Chinese Insurtech Startup Waterdrop Raises US$230M Series D Ahead Of U.S. IPO

Waterdrop is reportedly planning a U.S. IPO as early as this year, at a valuation of US$2 billion

Chinese insurtech startup Waterdrop, known as Shuidihuzhu in China, has raised US$230 million in a Series D round of financing led by insurance giant Swiss Re and existing investor and Chinese Internet giant Tencent, the startup announced in a statement on Thursday.

Previous investors IDG Capital and Wisdom Choice Global Fund also participated in the round, the statement noted. Waterdrop’s list of backers also include Boyu Capital, Gaorong Capital, China Capital Investment Group, BluRun Ventures, Sinovation Ventures, and ZhenFund.

The startup had previously raised $74.2 million in a Series B funding round in April this year, and the latest fundraise pushes Waterdrop’s total capital haul to $$449.4 million, according to Crunchbase data.

This fresh funds will be used to further grow the platform, and incorporate partnerships with others in the healthcare ecosystem, from pharmaceutical companies and insurance businesses, to hospitals and pharmacies, and other clinical care facilities, in part by way of a new service called Haoyaofu, to provide members with lower-cost medications and treatments, according to a report by TechCrunch.

The startup has been tight-lipped about its valuation, but Waterdrop was valued at nearly $2 billion in the current funding round, according to a Reuters report citing anonymous sources. Swiss Re alone has invested $100 million in the current round, the report noted.

Waterdrop is also planning an Initial Public Offering in the U.S. and has hired Goldman Sachs and Bank of America as underwriters. The IPO could happen as early as this year, Reuters noted.

Founded in 2016, Waterdrop offers illness crowdfunding on its platform Waterdrop Crowdfunding, operates mutual funds through Waterdrop Mutual, and offers insurance policies online via Waterdrop Insurance Mall.

The insurance business, with 120 million unique policy holders, reported a total written premium of $865 million in the first half of this year and expects to double its total written premium to $2 billion this year, the company said in its statement.

Waterdrop Crowdfunding, on the other hand, has raised $4.6 billion from 320 million unique users and over 1 billion donations as of the end of July 2020, TechCrunch reported. According to the press statement, Waterdrop Mutual has paid out $233 million to 12,819 families so far this year.

Waterdrop has been looking to grow its involvement in facilitating services such as medical consultations and providing overseas medical treatment, as well as cancer screening and routine exams, preventative cornerstones of how many insurers operate today.

“We are excited about the huge growth potential that lies ahead of us. Our long-term goal is to become a leading online healthcare platform in China with an ecosystem that includes insurers, pharmaceutical companies, hospitals and drug stores, as well as nursing institutions and rehabilitation institutions,” said Peng Shen, founder and CEO of Waterdrop, in a statement.

“We are committed to not only helping users with financing issues but also providing them with integrated healthcare services along the way,” he added.

“As a leading online insurtech company, Waterdrop is well-positioned to tackle the pain points of traditional insurance and pave the way for future breakthroughs in the industry, such as the accelerated technological innovation and digitalization of the industry worldwide that we have witnessed during the COVID-19 situation,” said Ning Zhou, Head of Principal Investment and Acquisition for Swiss Re, Asia.

“We will continue to build on our solid partnership with Waterdrop and together we will support the ongoing development of the insurance industry and promote digital innovation,” said Russell Higginbotham, CEO Reinsurance Asia and Regional President, Swiss Re.

“Amid the rapid expansion of the Chinese commercial health insurance market, Waterdrop has seized the market opportunity very well and used the power of technological innovation to help tens of millions of families,” said Yu Haiyang, MD of Tencent Investment.

With the onslaught of the global pandemic, insuretech companies have soared in popularity, and investment in insurtech startups has bounced back in Q2 of 2020, with a total investment of $1.56 billion, a 74% quarter-over-quarter growth, according to a CB Insights report.

In China, the premium income of China’s insurance companies in 2019 amounted to around CNY4.3 trillion, nearly three times as much as seven years ago, according to data from Statista.

Header image from Pixabay

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