Investing in the Right Start-Ups: a Decision-Making Model for Chinese Venture Capital Investment in Precision Oncology in the United States

Abstract

Precision oncology aims to combat cancer through targeted, personalized medicine, while technology transfer helps to translate knowledge in the field of precision oncology from research to practice; venture capital is the underlying funding source that supports and enables this process. With the booming venture capital industry in China, there is an increasing interest among Chinese venture capital investors to invest in precision oncology start-ups in the United States. This project examines the trends of Chinese venture capital investment in start-ups in the United States that focus on precision oncology. The overall objective is to learn about the purposes and preferences of Chinese venture capital firms, and to develop a model of decision-making on cross-border venture capital investment; this model should help Chinese venture capital investors to improve the targeting of investments and to enhance the effectiveness of technology transfer. A mixed-method research approach was adopted and included a significant literature review, secondary data analysis on 680 deals involved Chinese venture capital investment in healthcare in the United States, and 41 elite interviews of venture capital investors in both China and the United States. A model of decision-making on cross-border venture capital investment was developed based on the analytical findings and is presented as the “3M Model”. The three critical components of the 3M model are Macro-environment, Motivation, and Match (demand-supply). In addition, 4 toolkits were developed to help investors apply the model when making investment decisions in start-ups that focus on precision oncology in the United States.