OpenEvidence, a burgeoning artificial intelligence startup, has secured a significant $250 million in a new funding round, catapulting its valuation to a staggering $12 billion. The funding, spearheaded by Thrive Capital and DST, marks a meteoric rise for the Cambridge, Massachusetts-based company, which has now amassed $700 million from investors in under a year.
Initially raising $75 million at a $1 billion valuation in February, OpenEvidence’s trajectory accelerated dramatically, reaching a $6 billion valuation by October. The company’s impressive investor roster includes prominent names such as Google’s venture arm, Nvidia, Kleiner Perkins, Craft Ventures, and the Mayo Clinic, underscoring the strong market confidence in its vision.
Founded in 2022 by Daniel Nadler, a serial entrepreneur known for previously building Kensho Technologies—an AI firm acquired by Standard & Poor’s for approximately $700 million—OpenEvidence is positioned as an AI-powered assistant for physicians. Nadler emphasizes that the platform is not merely a conversational chatbot but a sophisticated tool designed to aid doctors in making critical clinical decisions at the point of care. Unlike general AI models trained on the open internet, OpenEvidence’s AI is meticulously trained on data from leading scientific journals, ensuring the accuracy and reliability of the medical information it provides.
“The ‘ChatGPT for doctors’ moniker is a useful descriptor, but our core mission is to empower physicians with AI-driven insights to enhance high-stakes clinical decision-making,” Nadler stated. “Our training data is exclusively derived from high-quality medical literature, rigorously excluding the variable and potentially unreliable information found on the open internet or social media.”
Nadler claims that OpenEvidence is currently the most widely adopted AI platform among physicians in the United States, with over 40% of doctors actively using the tool. This widespread adoption is a testament to the immense market opportunity within healthcare, a sector that represents nearly 20% of the U.S. GDP and sees an annual expenditure of $5 trillion.
“Healthcare is the largest sector of the real economy, and the realization of AI’s transformative potential within this space is creating significant opportunities for innovation and growth,” Nadler added.
The competitive landscape is indeed heating up, with major players like OpenAI and Anthropic also venturing into the healthcare AI domain. OpenAI recently launched “ChatGPT Health,” and Anthropic introduced “Claude Healthcare,” both HIPAA-compliant versions of their flagship AI models tailored for the medical sector.
Despite this emerging competition, Nadler asserts that OpenEvidence’s competitive advantage lies in its specialized focus on physicians, the quality of its curated data, and its established first-mover advantage. “We’ve already cultivated a deep feedback loop with hundreds of millions of real-world clinical consultations from verified physicians. This extensive usage data and the established partnerships are incredibly difficult to replicate,” he explained. “Even if a competitor were to emulate our approach today, they would still be significantly behind due to the invaluable real-world usage data we’ve accumulated.”
OpenEvidence reported surpassing $100 million in annualized revenue last year, driven primarily by organic growth, with 95% of new users acquired through physician referrals. Nadler highlighted the unique challenges and opportunities in serving smaller medical practices that may lack extensive IT departments or substantial budgets for specialized software.
The company’s revenue model, which relies on advertising, has been a key factor in its rapid adoption. OpenEvidence offers promotional opportunities to companies through various formats within its application, including banner ads, badges, images, and videos. This approach contrasts with a subscription-based model, facilitating broader and faster market penetration.
This advertising-centric revenue strategy aligns with a broader trend within the AI industry, as evidenced by OpenAI’s recent testing of an ad-supported version of ChatGPT. Nadler emphasizes a disciplined approach to growth, aiming to balance expansion with long-term profitability, a stark contrast to companies perceived as “burning billions” in pursuit of market share.
The AI sector is experiencing a significant surge in investment. In the third quarter of last year, there were six AI funding rounds exceeding $1 billion. Anthropic is reportedly in talks to raise an additional $10 billion, and Elon Musk’s xAI recently announced a $20 billion funding round. While acknowledging the intense M&A activity driven by big tech, Nadler remains focused on building OpenEvidence as an independent entity.
“I’ve experienced the acquisition route before, and while it can be successful, my current objective is to construct a company that delivers compounding value over many years,” Nadler stated.
Regarding a potential initial public offering (IPO), Nadler suggests that companies like SpaceX, OpenAI, and Anthropic, which are rumored to be considering 2026 IPOs, will likely pave the way. “There’s a natural progression in emerging technology ecosystems,” he observed. “Foundation model companies typically go public first, followed by the application layer. This mirrors the evolution of the internet, and we anticipate a similar pattern for the current AI cycle.”
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