Warm Congratulations to Waterdrop Inc. on Its Successful IPO, Becoming the NYSE's First "InsurTech Stock" | Gaorong Ventures News

On May 7, Waterdrop Inc., a leading Chinese insurance and health services technology platform, successfully listed on the New York Stock Exchange, becoming China's first "insurtech" IPO on the NYSE. The company trades under the ticker symbol "WDH," with an initial public offering of 30 million American depositary shares priced at $12 per share.

Gaorong Ventures was a co-lead investor in Waterdrop's angel round, backing the company from its earliest days and participating in every subsequent funding round along the way. Shen Peng, Waterdrop's founder and CEO, stated that the company aims to build an "insurance + health services" ecosystem for hundreds of millions of Chinese families, using technology to deliver accessible, efficient products and services that improve health outcomes for everyone, with the goal of becoming the leading online personal insurance brand in China. Chang Chen, founding partner of Gaorong Ventures, said, "Five years ago, when Shen Peng had just founded Waterdrop, we greatly admired this young founder's entrepreneurial vision and tremendous potential, and co-led the angel round. In the years since, we've watched Waterdrop steadily advance toward its original mission, addressing fundamental pain points for vast numbers of users, continuously strengthening its big data and intelligent infrastructure, and using technology to advance inclusive insurance — which is why Gaorong participated in every subsequent round as well. Along the way, we've been deeply inspired by Shen Peng and his team's 'always startup' mentality, their all-in spirit, and exceptional execution. Today, Waterdrop is making deep progress toward its vision of becoming an insurance and health services technology platform. Success begins with original intent, is built on perseverance, and endures through doing the difficult but right things. Our best wishes to Waterdrop, and congratulations to Shen Peng and the team!"

Using Technology to Advance Inclusive Insurance, Becoming China's Largest Independent Third-Party Insurance Platform

Founded in 2016, Waterdrop currently operates two main businesses — the medical crowdfunding platform "Shuidichou" and the health insurance technology platform "Shuidibao" — offering users integrated solutions spanning pre-illness protection and post-illness support. The company reaches users through network effects, helps those raising funds close gaps in critical medical expenses, and simultaneously raises awareness about protection among donors. By synthesizing comprehensive data accumulated across various scenarios, Waterdrop gains deep insights into user behavior and needs, then leverages big data and artificial intelligence to provide full-lifecycle health insurance and protection services, while beginning to expand into medical and health services.

Shuidichou pioneered zero-service-fee online medical fundraising and is China's largest personal medical crowdfunding platform. It operates on a non-profit basis as post-illness assistance, awakening donors to pay attention to their own health and educating them about protection awareness. As an internet insurance technology platform, Shuidibao currently partners with 62 insurance companies, using technology to advance inclusive insurance. Focused on online health insurance and powered by strong online service capabilities and big data analytics, Waterdrop achieves efficient operations, providing users in underserved markets with high-value insurance products and full-process services from underwriting to claims. Commission income from Shuidibao is Waterdrop's primary revenue source. In 2020, Waterdrop's net revenue was 3.028 billion yuan, up 100.4% year-over-year; commission income was 2.695 billion yuan, accounting for 89.1% of total revenue. By 2020 health and life insurance premium volume, Waterdrop is China's largest independent third-party insurance platform, achieving over 14.4 billion yuan in first-year premiums (FYP) in 2020, and having cumulatively served 79.4 million insurance users as of December 31, 2020.

Over the past three years, Shuidibao's performance has shown "exponential growth." As of December 31, 2018, 2019, and 2020, cumulative insurance purchasers were approximately 1.7 million, 8.8 million, and 19.2 million respectively, while FYP generated through Shuidibao was 972 million yuan, 6.668 billion yuan, and 14.426 billion yuan in 2018, 2019, and 2020. Beginning in 2019, Waterdrop began aggressively developing long-term insurance business, with its share steadily increasing. In 2020, long-term product FYP was 2.51 billion yuan, up 356% year-over-year. Long-term insurance commission income share rose from 0.6% in 2018 to 21.5% in 2020. The data advantages of its insurance technology platform have also continuously helped Waterdrop innovate on insurance product supply. Currently, the majority of Shuidibao's 200 insurance products are co-designed with partners.

Building the "Waterdrop Brain" Intelligent System, Leading the Insurtech Industry

As an insurtech company, Waterdrop has established advanced technology and differentiated data insights. In 2020, Waterdrop invested 244 million yuan in R&D, representing 8.1% of net revenue — leading the internet insurance industry. After nearly five years of development, Waterdrop has gradually formed an intelligent system called the "Waterdrop Brain." Building on massive advantages at the big data level, it collects, analyzes, and processes data as a foundation, then applies AI capabilities (NLP, OCR, recommendation algorithms, identity verification, etc.) to empower practical applications, ultimately forming solutions for intelligent underwriting, intelligent claims, intelligent healthcare, and risk control. Currently, Shuidibao has completed intelligent online automation for underwriting, renewal, cancellation, and policy maintenance services, with near 100% implementation. Waterdrop is also working with partners to further penetrate the insurance value chain, with the goal of providing insurers with digital services such as intelligent underwriting and intelligent claims. Technology service revenue grew from 59 million yuan in 2018 to 194 million yuan in 2020.

Building an "Insurance + Health Services" Ecosystem, Becoming a Health Protection Platform

Shen Peng believes that Waterdrop is fundamentally a health protection platform, with health insurance merely a starting point and the company's future entry point. Going forward, Waterdrop will continuously expand its supply of insurance products and health services. Waterdrop's vision is to partner with collaborators to build a Chinese version of UnitedHealth Group, allowing Waterdrop users to access better diagnosis and treatment at lower cost.

Beginning in the second half of 2020, leveraging user accumulation, data insights, and payment capabilities from its crowdfunding and insurance businesses, Waterdrop began expanding into pharmaceuticals and health management, successively piloting "Waterdrop Health" and "Waterdrop Haoyaofu" services. Waterdrop Health provides internet medical and health management services for both healthy individuals and those with existing conditions, while Waterdrop Haoyaofu primarily offers insurance-based innovative payment and health management services for those with existing conditions. By using the internet to connect "insurance + medicine + healthcare," and through the integration of commercial health insurance, critical illness fundraising, and health medical services, Waterdrop aims to build a comprehensive supplementary medical payment system providing users with full-lifecycle health protection solutions.

In terms of future strategy, Waterdrop's goal is to build an "insurance + health services" ecosystem, further expanding user coverage and engagement, investing in data analytics and technology infrastructure, deepening partnerships with medical institutions, connecting various medical payment methods, and providing consumers with broader medical and health service choices. Chang Chen stated, "Efficient and sound medical health protection is the most solid foundation for people to access a better life. As China's commercial insurance penetration, insurance industry digitalization, and user protection awareness continue to rise, Waterdrop still has enormous market growth potential ahead. As it further integrates health insurance, critical illness fundraising, and health medical services, we believe Waterdrop will use internet technology to bring insurance and health protection to broader populations, achieving people-centered technology inclusion."

On the eve of the IPO, Gaorong Ventures also sat down with Shen Peng for a conversation, sharing his entrepreneurial motivations, key decisions, and future vision.

Selected excerpts from the conversation follow.

Q1: Looking back at your entrepreneurial journey at this listing milestone, what has continuously driven you to keep pushing forward?

Shen Peng: If a company wants to go further and develop better, it must do what the entrepreneur most believes in. Whether or not you do what you most believe in already determines how far something can go.

Because entrepreneurship is a lifestyle, a lifelong commitment. From the perspective of living, you should definitely choose the way you most enjoy, the things you most love, and the rhythm that suits you.

So when I decided to start a company, it was because I saw something I believed in, something I felt I could devote my entire life to, that I firmly chose to found Waterdrop.

Looking back over five years of entrepreneurship, the most important reason we've made it to where we are is that we've consistently held to our original mission, continuously working around our fundamental motivation. Whether facing setbacks or success, we never retreated or got carried away — we just kept fighting persistently. This original mission is our company's purpose: using internet technology to help the masses access insurance and medical care, protecting hundreds of millions of families.

Q2: What are the key factors at different stages of entrepreneurship?

Shen Peng: The factors that determine entrepreneurial success are indeed ranked differently at different stages.

In the first year after founding, to be honest, the goal was simply to survive. We needed to validate whether what we were doing, this new model, could work — whether we could gain more user recognition with lower operating costs. During this stage, refining the business was the top priority.

Once we validated that the business model worked, we began thinking more about organizational development — how to design organizational structure, who to place in which positions, team growth, areas for daily management improvement, and so on. These were the topics we discussed most in the second and third years.

After three years of development, we realized the original business could no longer fully satisfy user needs, so we began thinking about what the next business should be, how new businesses could better synergize with existing ones to create greater value for users. So at this stage, beyond daily business and organizational management, we began emphasizing strategy, discussing more topics oriented toward the next 5 or 10 years, and regularly organizing strategy sessions and visioning meetings.

Q3: What were the key strategic decisions in Waterdrop's entrepreneurial journey? How do you continuously improve decision quality?

Shen Peng: The first and most correct decision was firmly choosing the internet health insurance industry. Internet health insurance is a correct major trend, and I personally love it. I never wavered and have fought for it steadfastly.

The second correct decision also came early in the founding period — establishing a multi-key-person partner mechanism rather than a structure where the founder dominates and makes unilateral decisions. Because the undertaking we're engaged in is large enough and involves sufficiently diverse capabilities — internet capabilities, insurance-related capabilities, health and medical capabilities. So we needed to attract more excellent key people to join through better mechanisms during the entrepreneurial process. By making equity incentives sufficiently attractive, we enabled sufficiently diverse and excellent people to strive together. This decision determined that we could achieve what we have today.

As an entrepreneur, the ability to make high-quality decisions is extremely important. And this decision-making ability is something cultivated gradually through the entrepreneurial process. Every day the external world changes in many ways, requiring constant judgment calls. Whether these decisions are high-quality is something that requires feedback from one decision after another, through review and reflection, slowly forming into a capability.

Is there a methodology for cultivating decision-making ability? The 7 Habits of Highly Effective People, The Leadership Pipeline, Jack Welch's Win, and The Real-Life MBA are all excellent reference materials.

Q4: Looking ten years ahead, what is the goal you most want Waterdrop to achieve? What efforts are needed to get there?

Shen Peng: In the future, China's health insurance should be accessible to the masses; and when a user buys insurance on the platform, mere payout is insufficient — we must ensure they not only have insurance to rely on, but can also access better diagnosis and treatment at lower cost, achieving true "insurance and medical care." This is crucial. Over the next ten years, we hope to partner with collaborators to build a Chinese version of UnitedHealth Group.

"Accessing better diagnosis and treatment at lower cost" can be illustrated with a scenario. When a user buys health insurance through Waterdrop and unfortunately develops a serious illness, they can quickly receive a payout for treatment; but the service doesn't end there. The user also has the right to access discounted critical illness prescription drugs at designated partner locations, pick up medications at pharmacy outlets near hospitals, and access relatively scarce medical treatments at designated hospitals.

To achieve this goal, we're also continuously optimizing our organization. In the past Waterdrop had many internet talent, with everyone entering from the internet sector. But as we go deeper into insurance and healthcare, we need to continuously bring in more professional insurance and medical talent in relevant areas. We've also made some organizational structure adjustments, spinning out the medical department as an independent team parallel to the insurance team, with the medical team focused on delivering medical fulfillment services to users, enabling ordinary people to access more cost-effective medical options.

Q5: Throughout Gaorong's journey with Waterdrop, what has left a deep impression on you?

Shen Peng: When I decided to start my company, Gaorong contacted me immediately. I spoke with Chang Chen for less than an hour before he quickly decided to invest — very decisive and efficient, which made me feel Gaorong's extremely high decision-making efficiency. From Waterdrop's founding to now, across five funding rounds, Gaorong participated in every single one, so I'm very grateful.

Shen Peng (left), Chang Chen (right)

Throughout the process, I felt many commonalities between Gaorong and Waterdrop in terms of philosophy. First, both place great emphasis on people and organizational development — I could sense that Gaorong operates as a complete team in battle. At the same time, I saw that Gaorong values founders very highly when working with startups. When I initially discussed funding with Gaorong, it was more about understanding my past experience, my personal management fundamentals and entrepreneurial fundamentals.