H1 secures $40M from CVS, proving that SaaS startups can still attract funding

It’s no secret that startups in the AI ​​era often get a little love from investors now.

Ariel Katz, co-founder and CEO of the nine-year-old healthcare platform H1he says that not all SaaS companies should be painted with the same broad brush.

“If you’re a SaaS company in transit, you can stop this,” he told TechCrunch. What AI can’t easily replicate, according to Katz, is a company that provides data at its core.

That’s a subjective opinion — the entire H1 business is built on selling physician information to pharmaceutical companies, medical practices, and health insurers — but that doesn’t mean they’re wrong.

“I’m not worried that Claude will do what we do,” Katz said, referring to Anthropic’s popular AI brand. He thinks that the data that H1 collects from doctors around the world could be so important to AI developers that they can become customers rather than competitors.

CVS Health Ventures, CVS/Aetna’s main financial arm, has to admit that H1 is at risk of being caught up in the “SaaSocalypse.” The investor only managed $40 million in the H1 round.

H1 was not looking to raise capital, Katz said. The startup turned a profitable EBITDA last year and is forecast to grow more than 40% this year. But a deal with one of the world’s largest medical companies was hard to resist, Katz said.

Despite the startups’ strong financial footing, companies like H1 aren’t attractive to traditional VCs who are used to backing AI startups at exorbitant prices.

H1 was last purchased $750 million where it raised $100 million led by Altimeter Capital at the peak of the Covid-era technology in November 2021.

Like other companies that have raised investment capital before the drop in 2022, H1 is focused on making profits. The beginning has also grown due to small acquisitions competitors and additional sales.