, but the key question is whether they can sustain such efforts. At Panlin Capital, we strive to leverage our own resources and core strengths to provide post-investment value-added services that support companies and founders without causing disruption. This approach is an integral part of Panlin’s ‘source innovation’ investment strategy, serving as an effective means to enhance returns on early-stage investments and mitigate investment risks—a consideration particularly critical in early-stage healthcare investing. Once the seed has been planted and the sprout has emerged, growing into a towering tree requires ample sunlight and rain. While this demands multi-party collaboration, Panlin Capital, as an institutional investor and shareholder, is committed to contributing actively and helping portfolio companies connect with and mobilize additional resources.”

“It is precisely the amicable relationship built on deep mutual trust that has granted Panlin Capital corresponding investment initiative when dealing with companies holding increasingly prominent advantages. ‘We have gained a thorough understanding of these enterprises, and they are willing to accept our additional investments in subsequent financing rounds.’”

Thanks to long-term support and professional companionship, Panlin Capital has gained continuous recognition from its portfolio companies, which have steadily increased their investments.

It is worth noting that,In the current landscape of healthcare investment, cross-sector collaboration has become a significant trend, and helping portfolio companies improve resource alignment has emerged as a key industry pain point.Panlin Capital has established a relatively comprehensive system, thanks to its years of strategic presence across multiple niche sectors and its access to rich and diversified limited partner (LP) and industry resources.

For instance, in facilitating government-enterprise collaboration, Panlin Capital has developed a strategic plan for the biopharmaceutical industry based on the local Airport Economic Zone Industrial Park in Xiaoshan, Hangzhou, successfully introducing its portfolio company—a digital and intelligent pharmaceutical cold-chain service platform—Dushi Pharmaceutical Supply Chain’s establishment and implementation helps the industrial park achieve early layout of intelligent logistics within the biopharmaceutical industry chain.It is reported that a series of Panlin Capital’s high-potential projects are being progressively implemented, truly achieving a win-win outcome for both enterprises and government industrial parks.

From long-term companionship through multi-round investments to the professional construction of investment teams and systems, as well as the refinement and deepening of post-investment management services, Panlin Capital has accelerated its evolution, establishing a new paradigm for healthcare investment and project management.

Currently, the narrative logic of healthcare venture capital in China is quietly evolving:From follower or imitative innovation to original innovation, and from U.S. dollar funds shouldering the bulk of the load to RMB funds playing an increasingly important role, the healthcare investment industry is undoubtedly entering a new period of opportunity.

From a national perspective, technological innovation has been placed at the core of China’s modernization drive. According to data from Xinhua News Agency, China’s research and experimental development (R&D) expenditure as a share of GDP rose steadily from 1.91% in 2012 to 2.54% in 2022, marking rapid growth. In 2022, total societal R&D spending surpassed RMB 3 trillion, making China the world’s second-largest economy in terms of R&D investment. This indicates that the industrialization wave of frontier technologies in China is poised to enter a window of dividend opportunities.

From the perspective of China’s healthcare industry, extensive growth has reached an inflection point, and the combined effects of a more robust regulatory framework, capital market corrections, and macroeconomic cycles are beginning to take hold. The industry is increasingly calling for companies with differentiated innovation capabilities that can offer products with strong clinical utility and market potential to meet the challenges of international expansion and drive industrial iteration and upgrading.

“Panlin Capital, a RMB-denominated fund that has focused on “technological innovation” since its inception, has undergone the rigors of two full investment cycles and forged a mature methodology for early- to mid-stage investments in sci-tech enterprises.“Li Yuhui told VCBeat that Panlin Capital will continue its professional and pragmatic investment strategy, evolve continuously, deliver substantial returns to investors, and support the nation’s technological innovation endeavors.”

Li Yuhui also mentioned,Despite the innovative drug industry being in a downturn of capital, the industry must not waste any crisis.VCBeat’s observation of the evolution of the global biopharmaceutical industry reveals that each cycle brings a period of frenzied, high-speed growth, leading to bubble accumulation; these bubbles then burst amid treacherous challenges, yet the overall trend continues to rise through twists and turns. Innovative companies that pursue deep, sustained breakthroughs will ultimately reap the substantial rewards of industry development.

For instance, during the previous cycle, the number of new drugs launched in China and the scale of clinical trials both increased significantly. Capital momentum tailored to the new drug ecosystem and regulatory frameworks aligned with international standards gradually fell into place, while the nascent industrial chain and talent system have become a solid foundation for the industry’s sustainable development.

Therefore, in the period ahead, China's biopharmaceutical industry, on its journey toward "source innovation,"As long as sufficient professionalism, strategic focus, and patience are maintained, China is poised to see the emergence of a cohort of biopharmaceutical companies with global influence over the next 10–20 years. These enterprises will lead industry development and articulate a distinctive narrative of Chinese innovation.

Along with this comes,Behind these world-class biopharmaceutical enterprises, a cohort of investment firms heavily invested in China and continuously betting on source innovation in biomedicine will inevitably rise.