Hongshan Healthcare Investing: 17 Years From the Sidelines to Center Stage

By Ren Qian

Years ago, whenever the topic of healthcare investing came up, Hongshan faced one question more than any other from outsiders: How could a tech-focused investment firm break into a field as insular and technically demanding as healthcare?

In healthcare investment circles, there has long been an unmistakable "38th parallel": specialized biopharma funds that focus exclusively on life sciences and healthcare, versus generalist firms that spread across tech, consumer, and healthcare. At least before Hong Kong's Chapter 18A listing rules took effect in 2018, the former remained the undisputed mainstream in this space, while the latter typically kept a low profile.

But Hongshan seemed to be the exception. It made its first healthcare investment back in 2006, starting with very early-stage bets on WeDoctor, Snibe, and Betta Pharma, moving on to Zai Lab, Innovent Biologics, and Burning Rock during the biotech startup boom, and in recent years densely covering cutting-edge subfields like gene therapy, cell therapy, life science tools, in vitro diagnostics, and brain science. If Hongshan isn't the most active investor in China's healthcare financing market, it's certainly among them.

Yet today, an even bigger misconception persists: outsiders generally believe Hongshan only invests at later stages, or that it only recently began investing early. The answer is entirely different. Early-stage investing is in Hongshan's DNA, and the proportion of early-stage healthcare deals has always been high.

According to incomplete statistics from Anyong Waves, in 2022 — when the healthcare primary financing market as a whole was in a turbulent phase marked by difficult fundraising and chilly sentiment — Hongshan completed 49 investments in healthcare, of which 31 were at Series A or earlier, ranking first among comparable firms. Of these, as many as 11 were at the seed or angel stage.

Moving earlier and deeper has become a defining feature of Hongshan's current healthcare investment strategy. Over the past month, Anyong Waves conducted intensive interviews with five senior investors from Hongshan's healthcare team, exploring the fundamental logic, strategic approach, talent development, and investment direction that have shaped its healthcare investing over the past decade-plus — seeking to discover what sets apart their decision-making and operational mechanisms, and what sustains their push deeper into the forest.

A Distinctive Team

Over the past 18 years, Hongshan's most representative cases have undoubtedly been new-economy companies that rose during the mobile internet era — Meituan, Dianping, ByteDance, Pinduoduo. But few know that back in 2007, when the market barely had any concept of innovative drugs and generic pharmaceutical companies dominated, Hongshan invested in a CRO company.

Though this company never grew into a giant like WuXi AppTec, it built the tactile knowledge that would later inform downstream innovative drug investments. And in 2011, when terms like IVD/in vitro diagnostics were nowhere near as hot as they are today, Hongshan discovered what would become Snibe — now a leader in chemiluminescence immunoassay and the IVD industry.

Looking back, in Hongshan's first few years, though it had yet to build a formal healthcare team, its passion and professionalism for healthcare investing were no less intense. Digital health, supply chain transformation, and innovative medical devices and consumables were all areas it closely tracked back then.

As massive opportunities rapidly emerged, healthcare and especially innovative drugs became a sector no mainstream fund could avoid. Hongshan's professional healthcare investment team also accelerated its growth during this period.

The story of Du Ying, founder of Zai Lab, once having been a Hongshan healthcare investor, circulated widely in the industry. At Hongshan, Du Ying led investments in BGI and Betta Pharma; two years later, when she founded Zai Lab, Hongshan became one of its earliest investors.

The same year Du Ying joined, Gu Cuiping — who holds a PhD in biochemistry and molecular biology — came aboard. She is a textbook example of an investor with dual industry and investment backgrounds, having managed new drug project licensing and preclinical research at a domestic biotech, and participated in R&D collaboration and project management for a multinational pharmaceutical company in China. Even before joining Hongshan, she was already a professional healthcare investor.

Three years later, Yang Yunxia, returning to China after completing her studies at Duke University, also joined Hongshan. "Doctor" is a prominent label for her. Her time in the operating room gave her an exceptionally deep understanding of and respect for medicine itself, which translated into steady, grounded investing while continually seeking innovation.

Cao Yibo, who joined in 2017, was among China's earliest clinical pharmacy master's graduates. After three years at McKinsey providing strategic consulting for multinational and domestic top-tier pharmaceutical companies, he entered industry as BD and strategy head for Nycomed's North Asia region, becoming the youngest department head for a multinational pharma in China at the time. He helped restructure the company's China business and led what remains the largest prescription drug M&A transaction by a multinational pharma in China, giving him distinctive insights into the pharmaceutical industry.

Xu Qiang, who joined the same year, also came from a pharmaceutical background, having accumulated substantial pharma market experience early in his career at Shanghai Pharmaceuticals and Xi'an-Janssen, and had already made a number of investments at another firm.

The reason for emphasizing their backgrounds is this: in a field with such high professional barriers, when you look through a list of investments — Winner Medical, Venus MedTech, Winona, Dizal Pharmaceutical, Yuanxin Technology, Asia Heart, Moderna, Grail, Brii Biosciences, Innovent Biologics, Neurophth, MegaRobo, Novogene, AccuMedical, GemPharmatech, Fapon Biotech, North Sea Lifescience, Corheart, Acontek, Recbio, ABclonal, Rgenix, and others — and see how many became well-known, you can't help but wonder: Why did Hongshan invest in all of these?

Tracing these projects, it's not hard to identify a pattern: focusing on unmet clinical needs, large-addressable markets, core technology platforms, strong innovation capability, and rapid progress are important labels they share.

The team may be the key to understanding this question. "Strong educational backgrounds, trained in the field — these are now mandatory requirements when our healthcare team recruits," said Hongshan Partner Yang Yunxia in an interview. Beyond this, strong logical ability, sufficient openness when facing professional questions, and rapid learning ability are valued bonus factors.

This has produced Hongshan's current healthcare investment team structure. Of roughly 20 people on the team, the vast majority hold PhDs in life sciences, medicine, pharmacy, and related fields — "even the interns," as one person put it — with partners and managing directors spanning academia, industry, and investment.

Of course, a strong team doesn't necessarily correlate with strong returns. But one visible result is that, due to this team evolution, Hongshan's healthcare investments long ago shed any shadow of internet healthcare, becoming instead more technological and cutting-edge in nature.

After 2020, Hongshan significantly increased investments in emerging sectors, from already widely recognized technical domains like immunotherapy, gene sequencing, gene editing, cell therapy, and novel vaccines, to still-exploratory frontier areas like nucleic acid drugs, neurointervention, artificial hearts, surgical robots, AI drug discovery, and brain-computer interfaces. During this same period, Han Jiang — with years of drug R&D industry experience and extensive investment experience — joined Hongshan, focusing on frontier investments across multiple areas.

Looking at Hongshan's healthcare development path, it seems hard to avoid the suspicion of "always chasing hot trends." Yang Yunxia told 36Kr that what looks like chasing trends is actually tracking trajectories. "First, every strategy formulation has strong foresight behind it. Second, these are opportunities that gradually emerge as each industry's infrastructure develops to a certain stage."

The Prepared Mind

Sequoia Capital partner Jim Goetz once proposed a theory of "the prepared mind" — that Sequoia partners use a top-down, anticipatory thinking method to clarify technology development trends, map out future technology landscapes, and predict which types of startups would succeed.

For instance, he early on mapped out a detailed picture of mobile internet development, identifying three cores that would shape it: the base stations telecom operators would build, the chips inside phones, and the software running on them.

From this perspective, a distinctive Hongshan investment strategy is "hunting by the map" — drawing industry puzzles through actual combat, from which to discover how trends form and how business models work. Internally, each investor also uses this methodology to map out their focused subsectors.

This theory also runs through Hongshan's healthcare investing in China.

Hongshan China began tracking nucleic acid drugs in 2016, when few in China had even heard of them. From small nucleic acids to mRNA and the nucleic acid supply chain behind them, after systematic research and scanning of the entire nucleic acid drug industry, the team quickly identified the industry's key issues and locked in an ideal target profile, investing in Moderna — the mRNA company that would become the most watched overseas in the past three years. Subsequently, Hongshan also moved at the right time to invest in a batch of representative domestic companies including Rgenix.

Another example is gene therapy. When Hongshan first began paying attention to this field, there was still skepticism in the industry about whether domestic companies had the capability to develop such products. Hongshan China Managing Director Gu Cuiping focused on this direction, and after judging the industry characteristics and doing extensive mapping and research, decisively invested in Neurophth.

The logic for investing was that gene therapy was a track Hongshan firmly believed in, and ophthalmology was an excellent entry subsector, plus it involved local injection, making safety relatively controllable. Neurophth's lead gene therapy product has now entered Phase 3 clinical trials.

Or take brain science. Hongshan China had already invested in cardiovascular and cerebrovascular disease-related companies five or six years ago, but for brain-computer interfaces, especially implantable BCIs, the team only moved after more than a year of systematic research in 2021. Yang Yunxia told Anyong Waves that when conducting such research, they typically begin with a systematic scan of the world's leading labs, forming a "Lab Tree," then select the most suitable companies from it to reach out to.

In Yang Yunxia's view, past outreach to top labs and professors has had high success rates. On one hand, this owes to Hongshan's overall brand, but more importantly, "professionalism makes the difference." Take something as simple as an email: Hongshan healthcare colleagues' outreach emails are rarely generic, instead raising targeted professional questions after reading many of the expert's papers. "Only this way will they truly be willing to spend time with us."

At Hongshan, investors also constantly discover revealing new directions from the business development of portfolio companies.

Hongshan China Managing Director Xu Qiang began focusing on innovative healthcare investment opportunities in 2017, specifically seeking companies with high technical barriers, certain reputational accumulation on the academic and technical capability fronts, and the ability to enter global markets. He simultaneously discovered that the vigorous development of China's biopharmaceutical industry was spawning new opportunities in upstream supply chains and life science tools, and moved accordingly to invest in typical companies like Nanomicro, ABclonal, and Fapon Biotech.

Even though each investor appears to have specialized domains, internally, the healthcare team inevitably has overlap in subdirections and stages, and each person's investment style differs. "Hongshan's healthcare team is an extremely diverse team," Xu Qiang said.

How to get a group of strong-willed investors to serve one organization over the long term may be precisely the sophistication of Hongshan's culture. Judging by tenure alone, the average time the five senior healthcare investors have spent at Hongshan is six years.

And when asked "What is the most distinctive style Hongshan healthcare shows to the outside world?" the five investors reached a consensus: courage to innovate, love of learning, and teamwork. As more and more opportunities emerge from cross-domain rather than single-industry intersections, collaboration across stages becomes especially important.

For example, before Hongshan Seed entered the AI drug discovery space, this industry form sitting at the intersection of healthcare and TMT once struggled to gain value recognition, mainly because single-domain investors found it hard to evaluate. This is precisely Hongshan China's advantage: simultaneously possessing extremely strong TMT investment capabilities and a professional healthcare team to fill in essential information. Through this collaborative coordination, multiple AI drug discovery companies including XtalPi, neoX Biotech, Metis, and Insilico Medicine were successively invested in.

Beyond this, in Cao Yibo's view, what distinguishes Hongshan China's healthcare investing from most investment institutions is whether it can truly focus on "companies with long-term investment value" to ride through cycles.

Before joining Hongshan, Cao Yibo had seven years of investment experience at another global specialized healthcare investment institution, possessing international perspective while also having personal experience and insight into industry cycles. "I think Hongshan is an institution with long-term investment capability, which is quite compatible with healthcare industry attributes. One is the ability to accompany companies for a long time, and another is genuinely being able to provide continuous support at the capital level."

A team driven by self-initiated research and bold experimental transformations reveal the secrets of Hongshan's success from two sides. In a sense, this is precisely the key reason Hongshan healthcare investing is always "one step ahead."

Hongshan China Managing Director Han Jiang told Anyong Waves that Hongshan has accumulated very strong brand effects over the past decades, and this platform can access many high-threshold projects with strong links to overseas projects and resources — "this is one of Hongshan's quite distinctive attributes."

Han Jiang also mentioned that Hongshan internally has "study groups," where different research topics are led by different partners or MDs as group leaders, with high-frequency discussions. "This kind of learning organization has an amplifying effect on the capability improvement of every individual involved," Han Jiang said.

Building Internal and External Ecosystems

If we switch to the perspective of portfolio companies, what kind of image does Hongshan healthcare investing present?

One day in November 2020, in a cramped conference room at Shenzhen's Kexing Science Park, Rgenix founder Hu Yong met the Hongshan healthcare investment team for the first time. Over an hour of discussion, from the differentiated advantages of LNP versus non-LNP delivery, to the pathways for targeting liver versus non-liver organs, even to linker design in delivery systems, both sides spoke with familiarity and expertise.

Several investment institutions had already offered term sheets, but after this exchange, Hu Yong decided to accept Hongshan's exclusive investment. Hu Yong recalled that from their first meeting at the end of 2020 to formal investment, it took less than two months.

When Hongshan first began engaging with Neurophth in 2018, the company only had a lab in an incubator at Wuhan Bio-lake, with very harsh office conditions. The company was then at a critical stage of CMC process development. "Trency [Gu Cuiping] brought her team to discuss with our three founders in that crowded office about how to break through AAV production bottlenecks, and the pros and cons of various transfection processes," Neurophth co-founder Xiao Su told Anyong Waves. The Hongshan team had its own unique and deep insights into the differences between various processes and potential issues regulators might have with each.

Shisheng Bio founder Li Xiang believes that for someone like him who has worked full-time in the field for over a decade, deep focused research is basic homework, nothing unusual. But for investors who need to simultaneously track different fields, "being able to proactively and continuously do such careful exhaustive research is quite rare." Hongshan is one of Shisheng's core investors, and Li Xiang has been deeply impressed in board meetings, shareholder meetings, and daily communications.

And these companies quickly experienced the practical help that Hongshan investment brought.

When moving into an incubator in Shanghai's Zhangjiang, Hu Yong introduced his company to relevant leaders. "After hearing we were a Hongshan-invested company, I could clearly feel their recognition of the enterprise."

At the time, AAV production had no mature experience to draw on domestically, and as a startup, Neurophth had very limited funds available. "But Trency firmly supported us in building our own moat in AAV production, and used continued investment to support the implementation of this strategic decision." In retrospect, this decision at the time greatly advanced pipeline progress, "helping us establish our position in gene therapy in China and even globally today," Xiao Su said.

Everyone wants to invest early; not many institutions can persist and do it well. What early-stage companies most need is actually a business partner, especially in a field with sufficiently high professional barriers like healthcare. If relying on a collective of the smartest minds to make decisions is one of Hongshan's differentiated approaches, then deeply understanding the importance of industrial ecosystems is the second. In interviews, nearly all respondents mentioned the importance of industrial ecosystems.

For example, talent ecosystem building. Beyond brand endorsement, a key empowerment Hongshan provides to healthcare portfolio companies is executive recruiting support.

In Gu Cuiping's view, scientist entrepreneurs often need complementary skills. Technology is just one aspect; team building, business logic judgment, product落地 [product落地 → product commercialization], or designing products that meet clinical needs all rely on a strong team working together.

For one project Xu Qiang was responsible for, from CFO to HR head to R&D director, all were recruited with help from Hongshan's human capital empowerment team. "On talent assessment and recruiting efficiency, we hope to help companies save more time and improve quality."

Han Jiang also found that many companies that can truly ride through cycles, no matter how excellent their initial core team composition, will still have extremely talented people join in the middle and later stages. "For healthcare companies to go deep and broad, they must continuously attract people with real experience and innovation capabilities in different specialties to supplement."

In Yang Yunxia's view, ecosystems should also be layered, with both internal and external circles functioning well. For example, internally, Hongshan's three directions of tech, healthcare, and consumer can actually achieve good organic integration, giving rise to cross-domain combinations like IT+BT or consumer+healthcare.

Externally, Hongshan has also established good communication ecosystems with both academic and industrial fields, helping it reach out at the first moment when scientists or industry veterans have entrepreneurial intentions.

In 2023, Hongshan decided to relaunch the Sequoia Global Healthcare Summit, with the theme "Begin with the End in Mind." In Cao Yibo's understanding, this theme itself is an important signal for the industry ecosystem.

Cao Yibo revealed that this year's summit features extensive networking and collaboration discussion sessions. "We don't want to specifically advocate which track is hot, which track is still worth investing in. We hope all healthcare industry practitioners don't lose sight of what their original intention was in entering this industry, what the ultimate purpose is, and what the essential value they seek is. From this starting point, perhaps everyone can find the most suitable path and companies with long-term investment value."