Tencent-backed Waterdrop Gains Unicorn Status


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There are many companies that are looking to dominate the health care market of China, the most populous country in the world. However, it appears as though there are two behemoths that will be fighting for market share – Ant Financial, an affiliate company of one of the largest Chinese conglomerates, Alibaba, and Waterdrop, backed by Tencent. It appears as though Waterdrop is now seeking funding at a $1 billion valuation as of April 29, 2019.

Fighting For Market Share

Waterdrop is a Beijing-based startup that has only been around for three years, which makes the valuation that much more impressive. The product, Waterdrop Mutual, is a software platform in which individuals chip in to help others diagnosed with critical illnesses of all kinds. There is a 300,000 yuan cap on the amount that can be raised, which is the equivalent of a little over $44,000 dollars. The companies profit by taking a commission of the money raised.

Ant Financial’s Xiang Hu Bao has become wildly popular, attracting 50 million within a few months. Waterdrop is still in the lead overall with 70 million users and hopes to use the new funds to help with overall automation and blockchain integration to maintain an edge over the competition. This shouldn’t come as much of a surprise, considering that Tencent recently partnered with the University of Hong Kong for blockchain research, showing its interest in the technology. Shen Peng, the founder, and chief executive officer of Tencent, estimates that there are already somewhere around fifty companies in the space currently offering similar services.

The fact that the money will be utilized for blockchain integration also makes sense when one puts into context, i.e. the fact that China currently leads the world in blockchain projects in general. Notably, Tencent is also part of a project to record invoices on the blockchain in Shenzen, one of the largest cities in the country.

Filling The Gap

Shen points out that there is a tremendous demand for the services, especially when one considers that China’s aging population has been the subject of various headlines. It is estimated that over 330 million Chinese citizens will be over 65 years old by 2050.

Considering that rates of critical illness are increasing and that there is a gap with respect to overall medical coverage, it is easy to see how these companies have gained traction so quickly. Shen even welcomes the fact that there is more competition than ever, stating: “It cuts our cost and time for educating users”.

Shen refused to elaborate on how much money he had hoped to raise for Waterdrop. However, it completed a B round of in March led by Tencent that raised almost 500 million yuan, which is the equivalent of over $74 million USD. One major difference between Waterdrop and Xiang Hu Bao is that Waterdrop actually requires a 1 yuan deposit to join, which is meant to ensure that users “take the system’s terms seriously”. There are restrictions on who can participate, including infants younger than 28 days old and anyone over the age of 65.

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