OpenEvidence, the AI-powered medical search engine used by 860,000 U.S. clinicians, has considered a $200 million funding round at a $20 billion valuation. The round is unlikely to proceed due to dilution concerns, according to a source involved in the discussions.
TL;DR
- OpenEvidence, a medical AI startup, is considering a $200 million funding round at a $20 billion valuation, but is unlikely to proceed due to dilution concerns.
- The company has seen significant revenue growth, doubling in the past seven months to $300 million in annualized revenue, which may ease investor fears about competition from larger AI labs.
- OpenEvidence's AI-powered medical search engine is used by 860,000 licensed and verified U.S. clinicians, with recent offerings including Voice Mode for hands-free queries.
What happened
OpenEvidence, a medical-focused AI startup, has reportedly considered raising $200 million at a $20 billion valuation. However, the company is unlikely to proceed with the fundraise due to concerns over dilution of shares for founders and shareholders, as reported by The Information on July 17.
The company has been in acquisition talks with a large tech company in the last few months, according to a source involved in the discussions. OpenEvidence is currently generating around $300 million in annualized revenue, which implies close to $25 million in revenue each month. This is double what the company was bringing in roughly seven months ago, when it was in talks to raise at a $12 billion valuation.
OpenEvidence is running at breakeven on a cash flow basis as it invests in training its models for tasks such as generating medical notes and searching information from medical journals. The company's AI-powered medical search engine is used by 860,000 licensed and verified U.S. clinicians, with recent offerings including Voice Mode, a hands-free feature that allows clinicians to ask questions and get spoken, evidence-based answers without touching a screen.
Why it matters
This significant revenue growth could ease fears among investors that larger AI labs, which are putting out competing apps, will absorb AI application startups. For example, OpenAI launched ChatGPT for Clinicians in April, which helps healthcare professionals with documentation and medical research.
The potential funding round and acquisition talks highlight the competitive landscape for medical AI startups. OpenEvidence's growth and breakeven cash flow status demonstrate its ability to compete with larger players in the market.
The company's recent offerings, such as Voice Mode, show its commitment to innovation and meeting the needs of clinicians. This could attract more users and investors, even if the current funding round does not proceed.
Key facts
- OpenEvidence is considering a $200 million funding round at a $20 billion valuation, according to The Information.
- The company is unlikely to proceed with the fundraise due to dilution concerns, per a source involved in the discussions.
- OpenEvidence has been in acquisition talks with a large tech company in the last few months.
- The company is generating around $300 million in annualized revenue, implying close to $25 million in revenue each month.
- OpenEvidence's revenue has doubled in the past seven months, up from $150 million in annualized revenue seven months ago.
- The company is running at breakeven on a cash flow basis as it invests in training its models.
- OpenEvidence's AI-powered medical search engine is used by 860,000 licensed and verified U.S. clinicians.
- The company's recent offerings include Voice Mode, a hands-free feature for clinicians to ask questions and get spoken, evidence-based answers.
Context
OpenEvidence's potential funding round and acquisition talks come at a time when healthcare firms are increasingly putting AI to work in areas where employee strain, patient demand, and operational complexity intersect. According to recent PYMNTS Intelligence research, healthcare's pathway toward AI is distinct, focused more on targeted relief than sweeping automation.
The research examined AI use in financial services and insurance, healthcare and medical, and media and advertising, and found that while every sector is moving toward AI, healthcare's narrower deployment also suggests discipline. The sector is concentrating AI in areas where it can reduce friction now, then build toward broader transformation once data and system integration improve.
OpenEvidence's growth and innovation in the medical AI space position it as a key player in the competitive landscape. The company's ability to generate significant revenue and attract acquisition interest highlights the potential of AI in healthcare and the opportunities for startups in this sector.
