Deal focus: Shukun stands out from the crowd

When Wei Zhou, founding partner of China Creation Ventures (CCV) started looking at artificial intelligence-enabled (AI) medical imaging start-ups in 2019, it was already a crowded space.

Moreover, most solutions focused on the lungs. This was a consequence of data availability. AI medical imaging start-ups help doctors make diagnoses by comparing scans to hundreds of previous samples and identifying discrepancies. There are many open-source databases of lung nodules, so it is a natural first area of focus.

Shukun was an exception. The company had opted to start with heart disease and was developing its own database of images. “I’m not a medical expert. I approached Shukun more from a TMT [technology, media and telecom] perspective. Is the business model suited to unleashing the underlying technology? Is the company solving a real pain-point in the hospital?” Zhou explains.

CCV concluded there was more value in cardiovascular than lung diagnoses. While AI systems pick up lung nodules, it’s hard to tell if they will become cancerous. In contrast, abnormalities concerning the heart tend to be serious and require examination by a doctor. The VC firm – which was also impressed by the Shukun team, headed up by two founders who spun out from IBM – led a RMB200 million ($29 million) Series B round in February 2019.

A real breakthrough came with COVID-19. Shukun developed a diagnosis solution in 10 days and started supplying it to dozens of hospitals, including Leishenshan hospital in Wuhan.

“Hospitals are normally very cautious, but the pandemic has created opportunities for new technology,” says Zhou. “It was impossible for doctors to handle so many cases in the early days of the outbreak in Wuhan, and AI produced immediate results. Many hospitals found the tool useful, and if you use something for three months, it’s painful to give up.”

Shukun recently raised RMB200 million in the third tranche of Series B round jointly led by Qiming Venture Partners, Thunder Software Tech, Everest Venture Capital, and SPD Silicon Valley Bank. It comes two months after a RMB200 million Series B extension. Lei Zhang, Shukun’s chief marketing officer, tells AVCJ that another round is in the planning stage.

Zhou adds: “The valuation has kept going up keeps these last three months because Shukun has emerged from the bottleneck of commercialization. A sufficient number of hospitals are now spending money on services.”

Shukun now has collaborations with 29 of China's top 30 hospitals specializing in cardiovascular diseases. Overall, more than 300 hospitals nationwide use the company’s "digital heart" products and 100 use its “digital brain,” which launched in July and is said to be the first product of its kind globally.

Nevertheless, there remains a tricky legal obstacle to wider adoption: doctors, not technology solutions, hold medical licenses. Physicians must review images and make a proper diagnosis, rather than relying on Shukun’s report, which slows down the process.

For Zhou, though, the core value of AI diagnosis solutions is not efficiency improvements, but a reduction in misdiagnoses. “In China’s second-tier or third-tier cities, they often have the best equipment, but they don't have many patients. This is because people only trust experienced doctors in top-tier cities,” he says.

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• Topics
• Greater China
• Early-stage
• Healthcare
• Technology
• China
• China Creation Ventures
• Qiming Venture Partners
• Everest Capital