We recently released the Q3’17 MoneyTree report with PwC to talk about VC trends, including digital health funding. While the sector has had a very strong year so far (already more than $5B invested), the number of seed deals is dropping.
All the dollars seem to be going to the large established players, while new companies are getting funded at a slower clip. Maybe people are still waiting for an exit success in the space before taking on these riskier bets.
I recently read a report about the shifts in China’s private health insurance scene. As I thought about the US spending at nearly a fifth of GDP, I laughed/cried when the report said:
“Health care expenditure as a percentage of China’s total gross domestic product has increased from a low of 3.7% in 1994 to 5.6% in 2013, when the country spent an estimated RMB3.2 trillion. This is one of the most dramatic increases in health care spending in modern history. “
But after wiping my tears, these two charts caught my eye.
First, more than 50% of people that bought private health insurance across all incomes did so for the first time.
For those that don’t know, China is incentivizing the use of private insurance through tax subsidies. This is largely because their public health insurance plans have minimal coverage and can’t meet the needs of the growing population.
Because of this private insurance has taken off, with companies having to fight for distribution channels as more people start buying private plans. Which brings me to chart 2 — most of this still happens through word of mouth. Only 12% used a digital channel.
This is where online-only insurers like Zhong An see an opportunity with those channels poised to increase. We did a full pre-IPO analysis here.
Zhong An offers the greatest variety of insurance products within healthcare, but relies heavily on partners for distribution. More than 85% of gross premiums came from partner platforms last year.
As more people seek information and products from their phones, we can expect it to become a bigger part of private insurance sales than the 4% listed above.
WeChat has become one of the key information portals for the population and we’re starting to see healthcare companies use that channel in interesting ways. Shuidi, a medical crowdfunding platform on WeChat, recently raised $24M from Tencent. The company also has a medical insurance platform, Shuidibao – which can use the crowdfunding site as a distribution avenue.
Tencent itself just got a license to sell its own insurance products through WeChat. Alibaba is offering free health insurance (up to an amount) through Alipay. This area is going to become even hotter as more people flock to digital channels to buy private insurance – it’s worth keeping an eye on it.
Licensing with GE Ventures
At October’s Council meeting, Pat Patnode, President of Licensing for GE Ventures, shared how they internally sold a centralized licensing group across GE and how it’s generating new revenue opportunities. Council members learned their secrets to success.
Councils are limited to SVP, EVP, President and C-level execs at companies with at least $1B in revenue. The next Councils meeting is December 11-12, 2017 in San Francisco at Dropbox HQ. Learn more.
