H1 raises $40M from CVS, showing SaaS startups still land deals
▼ Summary
– H1 CEO Ariel Katz argues that data-provider SaaS companies are safe from AI disruption, unlike workflow SaaS, because AI cannot easily replicate their core data.
– CVS Health Ventures led a $40 million investment into H1, indicating agreement that H1 is not vulnerable to the “SaaSocalypse” affecting other startups.
– H1 was not seeking funding; it is cash flow and EBITDA profitable, forecasting over 40% growth this year, but partnered with CVS for strategic reasons.
– Traditional VCs are less interested in companies like H1, focusing instead on backing AI startups with high valuations.
– H1 has focused on profitability and growth through acquisitions after its $100 million funding at a $750 million valuation in November 2021.
Not every startup outside the AI hype cycle is struggling to secure funding. While many pre-AI era companies find themselves overlooked by today’s investors, healthcare data platform H1 is proving there are still exceptions.
Ariel Katz, co-founder and CEO of the nine-year-old company, argues that the broad dismissal of SaaS startups misses an important distinction. “If you’re a workflow SaaS company, you could vibe code that,” Katz told TechCrunch. What artificial intelligence cannot easily replicate, he contends, is a business built fundamentally on being a data provider.
That argument naturally serves H1’s own interests. The company’s entire model revolves around selling detailed physician intelligence to pharmaceutical firms, hospital networks, and health insurers. But Katz’s logic holds weight. “I don’t worry about Claude ever doing what we do,” he said, referencing Anthropic’s flagship AI model. In his view, the global physician data H1 collects could prove so valuable to AI developers that they are more likely to become customers than competitors.
CVS Health Ventures, the corporate venture capital arm of the CVS/Aetna giant, appears to share that conviction. The investor has just led a $40 million funding round for H1, signaling confidence that the startup is not vulnerable to the so-called “SaaSocalypse.”
Katz noted that H1 was not actively seeking new capital. The company reached cash flow and EBITDA profitability last year and projects over 40% growth this year. Yet the opportunity to partner with one of the largest healthcare organizations in the world proved too compelling to pass up.
Still, despite these strong financial fundamentals, traditional venture capitalists remain largely focused on backing AI startups at soaring valuations. Companies like H1, which operate outside that frenzy, often struggle to attract attention.
H1 was last valued at $750 million when it raised $100 million led by Altimeter Capital in November 2021, at the peak of the Covid-era tech bubble. Like many firms that secured funding just before valuations cratered in 2022, H1 has concentrated on achieving profitability. The startup has also expanded by acquiring smaller competitors and complementary businesses along the way.
(Source: TechCrunch)
