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

It’s no secret that pre-AI era startups are generally getting little love from investors now.

Ariel Katz, co-founder and CEO of a nine-year-old healthcare data platform H1, argues that not all SaaS companies should be painted with the same broad brush.

“If you’re a workflow SaaS company, you could vibe code that,” he told TechCrunch. What AI cannot easily replicate, according to Katz, is a company that is a data provider at its core.

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

“I don’t worry about Claude ever doing what we do,” Katz said, referring to Anthropic’s popular AI model. He thinks that the data H1 collects on physicians globally could actually be so valuable to AI model makers that they are more likely to become customers than competitors.

CVS Health Ventures, the corporate venture capital arm of the CVS/Aetna health giant, must agree that H1 is in no danger of becoming a victim of the “SaaSocalypse.” The investor just led a $40 million round into H1.

H1 wasn’t looking to raise capital, Katz said. The startup turned cash flow and EBITDA profitable last year and is forecasting to grow over 40% this year. But the partnership with one of the largest healthcare companies in the world was hard to refuse, Katz said.

Despite the strong financial fundamentals, companies like H1 aren’t exciting for traditional VCs who are currently consumed with backing AI startups at skyrocketing valuations.

H1 was last valued at $750 million 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 secured capital just before valuations plummeted in 2022, H1 has focused on becoming profitable. The startup has also grown through acquiring smaller competitors and complementary businesses.