It’s no secret that pre-AI startups generally get little love from investors now.
Ariel Katz, co-founder and CEO of a nine-year-old healthcare data platform; H1argues that not all SaaS companies should be painted with the same broad brush.
“If you’re a SaaS workflow company, you could code it,” he told TechCrunch. What AI can’t easily replicate, according to Katz, is a company that is a data provider at its core.
That’s a self-serving view — H1’s entire business is based on selling detailed information about doctors to drug companies, hospital systems and health insurers — but that doesn’t mean it’s wrong.
“I’m not worried about Claude ever doing what we do,” Katz said, referring to Anthropic’s popular AI model. He believes the data H1 collects on doctors worldwide could actually be so valuable to AI model makers that they are more likely to become customers than competitors.
CVS Health Ventures, the venture capital arm of healthcare giant CVS/Aetna, must agree that H1 is in no danger of falling victim to the ‘SaaSocalypse’. The investor just led a $40 million round in H1.
H1 didn’t want to raise capital, Katz said. The startup turned cash flow and EBITDA profitable last year and is projected to grow over 40% this year. But partnering with one of the world’s largest healthcare companies was hard to say no to, Katz said.
Despite strong financials, companies like H1 aren’t exciting to traditional VCs who are currently consumed with backing AI startups at skyrocketing valuations.
H1 was last valued at 750 million dollars when it raised $100 million in funding led by Altimeter Capital at the height of the Covid-era tech bubble in November 2021.
Like other companies that raised capital just before valuations fell in 2022, the first half has been focused on becoming profitable. The startup has also grown through acquiring smaller ones competitors and complementary businesses.
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