H1 received $40 million from CVS, proving that SaaS startups can still attract investment

It’s no secret that startups in the pre-AI era generally get little love from investors now.

Ariel Katz, co-founder and CEO of the nine-year-old healthcare data platform H1argues that not all SaaS companies should be painted with the same broad brush.

“If you’re a workflow SaaS company, you can use the code for that,” he told TechCrunch. What AI can’t easily emulate, according to Katz, is a company offering data at its core.

That’s a self-serving view — H1’s entire business is built on selling detailed information about doctors to pharmaceutical companies, hospital systems and health insurance companies — but that doesn’t mean he’s wrong.

“I don’t worry about Claude doing what we do at all,” Katz said, referring to Anthropic’s popular AI model. He believes the data H1 collects on doctors globally 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 health giant CVS/Aetna, would have to agree that H1 is not at risk of falling victim to the “SaaSocalypse.” The investor just led a $40 million round in the first half.

H1 was not looking to raise capital, Katz said. The startup successfully converted cash flow and EBITDA into profits last year, and is expected to grow by more than 40% this year. But Katz said the partnership with one of the world’s largest healthcare companies was difficult to turn down.

Despite strong financial fundamentals, companies like H1 are not exciting for traditional venture capitalists who are currently busy backing AI startups at sky-high valuations.

H1 was last evaluated 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 of 2021.

Like other companies that received capital before valuations fell in 2022, the first half was focused on becoming profitable. The startup has also grown by acquiring smaller companies Competitors and complementary Companies.