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Cover story | Lu Qinchao of Danlu capital: only being the "lead investor" of high-quality

Media 2021-11-21 15:18:44
In February this year, Lu Qinchao was once again listed in Forbes "the best female venture capitalist in 2021". Relying on her excellent clinical medical literacy and many years of industry experience and knowledge, she has excavated the next star medical entrepreneurship project to help domestic medical enterprises move towards the world stage with capital.

Lu Qinchao

Founding partner & executive partner of Danlu capital

Interview | Li Huiwen | Li Yingliang

Responsible editor | Li huitu | Yan Xueying
2020 is an extraordinary year. COVID-19 sweeping the globe not only seriously affects people's health and daily life, but also makes people more deeply aware of the importance of innovation in health care industry to maintain world health.
In the field of health care, whether it is early investment and financing, or later IPO and M & A, it shows a trend of "going upstream". According to the annual investment and financing report of the medical and health industry in 2020 released by Silicon Valley Bank, a number of investment and financing indicators of medical related industries in 2020 reached an all-time high.
In February this year, Forbes China released the "list of the best female venture capitalists in 2021", and Lu Qinchao was once again listed as a number of star medical projects with excess returns. Lu Qinchao is behind the new generation of domestic medical and health brands such as Jianfan biology, robust medical and Kefu medical.

The senior female investor with excellent clinical medical background is injecting capital into the strength of domestic medical industry and the world with excellent market sensitivity and professional medical knowledge.

Refusing to be stable is the cultivation of star investors in the medical industry

2021 is the 16th year that Lu Qinchao has become a professional investor.

In 1996, she graduated from the Department of clinical medicine of Tongji Medical College of Huazhong University of science and technology. A stable and smooth road to medical practice was in front of her. But Lu Qinchao, who had been "restless" since childhood, did not play cards according to common sense. Lu Qinchao, a young and energetic man, gave up his job in the medical school of Sun Yat sen University, stepped into the business sea with high winds and waves, and worked as a sales representative of blood glucose meter in Johnson & Johnson Likang company.

The real opportunity for her to forge an indissoluble bond with investment is her two years of studying for an MBA at the Chinese University of Hong Kong. In her circle of friends, there are more and more students and friends in the financial sector, and her "hard core" clinical medicine background has laid a good foundation for her to become a star investor in the medical industry in the future.

After graduating from MBA in 2005, Lu Qinchao returned to the mainland and Sequoia Capital China fund extended an olive branch to her. At the golden stage of reform and opening up and improving the socialist market economic system, the private economy is active, capital is surging, and the market is glowing with unprecedented vitality.

When Lu Qinchao came to Sequoia Capital, it was just when the equity investment industry had just entered a rising period in China, and many of the early and medium-term companies she led to invest, such as Jianfan biology, armo, robust medical, Shanghai Yirui, Shenzhen Jingtai, etc., have now developed into leading enterprises in the field of medical segmentation. With 13 years of investment experience in Sequoia Capital, Lu Qinchao said that she gained the most in her life.

More than 10 years of experience in the investment community has also given Lu Qinchao a "capital" with accumulated wealth. "Restless" Lu Qinchao finally found the opportunity to "break the ceiling" at the threshold of "women are 40 years old", joined the "fission tide" in the field of venture capital and equity investment, left Sequoia Capital to "fly alone" and changed from a partner to the founder of a new fund.

The transformation of mentality and state and the subsequent challenges are actually a process of expectation and enjoyment for her: "How to achieve a balance between the identity of investors and entrepreneurs is actually a kind of learning. I am a person who pursues self-growth and hope to become better and better. If I only stop above the partner of Sequoia Capital China fund all my life, I will feel that the challenge to myself is not enough."

In February 2018, Lu Qinchao officially founded Danlu capital together with Su Zhenbo, the former managing partner of the shared investment medical fund. She "teamed up" with Su Zhenbo to start a business. She believes that the two people's similar experience and background are the basis for cooperation: "we both studied medicine, and my first job was to promote blood glucose meters, Frank (Su Zhenbo) It's to promote surgical consumables. We all know a lot about marketing. Frank is a good entrepreneurial partner. It's better to do it together than to fight alone. "

Linking all these seemingly "impulsive" decisions together can outline Lu Qinchao's life track throughout - constantly seeking change and surpassing herself yesterday. She laughs that the secret of keeping young is to work more with young people: "I especially enjoy the process of change. If a person doesn't change, his mind will grow old and his body will grow old. I hope I can keep my mind young and am very willing to communicate with young entrepreneurs. Their way of thinking will always give me new inspiration."

China's capital market thirty years of age has also undergone a "big exam" in 2020 when the global economy was enveloped in the shadow of the COVID-19 pandemic.

According to the data of Qingke Research Center, in 2020, under the complex economic environment, there were 7559 investments in China's equity investment market, with a year-on-year decrease of 7.9%, narrowing the decline; The investment amount was 887.149 billion yuan, a year-on-year increase of 14.0%.

At the same time, affected by the epidemic, since the second quarter of 2020, the appointment, adjustment and signing of investment institutions have been gradually carried out. Therefore, the completion of investment activities, especially the delivery of large investment, occurs more in the second half of the year.

"The main impact of the epidemic on us is that offline activities have been transferred to online, and the number of projects contacted is more than before the epidemic, because now all localities have organized efficient online roadshows. In fact, we have been used to conducting online or telephone interviews on projects first, and screening competent enterprises for on-site interviews. Therefore, in addition to the reduction in the number of business trips, the epidemic actually The impact on our whole investment decision-making process is very limited, "said Lu Qinchao.

However, she admitted that in 2020, COVID-19 was hit by some of the enterprises that were mainly subordinate to the offline business. However, Dan Lu capital still completed the delivery of ten investment projects of the first phase of the fund, seven investment projects completed the next round of financing, and two first phase investment projects to declare IPO's brilliant results. The second phase fund also completed its first closure and the delivery of three investment projects in 2020.

At present, 70% of Danlu capital is invested in the field of medical science and technology, including high-value consumables, IVD, medical big data, robots, etc., and 30% in the field of innovative drugs.

Lu Qinchao also said that with the increasingly serious consumption upgrading and aging trend in China, the demand for household medical devices and home care will increase significantly, and relevant industries will be favored. However, she believes that the competitive model of household medical devices needs to win through multiple categories, strong channels and heavy marketing.

"The technical barriers of household medical devices are relatively low. The transition from medical products to civilian markets usually means the popularization process from high gross profit to low and medium gross profit. For household medical device enterprises with low gross profit, we should win by the number of users and product categories. We generally do not invest in a single product line, but in collective enterprises," she said.

Kefu medical treatment is the best example. As early as 2014, Lu Qinchao contacted Kefu medical and has been paying attention to this multi category dealer of household medical devices: "At that time, Corfu had its own storage platform and gradually transformed into a self-developed and manufacturer in the process of acting as an agent for the products of other manufacturers. I have been following up the development of enterprises and studied their operation from 2015 to 2017. I think their finance is becoming more and more standardized and there is real business growth, so I have full confidence in their development." In 2018, Danlu capital led investment in Kefu medical, holding 3.9% of the shares.

Facts have proved that her vision is correct. From 2017 to 2019, Kefu medical's operating revenue increased steadily, and it is expected to achieve a revenue of about 2.334 billion in 2020. Kefu medical held a meeting on the gem on February 8, 2021. As a like-minded "old friend" and shareholder, Lu Qinchao has full expectations for Zhang Min, founder of Kefu medical: "I hope Kefu medical will become No.1 of China's household medical devices and shine on the world stage."

Focus on long-term value and only be the "lead investor" of early medical projects

As an investment institution focusing on the medical and health industry, Danlu capital has been officially operating for nearly three years. In the first year of its establishment alone, Danlu capital has signed 12 investment projects, of which 4 projects have completed a new round of financing, and the valuation of two projects has doubled or higher in the follow-up financing, giving a beautiful first year report card.

In an interview, Lu Qinchao made a clear picture of the target project of Danlu capital: "first, it must be an innovative technology start-up enterprise from the perspective of China; in terms of hard indicators, it is expected that the market scale of single products in China should be more than 2 billion yuan and the 10-year average growth rate should be more than 30%; finally, the invested enterprises should have the potential to become market leaders."

His "domineering" speech showed Lu Qinchao's full confidence. Excellent clinical medical literacy, knowledge and industry experience accumulated over the years are Lu Qinchao's confidence in judging high-quality early medical projects.

"Among the Post-70s investors, there are not many people with clinical medical background. We have rich accumulation in the medical and venture capital industries and are not afraid of competition. Our investment strategy has a saying - guided by unmet clinical and social needs. No matter how good some technologies are, but there is no market demand or social demand, we will not invest."

Another "domineering" investment style of Lu Qinchao is "only leading investment but not following investment": "we hold a large proportion of shares in most leading investment projects, usually 10% to 30%. Our investment philosophy is to make heavy bets once we are optimistic about the project."

Lu Qinchao's investment philosophy is simple and clear. She sets her goal to create and operate a "small and beautiful" medical fund, and the main foundation is maintained at a scale of 500 to 1 billion for a long time. "From the beginning, frank and I have the same idea. We don't mind how much money we make in the short term, and we don't like to compete with others on a crowded track."

But in fact, the "small goal" reflects Lu Qinchao's "great wisdom": "We hope to continue to strengthen Danlu capital, become a first-line brand of medical venture capital, and win with characteristics and performance. We insist on investing in a number of excellent domestic medical enterprises from the early stage, do a good job in brands, projects and performance. It is not only to obtain excess returns, but also a sense of social responsibility to revitalize the national medical industry."

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This article was published in the Journal of science, technology and finance in March 2021

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