Tencent-backed Health Startup Waterdrop Raises $200M in Series D Round

Insurance tech firm Waterdrop Inc. has raised around $200 million to fund its expansion in healthcare crowdfunding, at a valuation of approximately $2 billion, according to sources familiar with the matter.

These sources didn’t disclose specific investors, only revealing the lead investor was an international insurance giant.

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The Beijing-based company is reportedly seeking an initial public offering, other people familiar with the matter said last month. The proposed listing will include the firm’s main businesses – Waterdrop Insurance Mall, Waterdrop Mutual and Waterdrop Crowdfunding. Waterdrop is working with Goldman Sachs Group Inc. and Bank of America Corp. on the share sales.

According to sources, the company expects to go public by the end of this year or early 2021. The latest IPO valuation is $4 to $6 billion. Although final decisions have yet to be made, the US is said to be among the top potential listing places.

Bloomberg on Monday reported that the IPO will help Waterdrop increase funds to ward off competition from Ant Group in China’s healthcare segment amid growing demand for quality medical services among China’s aging population.

Founded by Shen Peng, a former Meituan employee, in 2016, Waterdrop provides insurance services as well as medical funding assistance for low- and middle-income patients. Over the last four years, the company has been rapidly expanding in China’s third, fourth and fifth-tier cities.

Among other major businesses, Waterdrop Mutual works as a collective: people give out small amounts of money to help others who are diagnosed with critical illnesses and in return receive payouts when they themselves are in need. The company said last year that it takes a commission of 8%.

Waterdrop has previously completed at least four rounds of financing. In May 2016, Waterdrop raised 50 million yuan ($7.2 million) through angel financing where investors included Tencent, Meituan Dianping, IDG and others. In August 2017, Waterdrop raised 160 million yuan in its series A funding round. Through series B financing, it raised almost 500 million yuan in March 2019. Three months later, it completed its series C funding round with more than 1 billion yuan. Tencent was a lead investor in the latter three funding rounds.

According to the company’s website, Waterdrop works with 28 insurance companies and has more than 250 million users. It has also launched more than 60 products over the years.