Tencent-backed online insurance platform Waterdrop raises $145m Series C

A clerk counts Chinese yuan and U.S. dollar banknotes at a branch of Bank of China in Taiyuan

Waterdrop, a Beijing-based online insurance platform backed by Tencent, has raised more than Rmb1 billion ($145 million) in its Series C funding round led by China-focused investment firm Boyu Capital.

The fundraising for the Series C round was completed less than three months after Waterdrop raised Rmb500 million ($74.2 million) in its Series B financing round led by Tencent.

Waterdrop’s Series B round was believed to be one of the largest deals in the insurance tech and healthcare market in China since the global economy spiralled down in 2018.

A Bloomberg report in April said Waterdrop was seeking a new funding at a valuation exceeding $1 billion, following the close of the Series B round.

The startup, founded by former Meituan Dianping executive Shen Peng in 2016, said the latest funding round was also participated by Tencent, CICC Capital, and Gaorong Capital.

Waterdrop will use the fresh funding to build a team focused on health insurance and to explore artificial intelligence applications in the industry.

Known in Chinese as Shuidi, Waterdrop brokered insurance policies with annual premiums of over Rmb500 million in May. The company added that nearly 90 per cent of its users bought their first online insurance product through the platform.

All its three businesses, including Waterdrop Crowdfunding, Waterdrop Mutual and Waterdrop Insurance, are mainly operated on WeChat ecosystem, including official accounts and mini-programs.

The startup rapidly grew the businesses in China’s third, fourth and fifth-tier cities over the past three years.

The crowdfunding business raised over Rmb12 billion with donations reaching over Rmb400 million, while its mutual business has paid out over Rmb350 million in mutual aid fund and assisted more than 2,500 families.

On the other hand, Waterdrop Insurance has cooperated with over 50 insurance companies in China and launched value-for-money insurance products to serve more than 10 million users.

Hong Kong-based Boyu Capital, the lead investor in the Series C round, was reported last year to be raising a new US dollar-denominated fund of at least $3 billion in committed capital. The fund size has not been finalised as of last year and could be up to $4 billion, according to sources interviewed by Reuters.