How Zaihui & MediTrust’s platforms drive digital transformation in China
Innovation requires infrastructure. Leading tech companies are built on cloud computing platforms built by other companies before them. Mobile apps rely on mobile app stores as their access point to onboarding users. Retail e-commerce would hardly be convenient, and might not be possible, without online embedded payments.
Who builds the infrastructure? Often startups. To succeed, they have to identify the right opportunity in the right market, and find the right partners to support them as they scale.
B Capital Group portfolio companies MediTrust and Zaihui, both based in China, are early to the platform game in their respective industries. MediTrust has built a platform for patients to access quality and affordable medications and healthcare services online with various payor solutions. Zaihui has bundled services and customer relationship management software into a one-stop platform for small businesses to improve their marketing and customer engagement strategies.
MediTrust founder and CEO Seth Zhang and Zaihui co-founder Chenhao Zhu spoke with B Cap general partner Daisy Cai about how they identified opportunities, and shared insights other founders can apply to their own industries.
Where there’s a need …
To find untapped opportunities, founders should look for areas where fragmentation and disconnection are holding other companies back. By creating a platform that makes the market more efficient for those organizations, your startup can solve problems and become the glue that fixes a gap.
MediTrust was founded in 2017 in response to two urgent needs: Fragmentation in the healthcare industry, and high drug prices. The startup built a platform that connects pharmacies, insurance companies, and healthcare providers, making patient care more efficient, and giving patients access to more healthcare options. By expanding patient access to more pharmacies and care providers, MediTrust says it saved patients $46.2 million (300 million yuan) in health expenses in the first half of 2021.
“There’s no ‘right timing,’” said CEO Zhang, adding, “at least half of the market [is] paying out of pocket … but there’s no one helping the patient to address their payment issues.”
Zaihui, founded in 2015, similarly built its platform with industry gaps in mind. Owners of small and medium brick-and-mortar businesses — including restaurants, where Zaihui has initially focused — are often not as online as their larger competitors. They need help both getting online and scaling their reach to customers.
“We [had] seen a huge market out there, huge demand out there for this type of solution,” said Zaihui co-founder Zhu. “Consumer traffic [had] become more fragmented, and restaurants needed a data-driven approach to manage their user acquisition and retention online.”
Zaihui provides both automated and human help with social media marketing. For example, the platform automatically designs and pushes coupons across social media platforms, while also connecting businesses on its platform with customer success specialists who analyze marketing performance.
“At the end of the day, we want to build a Shopify-like solution for all the local service merchants — from restaurants to beauty shops, from cosmetic surgery to wedding services,” said Zhu.
Pick the right investors, pick the right market
Having a great solution to a problem isn’t, on its own, enough to build a great company with potential to scale. You also need to pick the right partners early on, and make sure you’ve picked a market with room to grow.
Zhang attributes MeditTrust’s early success in part to choosing investors with deep and entrenched industry connections, such as Shanghai Pharmaceuticals and China Reinsurance Corporation (China Re).
“They are the giants in the health insurance field,” said Zhang. He added that his company was able to leverage their investors’ resources, impact, and client connections to “make sure that at an early stage [that] MediTrust can grow very fast” and gain the trust of the larger pharmaceutical and insurance industries.
Zaihui, meanwhile, has built a platform at the intersection of China’s fast-growing e-commerce market and the country’s massive supply of small and medium-size businesses. The small business sector in China accounts for 80 percent of the country’s non-government jobs. Meanwhile, small businesses have been hit especially hard by the economic impacts of COVID-19, driving urgency for small companies to catch up to a digital world.