In an unusual financing, U.K. diagnostics startup CompanDX has raised $6.1 million (39.6 million RMB) from Chinese government and private investors to develop and commercialize products in China. The investment is non-dilutive, meaning that instead of taking an equity stake in the startup, investors will be eligible for a percentage of any revenue from commercialized products sold in China.

“This is an extraordinary step for an early stage technology company and allows us to put a significant capital sum to work,” says Simon Haworth, CEO of CompanDX. “The China deal provides a shop window for how our technology can be applied in a diagnostic setting and helps us prove the viability of our technology platform to potential pharma and mid-cap partners interested in patient stratification for clinical trial purposes.”

Based in the biotech incubator BioCity Nottingham, a 2009 spinout from Nottingham Trent University applies proprietary bioinformatics technology to advance personalized medicine. Originally offering support services for research on a fee-for-service basis, the company in 2012 refocused its business beyond oncology to wider applications in personalized medicine for all major indications.

The company says the deal will help it accelerate product development due to the regulatory climate in China and the willingness of major regional science parks there to provide funding for accelerated development for products relevant to the Chinese marketplace. CompanDX plans to establish an office in the country shortly and expects to generate revenue from approved products in less than three years.

“The recent paucity of early stage funding in our sector has stifled expansion and potential growth for companies at a critical stage of their development, but CompanDX has shown great initiative in sourcing finance this way,” says Glenn Crocker, CEO of BioCity Nottingham. “Several of our other fast-growing companies could learn from this model, so we will watch the CompanDX development with interest.”

China has set ambitious targets to ramp up its innovation capability, and has targeted biotechnology as a strategic pillar for growth under its 12th Five-Year Plan. The plan allocates more than $1.5 billion toward innovative drug development, with three quarters of the funds to be disbursed at the provincial and municipal levels.

Foreign capital will also help another life sciences startup, this time a medical device company in the United States. Korea private equity group Power Heart Consortium has stepped in with a $30 million investment in startup Cleveland Heart. The company is developing an artificial heart that can serve as a transition to a heart implant, and a left ventricular assist device that has a smaller pump mechanism to allow for less invasive surgery when implanted. The startup was launched by Trans-world Medical Devices, based in Charlotte, North Carolina and the Cleveland Clinic Foundation, the corporate venture arm of the Cleveland Clinic.