Internet Medical Survival Report: Where are the 533 companies that received investment in the past five years now?

The first batch of Internet medical companies began to be established around 2011. 2014-2015 marked the peak of the development of Internet + medical care, and a large number of companies that received high amounts of financing emerged. But after the second half of 2015, the debate over Internet medical care or medical Internet has never stopped, centering on the focus topic of commercial monetization.

Since 2016, with the cooling of the secondary market, the capital winter theory has become popular in various fields, and Internet medical care has also been affected. Every layoff, corporate transformation or closure will become "ironclad evidence" of the capital winter theory. For example, the recent layoffs at Xunyiwenyao and Jiuyi160, as well as the exit of Yaogeili, have all gone viral on WeChat Moments.

As a media outlet deeply involved in the field of Internet healthcare, Artery Network has decided to once again carefully review the actual development of Internet healthcare over the past five years. We will use data to tell whether capital is experiencing a cold winter or a warm winter, and whether startups are lucky or miserable.

Over the past month, Artery Network has compiled data on 1,134 Internet + healthcare industry companies that have been established since January 2011, and focused on statistics on more than 20 dimensions of data such as industry categories, financing data since establishment, financing rounds, founder backgrounds, company survival status, and death time of 533 companies that have received investment. We then clean and analyze the above data and compile a report on the industry's survival status.

Let me first share with you some of the insights we gained through the data:

1. Among the 533 companies that received investment, the survival rate exceeded 80%, which shows that investors have good vision.

2. Entrepreneurs from the medical field have a lower mortality rate.

3. Several specialized fields have achieved good development.

4. Capital has been increasing investment in Internet healthcare

…

From January 2011 to date, a total of 1,134 Internet + medical companies have been established in China, covering 10 fields including health care, medical diagnosis and treatment, specialist services, medical information technology, and biotechnology. Among them, there are 533 companies that have received institutional and individual financing. We will focus on analyzing the data and survival status of these 533 companies, because companies that have received financing are more mature in business and have greater value for analysis.

Why did we choose to start statistics from 2011? Because this was the first year of the development of Internet + medical companies. The vast majority of medical companies with Internet genes were born after 2011. Among these 1,134 companies, about half have won the favor of investors. Of course, the real data is definitely more than 1,134 companies, because many companies disappeared before they could be recorded.

1. Internet + medical enterprises received a total of US$3.321 billion in investment

According to public data, from 2011 to date, these 533 companies have received a total of US$3.321 billion in investment, with an average financing amount of approximately US$6.23 million per company. Among them, according to the investigation of Artery Network, 440 companies are currently in operation , 66 companies have clearly died, and the survival status of the remaining companies is unknown. If calculated based on the data from the 66 deceased companies, the industry mortality rate is roughly 12.38%.

The mortality rate of new startups in China is over 90%, but after obtaining investment, the development of Internet + medical companies will be much better. The survival rate of these 533 companies is relatively high, which shows that the investors have excellent vision, the founders they choose have certain abilities, and the projects have good prospects. After receiving the investment, the entrepreneurs also pushed the business forward as expected, resulting in good development of the company.

2. Distribution of Internet + medical enterprises in different fields: Specialized services come from behind

Which fields have the most startups entering? According to our statistics, among the 533 companies, the top three are specialist services, health care and medical treatment, reaching 106, 91 and 91 companies respectively.

In the medical industry, the pain points that everyone has been talking about are inseparable from the three aspects of medical treatment in hospitals: the difficulty of registering before medical treatment, the long waiting time during medical treatment, and the management of chronic diseases after medical treatment. Therefore, Internet + medical companies generally choose to enter the category of seeking medical treatment, which is closely related to medical activities (specialized services are also a type of seeking medical treatment) . Because the industry threshold for health care applications is low, there are many companies entering this field.

3. The most new companies were founded in 2014 and 2015

The above chart shows the number of newly established Internet + medical companies each year from 2011 to the present. After peaking in 2014 and 2015, the number dropped sharply in 2016, to just 20 as of August. The companies we have counted are those that have received investment. Is it because of the capital winter in 2016 that there are enough newly established companies but not many companies that have received investment? When we added up the number of all companies, we found that this was not the case. In 2016, there were only 44 new Internet + medical companies established, and nearly half of them still received investment.

After more than five years of development, the Internet + medical industry landscape has basically been established, the number of start-ups has dropped sharply, and the number of companies that can obtain investment is even smaller. Therefore, the capital winter theory was thrown out this year, not only because the amount of capital investment in start-ups has decreased in data statistics, but we think the bigger reason is that the survival space of start-ups has been compressed, it is difficult to enter new blue oceans, and difficulty in financing has become a common phenomenon.

IV. Number of new companies in the sub-sectors

We divide Internet + medical companies into different fields and analyze their growth trends. In 2014 and 2015, new enterprises in the fields of specialist services and medical diagnosis and treatment maintained rapid growth. Specialist services and online diagnosis and treatment are the most active entrepreneurial fields, generating a large number of start-up companies. After peaking in 2014, the number of new companies in the healthcare industry has been declining significantly since 2015. There are fewer start-ups in the two fields of comprehensive medical services and pharmaceutical e-commerce, and they have maintained a relatively stable trend in recent years.

There are two reasons why the total number of new startups in 2016 was relatively small. One is that the statistical data is slightly biased backward, and information on some newly established companies is not included; the other is that after more than five years of development, the basic structure of the comprehensive field of Internet + medical companies has been determined.

5. Comparison of investment amounts in various segments of Internet + medical enterprises

The three areas ranked from highest to lowest in terms of investment amount are medical treatment, health care and specialist services. Medical treatment and specialist services are directly related to people's medical activities, and the health care field has a larger user base, so the three fields have the most new companies established and received the most investment. The high amount of financing for health insurance and medical treatment is mainly due to the emergence of projects after the D round and unicorn companies.

6. Background analysis of founders in various fields, clear distinction

Companies involved in Internet medical care are divided into two categories: Internet + medical care and medical care + Internet. They represent two types of founder backgrounds. One is an Internet background. They replicated the successful Internet experience in other industries and extended their tentacles into the medical industry. The other type has a medical background. They understand the bottlenecks of the traditional medical model and want to change the medical industry through the Internet.

For companies with an Internet background, their products are basically concentrated in the front and back ends of treatment activities. Most of them are fitness, health care and other applications, and their customers are concentrated on the C-end. The activities in which Internet users participate most are specialist services, health care and seeking medical treatment.

In fact, specialized services have relatively high requirements for medical technology thresholds. Specialized diagnosis and treatment in oncology, dentistry, pediatrics, and nephrology almost all require a medical background. There are relatively many founders with an Internet background in the figure because many of them are involved in the relatively less professional diabetes chronic disease management and medical beauty industries. However, the entry threshold for the diagnosis stage of the medical structure, which involves registration, payment, examination, treatment, and medication, is relatively high. It requires medical resources and scheduling capabilities, and the threshold for cooperation with B-end hospitals is high. The number of companies with a medical background is gradually increasing.

In the diagnosis process, if it involves high-threshold industries such as personalized cancer diagnosis and treatment, genetic diagnosis technology, offline clinics, and innovative drug research and development, almost all of them have a medical background.

Different fields have different technical barriers to entry, different backgrounds of entrepreneurs, different profit models, and there are also big differences in the degree of favor of capital. According to the statistics of Artery Network, the founders of companies in the biopharmaceutical, gene sequencing, and personalized tumor treatment industries almost all have medical and biological backgrounds. Moreover, the capital required to establish an enterprise is large, both in terms of financing amount and survival rate.

VII. Number of companies entering each round and total amount of investment received

This chart counts the total number of companies entering each round. The largest number of companies enter the seed and angel rounds, which is logical. As the company develops, from early angel investment, to growth investment, to mature investment, and then to PE investment, the chances of obtaining the next round of investment become smaller and smaller, from easy to difficult.

There are only 11 companies that can enter the C round and above, and they have generally developed into leaders in their respective fields.

8. The total amount of investment in round A is the largest, which also shows that the industry has not yet reached the time for a real decisive battle

Although the number of companies in the seed/angel round stage is the largest, the total amount is not high because angel investments are generally small. On average, each company received US$610,000 in funding. There are many companies entering the A round and the investment amount is large, so the total amount of investment in the A round is the largest.

Among the companies that entered the A round, Ping An Good Doctor ranked first in total investment amount. It received US$500 million in Series A financing and was valued at US$3 billion. The total financing amount of startups entering rounds B and C is gradually decreasing, but the average amount is relatively high. The company with the largest total amount of financing in the B round is Neusoft Xikang Network, which received US$170 million in A round investment and US$64 million in B round investment, with a total financing amount of US$234 million.

A large number of companies remain in the seed/angel round and A round, which also shows that the industry is still in the middle stage of development and has not entered the real explosive period. In actual combat, the battles in the consumer medical and pure health fields such as medical beauty are relatively fierce, and the medical field is still in the early and middle stages.

IX. Financing of New Startups in the Past Five Years

Earlier we counted the number of new startups each year. The table above shows the total amount of financing these companies received (note: these investments did not necessarily occur in the same year) .

Companies established in 2011 entered the industry early, so their products face less competition, making it easier for them to develop and attracting more attention from investors. The companies established that year gradually entered subsequent financing rounds, and the companies that were able to enter rounds B, C, and D accounted for the largest proportion.

In 2012, the number of newly established companies increased, but the total amount of financing these companies received was not high.

2013 and 2014 were the peak years for the establishment of Internet + medical companies, and also ushered in the best opportunity for the industry, with a large number of newly established companies and a high amount of financing obtained.

Although many companies were established in 2015, due to their late start and fierce industry competition, most of them can only remain in the angel round, and few companies have achieved rapid development. Fortunately, a large amount of investment entered this industry in 2015, and these newly established companies also received a lot of investment. They took away a total of US$524.66 million in investment, which was more than in 2013.

By observing the proportion of companies in each round below the table, we can also discover the development patterns of unicorn companies in the Internet + medical industry. During the start-up phase of about one year, companies can generally only get angel investment opportunities. After a development period of 2 to 3 years, the probability of obtaining Series A and Series B funding increases significantly. After entering the mature stage in about 5 years, rounds C and D investments will come in.

10. Annual investment amount: the amount of financing and investment in 2016 did not decrease

From 2011 to 2016, the amount of financing and investment in Internet + medical enterprises continued to rise sharply

According to investment and financing data statistics from Eggshell Research Institute, a subsidiary of Artery Network, the amount of capital flowing into the digital medical industry has been rising sharply since 2011. In 2014, the development of the Internet + medical industry accelerated significantly driven by capital, ushering in the spring of capital, with the amount of financing and investment increasing nearly five times compared to 2013. During this period, mainstream business groups began to take shape, and mobile medical institutions such as Ding Xiang Yuan , Chun Yu, and Hao Dai Fu began to stand out.

In the first half of 2016, a "capital winter", there were 60 investment and financing transactions in the second quarter alone, with a financing amount of US$977.73 million, a month-on-month increase of 83.1%. In August, the medical and health field received repeated large capital injections, with Huanle Dental, Jingyi Holdings, Quyi.com and Jiyinga receiving a total financing amount of nearly 900 million yuan.

Although in the first half of the year, Ping An Good Doctor alone received US$500 million in Series A financing, which directly increased the total financing amount in 2016 by a lot, but even after deducting the US$500 million, the total amount in Q2 2016 also exceeded that of the same period last year.

Therefore, judging from the amount of money, capital enthusiasm in the Internet + medical field has not decreased, but these funds are almost all invested in large companies with more mature and clearer business models.

The above is Artery Network’s overall analysis of the Internet + medical industry over the past five years. Next, we will also publish detailed data interpretation of each sub-sector, as well as an analysis report on the 66 deceased companies, so stay tuned.