Source Code leads Series C for China online insurance broker
Yuanbao, a Chinese online insurance broker, has raised nearly RMB1 billion ($156 million) in Series C funding led by Source Code Capital. Other investors include Cathay Capital, Hike Capital, Northern Light Venture Capital, Qiming Venture Partners, and SIG.
Yuanbao was founded in 2020 by Rui Fang, formerly a vice president of NetEase Group and head of the company's technology department. He was responsible for establishing NetEase’s online payment and e-commerce units.
The company was incubated by Hike, whose co-founder, Anna Xu, previously led the mobile internet division at NetEase.
“China’s insurance industry is worth RMB4 trillion ($611 billion) a year, but the digitalization rate is only about 5%. We found one good company, but the valuation was too high, so we approached the CEO of NetEase’s e-commerce unit about incubating a new business. It launched at the beginning of last year and is already generating significant revenue,” Xu told AVCJ earlier this year.
Yuanbao leverages artificial intelligence and other technology tools to match buyers with suitable products. It also has a national insurance brokerage license. The company has accumulated millions of paying users by focusing on cost-effective health insurance products which have a low payment threshold.
"Internet insurance is all about inclusivity. It enables ordinary people in less developed parts of China to understand and purchase insurance products to get protection. This is hugely valuable and it benefits the country and the people," Fang said in a statement.
A direct competitor is Waterdrop, which operates an insurance marketplace and a medical crowdfunding platform. It raised nearly $500 million in private funding and recently completed a $360 million IPO in the US. Waterdrop is the largest independent third-party insurance platform in China, with 19.2 million paying customers and RMB14.4 billion in first-year premiums last year.
The Chinese life and health insurance market is expected to see compound annual growth of 14.5% through 2024 with total premiums reaching RMB 6.1 trillion, according to iResearch Consulting. Online marketplaces will account for 9.7% of sales, up from 6% in 2019.
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