This screenshot taken on Nov 24, 2020 shows the official website of Waterdrop Inc.

Tencent Holdings Ltd is investing about US$150 million in Waterdrop Inc to bankroll the Chinese startup’s expansion in healthcare crowdfunding, according to people familiar with the matter.

The funding will be used to expand Waterdrop's online platform and bolster its technology, people familiar with the matter said, providing further ammunition for the firm to compete against Ant Group Co in the insurance technology sector

The insurance tech firm, which already counts Tencent as a backer, will use the funds to expand its online platform and bolster its technology, the people said, requesting not to be identified because the matter is private.

The funding provides further ammunition for Waterdrop to compete against Ant Group Co in the insurance technology sector. The four-year-old Beijing firm is among a batch of fast-growing platforms that are flipping the idea of insurance on its head, vowing to offer health-care protection for pennies.

ALSO READ: Fintech companies expand their reach

Waterdrop and Tencent declined to comment in respective emailed statements.

The additional funding comes atop the US$230 million that Waterdrop raised from Swiss Re and other investors during its series D round. The company is also planning to go public, targeting a valuation of about US$4 billion, people familiar with the matter said in July.

One of Waterdrop’s main businesses, Water Mutual, operates like a collective: investors chip in small amounts of money to help others diagnosed with critical illnesses. In return, they receive payouts when they’re in need. The company said last year it takes a commission of 8 percent.

Waterdrop is working with Bank of America Corp and Goldman Sachs Group Inc on the IPO. The US is among potential listing venues but no final decisions have been made.

READ MORE: Tencent-backed retailer Miniso raises US$608m in US IPO