• The outsize returns VCs depend on might be out of reach through healthcare M&A this year.
• VCs told BI they don't see much appetite for big deals among healthcare's historical mega-buyers.
• Healthcare startups looking to sell may have to settle for lower prices from their peers.

Healthcare startups are hoping for more M&A in the market this year after a three-year drought of company combinations. But most VCs aren't expecting to reap blockbuster returns through big healthcare deals anytime soon.

The industry's historical mega-buyers — from Big Tech and retail to health plans and private equity — don't seem to have much of an appetite for big digital health deals this year, according to nearly a dozen VCs and investment bankers Business Insider spoke to.

Big Tech companies like Amazon and retailers like Walgreens have already made multibillion-dollar buys in healthcare and, in some cases, been burned by their losses. Insurers like United Healthcare are facing mounting scrutiny, said these investors. While private equity seems increasingly interested in healthcare technologies, many of PE firms' recent big healthcare buys have been public companies, and often those already demonstrating stable revenue and profitability, rather than high-growth startups.

Many healthcare startups are looking to get bought or raising down rounds to extend their lifespans, sometimes offering discounts on their last-round valuations to make a deal happen, BI reported in November. Better-performing startups, especially later-stage players, may not want to sell as investors hope for a reopening in the IPO markets that could help them recoup their returns, VCs told BI.

On the bright side, those descending valuations offer plenty of opportunities for late-stage digital health startups flush with cash and looking to grow. Healthcare startups like Transcarent have already announced acquisitions this year, while others like Datavant have signaled they're ready for an M&A spree.

Still, the outsize returns VCs depend on might be out of reach through healthcare M&A for the time being.

"M&A can be a great outcome. It just feels like there's not a lot of buyers that can do the kinds of deals that we would hope for for that big outcome," said IVP partner Yuri Lee.

Tech and retail's healthcare struggles

2024 brought a reckoning for retail healthcare as a number of large companies looked to downsize, sell off, or shut down their healthcare bets.

Walmart shut down its entire Walmart Health division in April, including its 51 health centers and its virtual care services. Walgreens closed at least 160 of its VillageMD primary care clinics throughout the year; the pharmacy retailer said in an August securities filing that it was considering selling part or all of its controlling stake in VillageMD, which Walgreens paid more than $6 billion for.

CVS, which owns a number of healthcare businesses, including the insurer Aetna and the primary care clinic chain Oak Street Health, swapped out its CEOs in October after undergoing a strategic review, where the company reportedly considered splitting up its retail and insurance businesses as it faced rising costs from Medicare Advantage claims, according to Reuters. (For its part, CVS has forged on with its expansion of Oak Street Health, which it bought for $10.6 billion in 2023. The pharmacy business continued opening new clinics throughout the year as other retailers backed off their own in-person healthcare bets.)

A CVS Health spokesperson declined to comment for this story but said the company is "focused on executing on our integrated care strategy." Walmart declined to comment. Walgreens didn't respond to a request for comment.

Some of Big Tech's healthcare investments underwent their own struggles last year. While Amazon's pharmacy business is drawing more consumer interest, its primary care business One Medical, which Amazon said in 2022 it was acquiring for $3.9 billion, lost Google as a large enterprise client in 2024 and faced an ongoing wrongful death lawsuit. Amazon also scrapped its telehealth business, Amazon Care, in 2022.

Amazon declined to comment on its M&A strategy. A spokesperson said the company is committed to One Medical's continued growth and plans to expand next to New Jersey, Northeast Ohio, and Westchester County, New York. The spokesperson said One Medical has contracts with around 10,000 employers and growing.

Investors said that while players like Amazon may look around for smaller acquisitions to tack onto their existing offerings — especially those they can get at a discount — those buyers aren't likely to take another big swing anytime soon.

"I think it's fair to say that they've had a lot of large-scale failures in trying to buy nationally scaled assets that would impose consistency on the system. It just doesn't work like that," said Dan Mendelson, the CEO of JPMorgan's healthcare fund Morgan Health, of large tech and retail companies like Amazon. "As soon as you move to more of a national system, you lose the quality control and a lot of the economic viability."

Steadier buyers may snub startups

For the likely buyers among health insurance's top players, federal scrutiny and a public reckoning could hamper megadeals this year.

UnitedHealth Group's Optum spent more than $31 billion on acquisitions between 2022 and 2024. UnitedHealth is currently trying to close a $3.3 billion deal to acquire home-health company Amedisys. But the Department of Justice sued to block the merger in November, citing antitrust concerns.

Some other health plan mergers fell through last year, including early talks between Anthem and Cigna about a potential combination, per Bloomberg. Blue Cross Blue Shield of Louisiana also called off plans to sell itself to Elevance Health in February after facing regulatory pushback.

For health plans, the elephant in the room is the December murder of former UnitedHealthcare CEO Brian Thompson, which ignited a public outcry over how health insurers pay for patient care, or, more accurately, how frequently they deny paying for it. PitchBook senior healthcare analyst Aaron DeGagne said insurers may seek to lay low for the next few months as criticism mounts — "A lot of things could be misinterpreted," he said.

Despite those headwinds, DeGagne noted that health plans are hoping to tap into recent advancements in healthcare AI technologies to make their prior authorization and claims processes more efficient. He said he thinks health plans will notch more startup partnerships this year, and likely make their own investments in the sector, before they turn to acquisitions.

UnitedHealth Group didn't respond to requests for comment for this story.

Private equity firms have remained active in healthcare and shelled out billions of dollars on a handful of deals last year, like R1 RCM's August take-private by two private equity firms for $8.9 billion, the second biggest US healthcare deal in 2024, according to PitchBook.

Private equity's healthcare interest could certainly continue through 2025, especially as firms hope for falling interest rates and less regulatory scrutiny under a new presidential administration.

However, private equity firms often require acquisitions to be profitable or nearly profitable. In VC, investors aren't exactly itching to sell off their late-stage profitable healthcare bets — since many of those could be candidates for IPOs once the public markets reopen, Mendelson said.

"It is definitely the case that private equity buyers are attractive to middle-market companies. But the larger companies have to be thinking about an IPO," he said.

Moreover, private equity's healthcare playbook has historically relied on buying up individual healthcare practices, like medspas or home health centers. Those models generally bring in slower but more reliable revenue streams rather than explosive growth potential. Healthtech, a VC favorite, wasn't significantly represented in the top megadeals last year — of the 25 biggest US healthcare and life sciences deals in 2024, R1 RCM was the only true healthtech deal, with most of the other deals being in healthcare services or biopharma, per PitchBook.

So while private equity could certainly look to buy more healthcare companies this year, they may not be the sexy deals VCs are looking for, said Krish Ramadurai, a partner at AIX Ventures.

"A lot of the boring services companies with great margins and great product market fit are prime takeouts right now. And if you have the AI angle, even better," he said.

M&A-hungry healthcare unicorns

This year, some of the most active buyers of venture-backed healthcare startups may just be other startups.

Several healthcare startups have signaled their intentions to look for M&A in 2024. Datavant CEO Kyle Armbrester told Business Insider in January that the $7 billion health data startup plans to make more acquisitions this year, a strategy that could help the company continue to grow its revenue ahead of a potential IPO. Other startups approaching public market debuts may use a similar playbook, like Hinge Health, which has been open about its plans to make more acquisitions for its physical therapy business.

Venture capital firms may also work to combine multiple companies within their portfolios to minimize their losses, as healthcare firm 7wireVentures did in selling mental health investment Caraway to its pediatric healthcare investment Summer Health. General Catalyst has taken the same approach for numerous healthcare deals over the years; most recently, its health software bet Commure acquired care navigation platform Memora Health in December.

In fact, a number of General Catalyst's portfolio companies look poised to make acquisitions this year. One of its investments, health benefits platform Transcarent, already made a big bet with its $621 million acquisition of healthcare navigator Accolade in January. Commure has taken an M&A-forward strategy to drive its growth, with seven acquisitions to date, including two in 2024. Care enablement startup Fabric has made four acquisitions since launching out stealth in early 2023, and CEO Aniq Rahman told Business Insider in September that the company was still looking for deals.

"A lot of the companies that are struggling to go raise capital right now, or some of these larger businesses that are reevaluating their position in the market, are creating opportunities for us as well," Rahman said. "Pretty much every week, there's inbound coming in from investors that are like, we have assets in our portfolio that may be accretive to what you're doing with Fabric."

All told, there may yet be options for digital health startups hoping to get acquired and for the investors desperate for returns, even if billion-dollar deals aren't on the table.

"Founders and investors are getting impatient over exit timelines, and they can only stay impatient for so long," Pitchbook's DeGagne said.

• Artificial intelligence has led to a boom in new startup creation and dealmaking.
• Business Insider researched startups that have strong founding teams and investor dollars.
• These are our top picks, listed alphabetically, of startups you could bet your career on in 2025.

After years of contraction, cost-cutting, and layoffs, there's been a resurgence of tech dealmaking in Silicon Valley thanks to the AI boom. Business Insider rounded up a number of technology and AI startups that are growing. Here are our top picks.

Abridge

HQ: Pittsburgh

Total raised: $462.5 million

What it does: The medical scribe startup translates patient-doctor interactions into clinical notes in electronic medical records.

What makes it promising: Abridge's business exploded in 2024 as investors rushed to fund companies automating administrative tasks in healthcare. The startup, which is backed by top VC firms, including Lightspeed Venture Partners and Bessemer Venture Partners, just raised $250 million in new funding at a million valuation. Its deals with top health systems, such as Kaiser Permanente, and its partnership with medical records giant Epic have made Abridge the healthcare AI startup to beat.

Anysphere

HQ: San Francisco

Total raised: $176 million

What it does: Anysphere makes AI coding software

What makes it promising: You may not have heard of Anysphere but you are likely familiar with its popular AI coding assistant, Cursor, that can predict a user's next line of code. The company recently raised $105 million at a $2.5 billion valuation. Notable investors include Benchmark, Andreessen Horowitz, and OpenAI.

Attention

HQ: New York

Total raised: $17.1 million

What it does: Attention uses natural language processing to fill out CRM programs and generate action items from sales calls.

What makes it promising: Some companies spend millions of dollars on customer relationship management programs, which are essentially software for sales teams that house crucial information about current and potential customers. The problem? Many teams don't properly fill out their CRM, rendering the investment useless. That's where Attention comes in — the startup uses AI to listen in on sales calls, fill out company CRMs with crucial information, and generate action items so a sales team member has the info they need to go back and close a deal.

Attention raised $14 million from Alven, Eniac, Frst, Liquid 2 Ventures, 645 Ventures, and Aglaé in October 2024.

Clasp

HQ: Boston

Total raised: $30 million, according to the company

What it does: Clasp helps employers secure critical talent before graduation, tackling workforce shortages in hard-to-hire fields like healthcare. Think of it like ROTC for critical professions. If a hospital system is facing a shrinking pipeline of nurses, it can partner with Clasp to access a national network of universities and training programs, match with current nursing students, and commit to repaying their student loans over a multi-year word period.

What makes it promising: Founded in 2018, Clasp has over 10,000 individuals on its platform and plenty of room to grow. While it's currently focused on building critical talent pools for the healthcare industry, the company plans to expand into other hard-to-hire industries. In 2024, Clasp raised over $10 million in a funding round led by Crosslink Capital and is actively investing in its growth team to scale employer and school partnerships.

CodaMetrix

HQ: Boston

Total raised: $95 million

What it does: CodaMetrix uses AI to analyze clinical notes and derive medical codes for billing and claims.

What makes it promising: Coding is a critical step of the revenue cycle management process for hospitals, typically requiring providers to manually assign numerical codes to medical services and diagnoses to ensure they get paid for their care.

CodaMetrix spun out of Mass General Brigham in 2019 to automate those administrative tasks and reduce provider burden, and it's captured a wave of investor interest in the sector, last raising a $40 million Series B round in March. The startup has worked with top health systems like Mayo Clinic and Yale Medicine to develop new revenue cycle management solutions, and it added some key hires to its executive team last year, including a new chief technology officer and COO.

Cohere Health

HQ: Boston

Total raised: $106 million

What it does: Cohere Health automates the pre-authorization process for medical treatments.

What makes it promising: Cohere Health works with health plans like Humana and Geisinger to make the prior authorization process more efficient and accurate, using AI to save money for the plans and reduce the number of unnecessary denials for patients. The startup last raised a $50 million Series B extension in February 2024, led by Deerfield Management and including existing investors, including Define Ventures and Flare Capital Partners.

Cohere has announced a number of new products in the last year, including tools released in January to help health plans meet prior authorization compliance standards set by the Centers for Medicare and Medicaid Services.

Coram AI

HQ: Sunnyvale, California

Total raised: $30 million

What it does: Coram AI puts agentic AI software into existing security systems and cameras.

What makes it promising: The US is filled with businesses and buildings that have non-operational security systems, Coram says. The startup's solution is an AI software that ports onto existing security hardware systems to provide generative AI visual security via AI agents that can identify and track threats in real time.

Coram raised $13.8 million in January from Battery Ventures, 8VC, and Mosaic Ventures.

Cortica

HQ: San Diego

Total raised: Over $300 million

What it does: Cortica provides virtual and in-person pediatric care for autism, as well as commonly co-occurring conditions like behavioral issues and sleep disorders.

What makes it promising: Cortica has set itself apart by going after value-based care contracts with health plans and employers that pay the startup for better patient outcomes, a rarity in specialized mental healthcare. The startup employs more than 2,000 providers that help care for children with autism at its clinics, in the home, or virtually, aiming to deliver "whole-child care" through everything from physical therapy to speech-language pathology to neurology. Cortica most recently raised an $80 million round in November, co-led by JP Morgan's healthcare investment fund Morgan Health and Nexus NeuroTech Ventures.

Daedalus

HQ: Karlsruhe, Germany

Total raised: $32.6 million

What it does: Daedalus helps factories and their production robots operate more efficiently.

What makes it promising: Launched by ex-OpenAI engineer Jonas Schneider, who was a key part of the AI juggernaut's robotics team, Daedalus was part of Y Combinator's winter 2020 cohort. The startup, which also has an office in San Francisco, uses AI robotics technology to cull the need to reprogram production robots constantly. Instead, it automates a lot of the tasks associated with the manufacturing process; for example, if clients give Daedalus a CAD drawing, it will render a fully-completed version of the drawing.

In February 2024, the startup raised a fresh $21 million Series A. The funding will help Daedalus in its mission of automating the manufacturing process across various industries, from semiconductors to healthcare.

Decagon

HQ: San Francisco

Total raised: $100 million

What it does: Decagon develops AI support agents that autonomously resolve customer inquiries over chat, email, or voice calls.

What makes it promising: The company raised $100 million, including a $65 million Series B, late last year. Bain Capital Ventures led the Series B round, and Elad Gil, A*, Accel, Bond Capital, and Acme Capital participated. According to the company's blog, the fundraise quadrupled Decagon's valuation. Bilt, Duolingo, Eventbrite, Notion, and Rippling use Decagon to manage interactions with customers by gathering data and reviewing conversations.

Decart

HQ: San Francisco

Total raised: $53 million, according to the company

What it does: Decart is an AI research lab focused on efficiency. Its infrastructure platform aims to dramatically cut the costs of training and running foundation models.

Why it's promising: Last fall, Decart emerged from stealth with $21 million in seed funding from Sequoia and Oren Zeev and launched a demo, Oasis, that captivated the tech world. Oasis's video platform enables users to create interactive, open-world experiences from a single uploaded image and generates content in real time based on user input. In December, the Israeli-founded startup secured an additional $32 million from Benchmark and other investors. Since then, Decart has doubled its team size and continues developing new products.

Elise AI

HQ: New York

Total raised: $172 million

What it does: EliseAI sells AI assistants, primarily to housing operators, as well as healthcare providers. These speed up menial tasks such as maintenance requests and scheduling appointments.

What makes it promising: The startup hit a unicorn valuation in 2024 with a $75 million Series D. Its technology is revolutionary for the housing sector, which previously suffered from inefficient technology, resulting in consumers absorbing additional costs, said founder and CEO Minna Song.

When arranging house viewings and meetings, keeping up with messaging prospective tenants can take up a lot of time and energy. Elise AI's chatbot automates these interactions so they free up time for management teams to pursue more meaningful work. The tech has also been embraced by the healthcare industry, which experiences similar pain points for managing invoices and bills, as well as patient appointments.

Flo Health

HQ: London, United Kingdom

Total raised: $300 million

What it does: Flo is a digital women's health company, which provides a period tracking and wellness app.

What makes it promising: Flo became the first digital women's health company to hit a unicorn valuation in 2024, following a $200 million raise from General Atlantic.

The startup, which launched in 2015, ballooned in popularity as it offered a comprehensive suite of products, such as period tracking and personalized insights into reproductive health via its app. After Roe v. Wade was repealed, Flo developed an 'Anonymous Mode' setting that would allow users to access the app without associating any identifying information with their health data.

Following its fundraise in 2024, the startup is making a big hiring push in Lithuania — recruiting for over 100 roles in Vilnius. It will also expand its user base and double down on offerings for those with menopause.

Glean

HQ: San Francisco

Total raised: $560 million, according to the company

What it does: Glean makes search chatbots and agents for businesses, allowing workers to search for information across various systems and applications and create and summarize content.

What makes it promising: Glean's business is taking off as organizations seek quick productivity gains. Founded by a group of former Google Search engineers, Glean topped $100 million in annual recurring revenue last fiscal year, up from $50 million earlier in the year. The company plans to expand into new markets and verticals in 2025 to keep up its momentum.

Grow Therapy

HQ: New York City

Total raised: $178 million

What it does: Grow Therapy works with independent therapy practices to streamline their administrative tasks and connect patients with therapists covered by their insurance.

What makes it promising: Grow helps therapists start and run their own mental health practices. SignalFire founder and CEO Chris Farmer named Grow Therapy to Business Insider's list of the most promising healthcare AI startups of 2024, citing the startup's focus on handling administrative tasks "so therapists can focus on their patients and control their own schedule instead of being underworked and underpaid at someone else's practice."

Grow Therapy most recently raised $88 million in Series C funding in April, led by Sequoia Capital.

Harvey

HQ: San Francisco

Total raised: $500 million

What it does: Harvey is a developer of a generative AI legal tech platform for lawyers and paralegals to help with contract analysis, due diligence, litigation, and regulatory compliance.

What makes it promising: Many startups are attempting the herculean task of disrupting the legal industry, but Harvey is in the pole position. Backed by big-name investors like Sequoia and Kleiner Perkins, Harvey has ridden the AI wave to recently double its valuation to $3 billion in a fresh $300 million round of funding. In 2024, Harvey saw 4x annual recurring revenue growth and now has 235 customers in 42 countries.

Hue

HQ: Remote

Total raised: $4.5 million

What it does: Hue helps brands and retailers sell online by collecting user-generated video reviews and embedding that content into product pages.

What makes it promising: Hue is bringing the power of TikTok-style video reviews to brands and retailers, significantly increasing conversion rates and time spent on-site. Founded by a trio of women who come from the consumer industry they now serve, Hue closed on $4.5 million in seed funding last year from Fika Ventures, Underscore VC, and others.

Knime

HQ: Zurich, Switzerland

Total raised: $53.8 million

What it does: Knime has built a low-code, open-source data analytics platform for businesses.

What makes it promising: The startup is headquartered in Switzerland but has a global presence, with offices in Texas and Berlin. Its mission is to democratize data analytics and utilize generative AI to make that mission more accessible, cofounder and CEO Michael Berthold previously told Business Insider.

The startup raised $30 million in equity funding from Invus in August 2024 and serves over 400 enterprise customers — including the likes of Audi, Novartis, and P&G.

Landbase

HQ: San Francisco

Total raised: $12.5 million

What it does: Landbase uses AI agents to automate businesses' go-to-market procedures.

What makes it promising: Launched in 2023, Landbase has quickly applied the use of agentic AI to automating GTM strategies, training its GTM Omni model on billions of data points.

In July 2024, it raised a fresh $12.5 million from First Minute Capital and 8VC. It also recently acquired LavaReach, an AI-powered prospect research tool.

Legora, formerly Leya

HQ: Stockholm with offices in London

Total raised: $37 million

What it does: Lawyers use Legora to streamline legal work across reviewing, drafting, and research.

What makes it promising: Just months after graduating from the storied startup accelerator Y Combinator, Legora raised back-to-back rounds of funding from investors like Benchmark, Redpoint, and Jack Altman's fund Alt Capital. The company has so far grown its business in Europe and the US and is now quickly expanding to new markets. The website's careers page shows the company is hiring go-to-market managers in New York, Madrid, and London.

Midi Health

HQ: San Francisco

Total raised: $100 million

What it does: Midi partners with employers and health systems to provide virtual care for menopause.

What makes it promising: Midi is leading a growing market for menopause support as women's health investors expand their reach beyond fertility and maternal care. 18% of employers surveyed by Mercer said they plan to provide menopause benefits to employees in 2025, up from a measly 4% in 2023. Midi provides virtual services, including hormonal-replacement therapy and lifestyle support for those struggling with hormonal changes as they age, navigating symptoms like hot flashes and weight gain through perimenopause and menopause.

Midi also works with health systems to offer specialized telehealth services and coordinate care alongside a patient's in-person doctors. The startup raised a $63 million Series B round last year from dozens of angel investors, including actress Amy Schumer and former Meta COO Sheryl Sandberg, as well as VC firms like GV (Google Ventures) and Emerson Collective.

Neubird

HQ: Redwood City

Total raised: $44.5 million

What it does: Uses artificial intelligence to monitor, analyze, and resolve IT issues for companies.

What makes it promising: Hawkeye, the startup's AI-powered ITOps engineer, automates the detection and resolution of IT issues, freeing software engineers from routine troubleshooting. The startup's growing customer base includes both startups and large financial institutions, according to TechCrunch. The startup raised a $22.5 million seed extension round led by Microsoft's M12 in December, just eight months after raising a $22 million seed round from Mayfield, TechCrunch reported.

Nimble

HQ: San Francisco

Total raised: $221 million

What it does: Nimble develops fully autonomous e-commerce fulfillment centers powered by its warehouse robots that can retrieve inventory, pick items, pack orders, and sort packages.

What makes it promising: Backed by FedEd and Accel, Nimble is building a national network of next-generation robotic warehouses to provide faster, lower-cost logistics. It aims to solve a critical pain point for customers like Puma and AdoreMe, who are attempting to scale operations while facing a national shortage of warehouse workers. The company most recently raised $106 million in a round co-led by FedEx and Cedar Pine that propelled its valuation to $1 billion.

Norm Ai

HQ: New York

Total raised: $38 million

What it does: Builds AI agents to automate compliance tasks and regulatory assessments.

What makes it promising: Norm's AI platform takes complex regulations and converts them into code that can be parsed by computers, allowing companies to clearly explain compliance findings, for example. The startup raised three rounds of funding — a Series A and two follow-on investments — in just 11 months. Coatue Management led its $27 million Series A, and Bain Capital Ventures, Blackstone Innovations Investments, and others participated.

Please, formerly MultiOn

HQ: Palo Alto, California

Total raised: Undisclosed

What it does: Please develops an AI assistant that helps consumers with their plans, using agents to complete actions like booking trips and managing reservations.

What makes it promising: The startup, which rebranded from MultiOn to Please in January, develops web-based AI agents that are powered by LLMs. Major players like Amazon and General Catalyst invested in the company in a round that valued it at $100 million, The Information reported.

Reality Defender

HQ: New York

Total raised: $40 million

What it does: Reality Defender has developed a deepfake detection platform that spots AI-generated content.

What makes it promising: As the use of AI-generated content burgeons, the technology has also been increasingly used to create fraudulent content and misinformation. Reality Defender's platform can detect if something is AI-generated in images, text, video, and audio.

In particular, the startup has found a niche in providing its services to enterprise clients to help identify deepfakes. It has developed an API and web app that allows users to analyze content and gauge if it's been modified by AI; however, it doesn't directly discern if something is a deepfake. Rather, users are given inference points so they can determine the extent to which AI has altered something.

In October 2024, the startup raised a fresh $33 million to grow its offerings in the financial sector.

Remark

HQ: Boston

Total raised: $10 million

What it does: Remark develops a shopping guidance platform that connects shoppers with online product experts.

What makes it promising: Remark helps shoppers make purchase decisions by allowing them to asynchronously chat with product experts, both human and AI, simulating the experience of chatting with a sales associate at a brick-and-mortar store. The two-year-old company helps consumers looking to purchase items in the fashion, home goods, outdoor, baby products, beauty, and skincare industries, Remark told Business Insider. And it's already seeing promising results: Brands using Remark have seen a 10-12% revenue lift and a 30+% conversion rate, according to the company.

Robin AI

HQ: London and New York

Total raised: $71 million

What it does: Robin AI develops an AI legal assistant that drafts and analyzes contracts for companies and their legal teams.

What makes it promising: Robin AI announced not one but two rounds of funding in 2024: a $26 million Series B, led by Temasek, and a $25 million follow-on investment, with participation from Paypal Ventures and Cambridge University. The company's AI-powered platform helps in-house counsel teams and enterprises streamline their contract review processes. Richard Robinson, who worked as a lawyer at Clifford Chance, and James Clough, previously a machine learning researcher, founded the company in 2019.

Rogo

HQ: New York

Total raised: $27 million

What it does: Rogo develops an AI agent that helps Wall Street professionals with tasks such as company research and memo drafting.

What makes it promising: Investment banking may look high-octane on HBO's "Industry," but working on Wall Street is a grind. Enter Rogo. The AI-powered platform helps analysts quickly analyze earnings, construct market maps, and other tasks. Two of Rogo's cofounders, Gabe Stengel and John Willett, previously worked in investment banking. Investors include Khosla Ventures, Jack Altman's AltCapital, AlleyCorp, and BoxGroup.

Rox

HQ: San Francisco

Total raised: $50 million

What it does: Rox's team of AI sales assistants automates tasks and provides data-driven insights for sales teams.

What makes it promising: AI-powered tools like Rox are gaining traction with sales teams by reducing administrative work and improving deal execution. The company streamlines CRM updates, summarizes relevant news events, and drafts outreach in its platform, helping sales reps focus on closing deals rather than on tedious tasks. As of November 2024, over 35 enterprise sales teams from companies such as MongoDB and Ramp have used Rox. The startup raised both its seed round, led by Sequoia with participation from Google Ventures, and its Series A, led by General Catalyst, in stealth. It's currently in public beta.

Sierra

HQ: San Francisco

Total raised: $285 million

What it does: Seirra's AI-powered conversational agents interact with customers.

What makes it promising: Founded by OpenAI chairman and ex-Salesforce co-CEO Bret Taylor and former Google executive Clay Bavor, Sierra's valuation soared to $4.5 billion at the end of 2024. Just don't call it a chatbot, as Taylor prefers to be thought of as "conversational AI." Whatever you call it, companies like ADT, Casper, and Sonos have used Sierra to handle customer service inquiries.

Skyfire

HQ: San Francisco

Total raised: $8.5 million

What it does: Skyfire is a payment network that lets AI agents autonomously spend money on behalf of their human counterparts.

What makes it promising: With AI agents expected to be a big theme in 2025, investors are excited about the types of tasks they can take over from humans. While other AI agents are handling customer service and sales calls, Skyfire is an early agentic player in the fintech space and is tackling the regulatory and societal considerations that come with giving a robot license to swipe a credit card.

Skyfire launched from stealth last summer and raised $8.5 million in seed funding from financial firms Neuberger Berman, DRW, and Brevan Howard Digital, plus Intersection Growth Partners, Arrington Capital, RedBeard Ventures, and others.

Smartcat

HQ: Amsterdam

Total raised: $75 million

What it does: Smartcat provides AI-generated translation services for businesses.

What makes it promising: For companies that want to scale globally, Smartcat offers a more cost-effective solution than hiring a gaggle of human translators. Smartcat's AI can translate both written and spoken words into more than 280 languages, making it easier to deploy corporate content, such as marketing materials and internal training videos, to office locations around the world.

Smartcat raised a $43 million Series C last year from Left Lane Capital, Koro Capital, Marbruck Investments, and Chrome Capital.

StackGen

HQ: San Francisco

Total raised: $12.3 million

What it does: StackGen uses AI to auto-generate infrastructure such as servers, databases, and networking from code.

What makes it promising: The AI revolution is coming for developers, with plenty of startups cropping up to help — and in some cases, replace — software engineers designing apps and building websites. StackGen is unique because it operates at the infrastructure layer of software development: Its AI reads code created by human developers and uses the information to generate technical infrastructure like servers and databases. StackGen raised $12.3 million last fall from a group of investors, including Thomvest Ventures, FireBolt Ventures, WestWave Capital, and Secure Octane.

Sublime Security

HQ: Washington, DC

Total raised: $94 million

What it does: Sublime's email security platform detects and prevents malicious behaviors in the inbox, enabling organizations to defend against phishing, email fraud, and other cyberattacks.

What makes it promising: Sublime's business has exploded as generative AI gives attackers a way to rapidly produce mass spear-phishing campaigns. The company has quadrupled its customer base over the past year and added enterprise customers like Elastic, Benteler, and SentinelOne to a roster of existing customers like Spotify, Reddit, and Brex. The company has won backing from top investors, including IVP, Index Ventures, and Slow Ventures.

SuperAGI

HQ: Newark, Delaware

Total raised: $15 million

What it does: SupaerAGI develops AI Agents for fully automated sales, marketing, support, and app development.

What makes it promising: SuperAGI got a big boost last year, picking up funding from Newlands VC, the secretive firm started by WhatsApp cofounder Jan Koum. Aiming to supercharge business teams, SuperAGI is used by developers at Google, Tesla, OpenAI, and Microsoft.

Synthesia

HQ: London

Total raised: Over $350 million

What it does: Synthesia is an AI video creator that helps companies with tasks such as employee training, customer support, and sales.

What makes it promising: Founded in 2017, Synthesia was early to the generative AI boom. It reportedly doubled its valuation in 2024 and moved beyond video creation to help businesses solve a wider range of needs. More than 5,000 companies use Snythsia, from Heineken to Dupont to Zoom.

Together AI

HQ: San Francisco

Total raised: $232 million

What it does: Together AI has created an open-source generative AI and infrastructure platform for developing AI models. The company runs data centers suited specifically for AI workloads.

What makes it promising: The company most recently raised $106 million in a round led by Salesforce Ventures that saw its valuation cross the $1 billion mark. Other big-name investors include Coatue, Kleiner Perkins, NEA, Greycroft, and Nvidia. The startup is reportedly raising another round of funding that would value it at $3 billion.

Torq

HQ: New York

Total raised: $192 million

What it does: Torq has created autonomous security operations to help companies guard against cyber attacks.

What makes it promising: Torq achieved 300% revenue growth and increased its headcount by 200% in 2024, according to the company. It recently hired a new head of sales Usman Gulfaraz, to help the company get to $100 million in annual recurring revenue for 2026. Customers include Chipotle Mexican Grill, Inditex, PepsiCo, Procter & Gamble, and Siemens.

Unify

HQ: San Francisco

Total raised: $18.2 million

What it does: Unify is a developer of a performance management system for sales teams.

What makes it promising: Backed by OpenAI and Thrive Capital, Unify helps salespeople tailor "warm outbound" emails that are less likely to get lost in crowded email boxes. Unify's growing team includes ex-staffers from Spotify, Airbnb, and Ramp.

Vapi

HQ: San Francisco

Total raised: $20 million

What it does: Vapi is building an infrastructure tool for developers to build AI voice agents.

What makes it promising: Investors are foaming at the mouth to back promising AI agents, and one group of startups is specifically using the tech to understand spoken commands. One of these so-called AI voice agent startups is Vapi, which is creating a tool for developers to create, test, and deploy AI voice agents of their own that can be applied in a number of business settings, from reception desk to employee training to sales call.

Vapi raised $20 million at the end of 2024 from Bessemer Venture Partners. Abstract Ventures, AI Grant, Y Combinator, Saga Ventures, and Michael Ovitz.

Writer

HQ: San Francisco

Total raised: $326 million

What it does: Writer is a full-stack generative AI platform that gives businesses tools to create their own AI applications and automate other workflows.

What makes it promising: Writer has carved out a niche in enterprise AI and offers a secure, customizable generative AI platform tailored for businesses — which sets it apart from more generalist models like OpenAI. The company has attracted major clients, including Fortune 500 firms, by focusing on data privacy, compliance, and domain-specific AI solutions, and its recently released AI model emphasizes control, security, and enterprise-grade performance.

Writer raised a $200 million Series C in November 2024 from Premji Invest, Radical Ventures, ICONIQ Growth, Adobe Ventures, B Capital, Citi Ventures, IBM Ventures, Salesforce Ventures, Workday Ventures, Accenture, Balderton, Insight Partners, and Vanguard. The round valued the startup at $1.9 billion.

7AI

HQ: Boston

Total raised: $36 million

What it does: 7AI uses AI agents to autonomously respond to alerts and investigate cyber threats on behalf of security operations teams.

What makes it promising: 7AI cofounders Lior Div and Yonatan Striem Amit previously cofounded Cyberreason, another cybersecurity company. 7AI raised a $36 million seed round in June 2024 that valued the company at over $100 million. The financing was led by Greylock Partners, with participation from Spark Capital and CRV.

• The Washington Post cut an ad urging Trump to fire Elon Musk, watchdog group Common Cause said.
• Common Cause said it had a $115,000 deal to run ads in the Post's Tuesday print editions.
• The Post initially approved the nature of the ad, and didn't say why it was rejected, the org said.

The Washington Post scrapped an ad calling for President Donald Trump to "fire Elon Musk" that was slated to run in some of its Tuesday print editions, according to one of the organizations that ordered the ad.

Advocacy group Common Cause had agreed to pay $115,000 to the Post to run an ad criticizing billionaire Elon Musk wrapped around the newspapers and a similar ad inside the paper, the organization told Business Insider.

The ads are part of a bigger campaign by Common Cause called "Fire Elon Musk," urging people to sign a petition calling for Musk's removal as the head of the new Department of Government Efficiency.

The ad, which Common Cause later posted on its website, features Elon Musk laughing behind an image of the White House, and says in large text, "Who's running this country: Donald Trump or Elon Musk?"

Smaller text below the image states that the Tesla CEO "has created chaos and confusion and put our livelihoods at risk" and notes that "the Constitution only allows for one president at a time."

The group said the Post initially approved the nature of the ad but that the Post informed Common Cause on Friday of its decision to drop the wrap ad from publication without explanation.

The Post said it would allow Common Cause to run its similar ad inside the paper, per the organization, but Common Cause declined.

"It's deeply concerning that our ad was censored and rejected without a valid reason," said Virginia Kase Solomón, Common Cause's president and CEO, and Margaret Huang, Southern Poverty Law Center's president and CEO, in a joint statement. Common Cause planned to pay for the ads in collaboration with the Southern Poverty Law Center Action Fund.

"We believe this is limiting our freedom of expression at a critical time in our nation's history. This seems to show the Washington Post is feeling pressure to cover the news a certain way," Kase Solomón and Huang said.

The Post declined to comment on its internal decisions about advertising campaigns. Its advertising guidelines state that the Post "accepts all types of advertising and does not decline advertising unless there is a compelling reason to do so," but "nonetheless reserves the right to position, revise, or refuse to publish any advertisement."

The ads are part of a bigger campaign by Common Cause called "Fire Elon Musk," urging people to sign a petition calling for Musk's removal as the head of DOGE. The group says it's collected 60,000 signatures and organized thousands of calls to congressional representatives.

Musk, the world's richest person, runs several companies including X, SpaceX, The Boring Company, and Tesla. He's now leading DOGE, the new commission that aims to slash federal spending and cut regulations.

The Post's decision to pull the ad comes just a month after Elon Musk nodded at a friendship with the outlet's billionaire owner, Jeff Bezos, in a series of X posts. Musk and Bezos own competing companies, SpaceX and Blue Origin, respectively, and have exchanged playful jabs for years.

In January posts, Musk and Bezos congratulated each other on their companies' rocket launches, and Musk posted clips from the 2008 comedy "Step Brothers," one of which showed its characters asking, "Did we just become best friends?"

Here are the ads that Common Cause said it planned to run in the Washington Post:

• Southwest Airlines is cutting 15% of its corporate workforce, or 1,750 employees, the carrier said.
• They're the first major layoffs in Southwest's 53-year history and come amid profitability woes.
• Read the CEO Bob Jordan's full message on Monday to employees.

Southwest Airlines said on Monday that it is slashing 15% of its corporate workforce, or 1,750 employees.

The cuts are the first major layoffs in Southwest's 53-year history and the airline's latest response to the company's financial woes as its profits plunge.

The carrier said the layoffs will help the company save about $210 million in 2025 — excluding severance packages and post-employment benefits, which could cost the company $60 to $80 million — and around $300 million in 2026.

Southwest president and CEO Bob Jordan said the severances would take effect in late April and that impacted workers would keep their pay, benefits, and bonuses until then.

Elliott Investment Management, an activist firm that took a stake in Southwest in June, has been pushing for changes at the carrier, including a restructuring of its board and updates to its business model.

Southwest said in July that it plans to end its long-standing open-seating policy to generate more seating revenue. The company also reduced flight crew positions in Atlanta last year to cut costs.

Southwest isn't the only budget airline to take cost-cutting measures in a changing industry.

Spirit Airlines, for example, said in July it would start bundling previously a-la-carte items like snacks and checked bags to target premium passengers.

JetBlue Airways said the same month that it would delay delivering more than 40 jets to the airline's fleet until 2030 or later.

Low-cost competitor Frontier Airlines has similarly made changes, like adding a new business-class-like cabin with a blocked middle seat to lure in more customers.

Read Southwest CEO Bob Jordan's full message to employees on Monday:

Southwest Team:

We are at a pivotal moment as we carry out our three-year business plan to transform Southwest Airlines. Our transformational plan is the largest and most comprehensive in our 53-year history, and it focuses on three simple but powerful objectives. First, boost revenues and loyalty by offering our Customers the experience they want; second, maximize efficiencies and minimize costs; and third, make the most of our investments.

As we continue to work together to transform our Company, an area of intense focus will be maximizing efficiencies and minimizing costs. We must ensure we fund the right work, reduce duplicative efforts, and have a lean organizational structure that drives clarity, pace, and urgency. Improving how we work together and how we get work done has a tremendous impact on our efficiency as a Company and how we deliver against our plan.

We have made the very tough decision to move forward with a reduction in our workforce, focused almost entirely on Corporate and Leadership positions. This reduction affects approximately 1,750 Employee roles, or 15% of Corporate positions. Separations do not begin until late April. Until then, most Employees who are notified of their displacement will not work but will continue to receive their salary, benefits, and bonus, if eligible.

This is a very difficult and monumental shift, and I arrived at this decision after careful and thorough reflection, knowing how hard it will be to say goodbye to Cohearts who have been a significant part of our Culture and our accomplishments.

We are dedicated to operating safely and reliably for our Customers every single day. The fundamental objective of Leadership and Noncontract roles is to support our Frontline Employees as efficiently and effectively as possible. With the best intentions, the growth of our Leadership and Noncontract functions have outpaced our operation's growth for many years. Now, this group must become more lean, efficient, and agile to better serve our Frontline Employees in our shared mission of serving our Customers.

What to Expect

This will be hard, and we will treat our People with the care and respect they have earned and they deserve. Impacted Employees will receive severance and will be offered resources to provide an opportunity to ask questions and prepare for the future, like sessions with Human Resource Business Partners, a dedicated Offboarding Support Team, and outplacement services.

Moving Forward Together

This was an extremely difficult decision to make because of its impact on our People—both those who will be directly impacted and those who will remain.

Changing how we work is an essential part of becoming a more agile Company, and it will be a journey. We are building a leaner organization with increased clarity regarding what is most important, quicker decision making, and a focus on getting the right things done with urgency—not unlike our entrepreneurial founding spirit of the 1970s. As we focus on delivering on our plan, our future will be built upon the actions we take today to ensure an even brighter future.

Are you one of the Southwest employees who was laid off? If so, reach out to Business Insider Senior Aviation Reporter Taylor Rains on a non-work device at [email protected].

• Transparent pharmacy benefit management startup Capital Rx hit $3.5 billion in revenue last year.
• The startup is surging as Congress seeks to rein in PBM giants that profit from high drug costs.
• Capital Rx, backed by VC firms like General Catalyst, doesn't make money from drug spend.

Pharmacy benefit management startup Capital Rx earned $3.5 billion in revenue last year as Congress sought to reign in the legacy middlemen that have long profited from high drug costs.

Pharmacy benefit managers, or PBMs, negotiate drug prices between drug manufacturers, insurance companies, and pharmacies. These companies are facing mounting criticism for marking up drug prices for their own benefit, including in Congress, where lawmakers in 2024 sought to pass reforms that would force more transparency into PBM business practices.

Today, the three largest PBMs — CVS Health's Caremark, UnitedHealthcare's OptumRx, and Cigna's ExpressScripts — make money in large part by taking a cut of the discounts they negotiate between drug manufacturers and insurers. PBMs are incentivized to keep drug spending high because higher drug costs usually mean bigger discounts and, thus, bigger profits.

Capital Rx, a healthcare startup backed by VC firms like General Catalyst and Transformation Capital, is taking a different approach.

The startup bills itself as a transparent PBM that doesn't profit from higher drug spending. Instead, it's going back to the basics of the PBM industry, charging health insurers and employers flat administrative fees to manage their prescription drug plans.

With the legacy PBM players under fire, Capital Rx's business is surging. The startup brought in $3.5 billion in revenue last year across its business lines, and CEO AJ Loiacono told Business Insider exclusively that it's projecting $4.8 billion in revenue in 2025.

Despite its soaring revenue, Capital Rx isn't yet profitable, which Loiacono attributed to the startup's heavy investment in its tech development. He said the startup is on track to be profitable by the end of 2025.

Much of Capital Rx's success relies on its ability to steal customers away from the big three PBMs — the startup said it signed on 80 new clients last year. It's competing with startups like Rightway, backed by VC firms including Khosla Ventures and Tiger Global, as well as more traditional small PBMs like Navitus Health Solutions, co-owned by Costco and Midwestern health system SSM Health.

Capital Rx has raised $355 million since its 2017 founding, including $115 million in Series D funding last year, which valued Capital Rx at $1.26 billion. The startup declined to share its current valuation.

Because Capital Rx doesn't take a cut of drug discounts, however, its transparent PBM business operates at a lower margin than legacy PBMs. That's where the second half of its business comes in.

About 40% of Capital Rx's revenue comes from pharmacy benefits administration, which involves handling tasks for health plans like processing prescription claims and helping patients get access to their medications. The startup built a tech platform called JUDI to centralize these tasks, and Loiacono said he's seeing uptake of the tech grow even faster than Capital Rx's PBM business.

The startup is also launching features for processing medical claims on its platform. Typically, health plans have to process pharmacy and medical claims separately. Capital Rx said it plans to expand the platform further to include vision and dental benefits.

"It costs us about 70% less to administrate a plan or a patient than our competitors because of our JUDI platform," Loiacono said. The startup has licensed its tech to a variety of health systems and health plans, including Memorial Hermann in Texas and 23 different BlueCross BlueShield plans.

Drug costs in the US have continued to rise as pharmaceutical companies develop new and expensive specialty medicines. According to IQVIA, nearly half a trillion dollars in pharmacy drug spending is expected in 2025.

Congress appeared ready to pass measures to rein in PBMs as part of a federal funding bill in December, but those efforts were left out of the final version of the bill at the last minute.

While Loiacono said it's difficult to predict what drug pricing reforms the Trump administration might pursue this year, if any, he said he expects Congress to revisit the legislation left on the table in December.

"Anyone who's asking for the removal of complexity, opacity, and the ability to take advantage of a patient's ignorance around drug pricing — these are all beneficial indicators of where we could go," he said.

• Healthcare startups will have to meet high standards to hope for an IPO this year.
• Investors are desperate for better public companies after the last IPO class's poor performance.
• VCs and bankers said startups need profitability, hundreds of millions in revenue, and high growth.

As healthcare startups hope for an opening in the IPO market this year, investors' standards for their public prospects are higher than ever.

It's been a dismal few years for healthcare IPOs. The last wave of startups went public in 2021, with 23 healthcare companies going out that year via IPO or SPAC, according to Rock Health. In the next three years, only four companies went public — and only two of those, Waystar and Tempus AI, remain on the market today.

With interest rates expected to drop this year, founders are waiting with bated breath for another wave of healthcare IPOs. But investors say those startups will have to work a lot harder to go public this time around.

Most of the healthcare companies that went public in the last cycle haven't put in a strong showing. Companies like care management player Neue Health, formerly Bright Health Group, and healthcare navigator Accolade have since gone private in acquisitions, valuing them at a fraction of their IPO prices. Others, including diagnostic testing company Cue Health and senior care provider Cano Health, have declared bankruptcy.

Many of the companies that have remained public have seen their shares plummet, like telehealth company Amwell, which went public in 2020 at a $3.9 billion valuation. Today, its market cap is about $165 million.

The public healthcare markets are in dire need of a redemption arc. Investors and bankers told Business Insider that healthcare startups considering an IPO should have revenue in the several hundreds of millions, profitability, and growth at a pace of 30% or more on top of the prior year's revenue. Those expectations represent a striking heel-turn from the last cycle when high-growth but unprofitable healthtech companies with lower revenue could consider public market debuts.

Those elevated standards hope to ensure a stronger performance for the next wave of public healthcare companies, a critical step in proving the industry's viability for future investors.

"A lot of the hype companies go public, and then a few years later their prices drop, which trickles down to the earlier-stage investors who think, 'Why are we putting hundreds of millions of dollars into these companies that IPO for a few billion, and then six months later they are at less than $1 billion in value?'" said Farzad Soleimani, a partner at early-stage firm 1984 Ventures. "I think we are at a stage where we need to see a lot of improvements in that regard."

Meeting the mandate

Several investors and founders mentioned the "rule of 40" as a benchmark for what healthcare companies should go public. Typically applied to software companies, that principle states that the sum of a company's revenue growth rate and profit margin should be equal to or greater than 40%.

Reaching those metrics isn't so easy for healthcare startups, which can struggle to reach tech-expected margins when facing the high costs of employing clinicians or navigating insurance reimbursement.

"Especially in healthcare, the bar is pretty high — those scaled, $500-million-plus revenue companies, ideally profitable, and then you want to be growing at a reasonable clip too," said Yuri Lee, a partner at IVP. "A lot of the companies that would've gone public a few years ago, I don't think they're in a place be able to meet those three criteria."

Multiple investors and bankers told Business Insider that physical therapy startup Hinge Health is the best choice for the year's first digital health IPO, with margins more closely resembling a software company than a healthcare services provider. Hinge Health hired banks including Morgan Stanley last year to prepare for its intended public market debut, with the hopes of going public in early 2025, BI reported in September.

Omada Health filed its own S-1 last summer ahead of a potential IPO, BI reported in October. The startup, which has been treating diabetes since 2011, saw significant growth in 2024 tied to its weight loss offering as GLP-1 drug use surged, CEO Sean Duffy told BI that month.

Some IPO prospects are staying private for now to buy up other companies to boost their growth. Private equity-backed Datavant told BI in January that the $7 billion health data company is looking for multiple acquisitions this year. With "well over" $1 billion in revenue and steady profitability, CEO Kyle Armbrester said Datavant plans to buy new assets using the cash on its balance sheet.

Other startups have been vocal about their plans to reach profitability before considering an IPO.

Sword Health CEO Virgilio Bento told BI in 2023 that he'd only be interested in taking the physical therapy startup public if it's profitable, a milestone he later told Axios the company expected to hit in 2024. He said Sword could go public as soon as the second half of 2025.

Fellow diabetes startup Virta Health told BI in January that it expects to reach profitability by the end of 2025. CEO Sami Inkinen said an IPO is the natural next step for the company, but one he doesn't want to take if Virta is burning more cash than it's bringing in.

That's a mistake that plagued digital health companies in the last cycle of IPOs, he said, adding that there are still startups considering IPOs in the next cycle that haven't reached profitability.

"Nearly all of these companies are hundreds of millions of dollars in revenue and still zero profits. That is very dangerous," he said.

New valuations incoming

With companies like Amwell and 23andMe sitting at market caps in the few hundreds of millions, healthcare investors are eager for a stronger set of public comps with higher valuations they can use as reference points when valuing private companies.

However, some of the startups hoping to go public haven't announced funding since 2020 or 2021, when VCs regularly used sky-high revenue multiples to calculate valuations. Hinge Health, for example, will have to contend with the $6.2 billion valuation it landed in 2021 if it doesn't raise another round of funding before going public. It's unclear whether the current healthcare IPO hopefuls will be able to match those high valuations in their public market debuts.

Some recent take-private deals, like Transcarent's acquisition of Accolade in January — a $621 million deal, about half of Accolade's valuation at the time of its 2020 IPO — could help ease the problem. Removing the healthcare navigator from the public markets could allow other navigators, like Included Health, to go public with better multiples.

Included had previously filed its S-1 for a 2022 IPO, but called off its plans when the market tanked, CEO Owen Tripp told BI in January. This time around, he said, fewer point solutions are standing up to public investor scrutiny.

"The solutions I see coming now are way more complete and just bigger," he said. "We could have gone public based on our numbers then — think about where we are now."

More than half of the digital health companies that went public in 2021 did so through mergers with special purpose acquisition companies, an appealing option for startups hoping for a quicker, less regulated route to the public markets. But the poor performance of those deals has put SPACs mostly off-limits for healthcare startups hoping to go public in the next wave, said Jon Swope, a managing director in Barclays' healthtech investment banking practice.

"It's unlikely that we see companies using that vehicle that could go public the regular way," he told BI in October.

Scott Barclay, a managing director at Insight Partners, said the high standards for new healthcare IPOs are a sign of a healthier market. Because the market shifted from valuing growth alone to growth alongside profit, he said, founders have been forced to bring stronger and more efficient businesses to the table.

"We're seeing more intrinsically good business models powered by software versus a lot of previous shots in the last generation," he said. "The market drop has forged founders with businesses that are just stronger."

• Nutrition startup Fay has raised $50 million in Series B funding.
• Goldman Growth Equity led the fundraise at a $500 million valuation.
• Fay is picking up steam by connecting patients with registered dietitians as Ozempic use surges.

Nutrition startup Fay just grabbed a Series B fundraise led by Goldman Growth Equity.

Fay, which connects patients with registered dietitians covered by their insurance, raised a $50 million round which values the startup at $500 million, a fivefold increase on Fay's Series A valuation, according to the company. Existing investors General Catalyst and Forerunner also joined the Series B round.

Fay works with employers and health plans to help patients find virtual or in-person nutrition counseling covered by their insurance. The startup also offers services to registered dietitians using its platform like helping those providers verify their qualifications with insurance companies so they can accept reimbursement.

Cofounders Sammy Faycurry and Mark Stefanski told Business Insider that Fay has seen significant growth since emerging from stealth in May 2024 with $25 million in funding. The startup now hosts more than 2,500 dietitians on its platform, up from over 1,000 in May.

"From the start, we focused on putting product first," Fay cofounder Mark Stefanski told BI. The startup has introduced several AI-powered features, including a tool to help dietitians quickly generate meal plans. "Those features supercharge the dietitians, which lets them do in seconds or minutes what would otherwise take them hours," Stefanski said.

Forerunner Ventures led Fay's $20 million Series A. Founded in 2022, Fay is also backed by VC firm 1984 and angel investors from fellow healthcare startups Grow Therapy and Maven Clinic.

Employers and health plans appear increasingly eager to work with startups providing lifestyle interventions for obesity, especially as the use of GLP-1 drugs surges.

Fay said at its launch that the explosion of GLP-1s had boosted demand for registered dietitians as clinicians seek to prescribe drugs like Ozempic alongside nutrition care.

It's not the only nutrition startup catching investors' eyes for that purpose. Telehealth platform Nourish raised a $35 million Series A in March 2024, led by Index Ventures, while Culina Health raised a $7.9 million Series A in December, led by Healthworx, the investment arm of CareFirst BlueCross BlueShield.

Later-stage startups want in on the action, too. Virta Health and Omada Health have both started offering obesity care in the past year alongside their diabetes programs.

Omada CEO Sean Duffy told BI in October that weight-loss care has become the most popular front door for Omada's new customers.

"The inbound that we get from benefits buyers, the first question is, tell me more about the GLP-1 care track. And that's the thing that turns into the other conversations," Duffy said.

Fay offers its nutritionist-matching services in all 50 states. The startup released its patient-facing app in October, and its cofounders said they plan to add several new features this year.

The startup says it also plans to use the Series B funds to improve its ability to collect and report data on patient outcomes and cost savings to providers and payers.

• Included Health planned to go public in 2022 before the market slumped.
• Since then, it's been heads-down, reaching profitability and growing revenue.
• The healthcare IPO market appears poised to reopen later this year.

Three years after Included Health hoped to go public and then decided to pull back its plans for an IPO, the healthcare startup says sales are up and it's profitable.

Business Insider first reported in December 2021 that Included was targeting an early 2022 public market debut and had hired banks, including Morgan Stanley, JPMorgan, and Bank of America, for the deal. CEO Owen Tripp confirmed to BI this month that the startup had, in fact, filed its S-1 privately for an IPO.

Included, formed when care navigator Grand Rounds and virtual care provider Doctor on Demand merged in May 2021, works with companies to help employees navigate their benefits and access services like virtual care and mental healthcare. The startup hoped to join a surging class of public healthtech companies — 23 healthcare startups went public via IPO or SPAC in 2021, per Rock Health.

By the end of 2021, though, the market had already begun to take a turn for the worse, dampening Included's IPO ambitions.

Seeing the writing on the wall, Tripp said he pulled Included out of its planned "test the waters" meetings with potential investors, and the startup took a step back to reevaluate its business.

"We spent most of that intervening time taking advantage of the fact that we had a really strong cash position — we didn't need to raise money," Tripp said. "We could really look hard in the mirror at what we liked and what we didn't like."

What Included Health liked, Tripp said, was its ability to provide healthcare that patients trusted. What needed work was its ability to provide personalized care integrated with help for employees seeking more than just a doctor's visit, like those juggling multiple types of care and facing administrative headaches like denied insurance claims.

To do that more effectively, the startup restructured its executive team including through new CFO and chief legal officer hires, began building new products, and became profitable, Tripp said.

While Included didn't disclose its current revenue, the startup said it's seen double-digit revenue growth since 2021 and now works with about 300 employers and health plans. Four years ago, the company had about 250 contracts and combined revenue in the hundreds of millions after the Grand Rounds-Doctor on Demand merger.

The startup also expanded existing contracts like its deal with Walmart, and landed new ones, including with the California Public Employees' Retirement System. It's now working with about 300 employers and health plans. Tripp called the CalPERS tie-in, announced in June, a "massive deal" and a strong positive signal of the healthcare market's appetite.

"That's part of my optimism about why companies like ours are much stronger in this cycle than any of the companies back in the 2021-22 cycle," he said.

The IPO market appears poised to reopen this year as a number of healthcare startups gear up for public market debuts. Physical therapy startup Hinge Health hired banks including Morgan Stanley for its own IPO, BI reported in September. Diabetes company Omada Health filed its S-1 this past summer, BI reported in October.

An evolving class of navigators

Included wasn't the only healthtech startup to hit pause on its IPO plans when the market slumped in 2022.

Hinge Health told Reuters back in January 2021 that it wanted to go public in 2022. Komodo Health told BI in November 2022 that it would put its IPO plans on hold; the health-data startup hasn't indicated any exit plans since.

As the healthcare market wakes up with the potential for an M&A uptick and IPOs this year, the care navigation segment is facing a number of shake-ups. Transcarent, led by Livongo Health founder Glen Tullman, bought public market competitor Accolade in January for $621 million, about half of Accolade's IPO price when the benefits navigator went public in 2020. Included's other top competitor, Quantum Health, got a new CEO this month after its previous CEO stepped down, citing family health issues.

Meanwhile, other players are grabbing fresh cash. Solera Health raised a $40 million Series E this month for its healthcare benefits "front door." AI-focused navigator Amino Health raised $10 million from Transformation Capital in a May 2024 funding round.

In a January 8 LinkedIn post (the same day Transcarent announced its Accolade acquisition), Tripp wrote that the healthcare navigation category had "lost its way," with many offerings becoming "commoditized, check-the-box service(s)." "Nothing in the category has been nearly enough to truly help all people find their way holistically to and through the system, and as a result it has become a smoldering category with a mounting track record of corporate misses," he said.

In a follow-up post, he wrote that healthcare navigation should take more steps toward advocating for patients without mixing in insurers' often conflicting incentives and use new technologies like AI assistants carefully to level up clinicians rather than replace them. He also teased that Included would soon push into home care and pharmacy support to further its vision of integrated care.

Tripp told BI that Included doesn't have any preference on its cap table — all of its shares are common stock, meaning in the event of an exit, its investors will get equal rights to their payouts. He says that allows Included to function more like a public company than some other startups.

"At some point, we want to reward people with liquidity, but that's not the driving force of what we do," he said.

• Rad AI recently raised a Series C funding round led by Transformation Capital, Business Insider has learned.
• The funding values Rad AI at $525 million, two people with knowledge of the raise said.
• Rad AI, founded in 2018, uses generative AI to automate tasks for radiologists and reduce burnout.

Hot healthcare startup Rad AI has raised a Series C funding round, Business Insider has learned from multiple sources.

The company, which creates AI-powered tools for radiologists, grabbed fresh funding in a Series C round led by Transformation Capital, according to two people with knowledge of the round.

Those people said the new fundraise valued Rad AI at $525 million.

Rad AI brought in about $60 million in the round, per one person with knowledge of the efforts.

Rad AI did not officially respond to requests for comment. Transformation Capital declined to comment.

Transformation Capital preempted the Series C funding, two of the sources familiar with the deal said. It comes on the heels of Rad AI's Series B, a $50 million fundraise led by Khosla Ventures and announced in May 2024, just seven months prior to this latest round.

Founded in 2018, Rad AI has seized on a wave of interest in healthcare tech that uses generative AI to make providers more efficient and reduce burnout.

While many startups in the radiology tech market are going after imaging — using AI to flag potential abnormalities in a scan, for example — Rad AI assists clinicians with more routine tasks, including automatically generating radiology reports and automating patient follow-ups.

Sirona Medical, which raised a $42 million Series C in November led by Avidity Partners, is among Rad AI's closest competitors.

Proprietary data from VC firm TRAC suggests that Rad AI is onto something big. The startup made its way onto TRAC's 2025 list of future unicorns, which uses TRAC's algorithm to predict which early-stage startups are most likely to reach valuations of $1 billion or more. TRAC says the startups it identifies have a one-in-five chance of becoming unicorns.

Rad AI cofounder Dr. Jeff Chang bills himself as the youngest US radiologist in history. He began medical school at NYU at age 16 and spent 10 years working in emergency-room radiology. His cofounder and Rad AI's CEO, Doktor Gurson, is a serial tech entrepreneur — Rad AI is his fifth company, according to his LinkedIn.

The company says it's now working with nearly half of all US health systems and 9 of the 10 largest radiology practices in the country.

• Virta Health is now prescribing GLP-1s to treat obesity alongside its diabetes-reversal program.
• Virta says it's doing $100 million in annual recurring revenue and seeing its growth accelerate.
• Its CEO says the startup aims to hit profitability by the end of 2025 ahead of a potential IPO.

Virta Health has prescribed GLP-1 medications like Ozempic for diabetes since the startup began caring for patients in 2016. Now, it wants to prescribe the buzzy drugs to treat obesity, too.

Virta made a name for itself in virtual diabetes care with its rigorous nutrition plans. The program aims to help patients reverse type 2 diabetes largely through personalized low-carb diets. The startup began treating prediabetes and obesity in 2020.

While GLP-1 medications were originally developed to treat diabetes, the drugs have exploded for their weight-loss potential. However, previous clinical research has shown that patients gain back most of the weight lost with a GLP-1 when they stop taking the medication. That's a big problem for employers, who don't want to pay for the expensive drugs indefinitely.

Virta now is positioning itself as a "responsible prescriber" for employers who want to manage the costs of covering those medications for their employees by pairing the prescriptions with nutrition support. The company says it can help patients lose the weight and keep it off — Virta released a study in February 2024 showing its program can help diabetes patients maintain their weight loss after they stop taking GLP-1s.

Virta's expanded weight-loss program could be the last push the startup needs to get to profitability — and maybe even an IPO.

The company is now bringing in more than $100 million in annual recurring revenue, a 60% year-over-year increase, CEO Sami Inkinen told Business Insider. Virta expects even faster growth in 2025 as its weight-loss business accelerates.

Inkinen said Virta will be profitable by the end of 2025.

"An IPO is the next milestone for us," he said. He declined to provide details on Virta's planned timeline for a public market debut but suggested that the company wants to be profitable before it tests the IPO waters.

Virta's biggest competitor, Omada Health, is using a similar strategy as the diabetes startup approaches an IPO. BI reported in October that Omada Health had filed its S-1 this summer; CEO Sean Duffy told BI later that month that Omada's obesity care program had become the entry point for most of its new customers.

Digital health's weight-loss frenzy

Virta and Omada's expansion into obesity care is one of many channels of the surging market for weight loss solutions, as consumers rush to get their hands on GLP-1s like Ozempic and Wegovy.

Telehealth businesses like venture-backed Ro went big on new offerings to provide virtual weight-loss care alongside prescriptions. WW International, more commonly known as WeightWatchers, switched up its diet-centric approach in 2023 by acquiring digital health platform Sequence to offer GLP-1 medications to its customers. Ro's public competitor, Hims and Hers, bought a compounding pharmacy in September largely to prescribe knock-off versions of weight loss drugs like Ozempic while those medications are in shortage.

Inkinen emphasized that Virta has no financial reason to prescribe GLP-1s.

"We are not an online pill mill. We don't make money from the drugs, and we are not incentivized to prescribe drugs to make money," he said.

As the market has gotten more competitive, Inkinen said employers and health plans have increasingly honed their strategies for GLP-1 coverage. Previously, he said, employers either covered the drugs with few caveats or blocked payments for the medications altogether. Now, they're beginning to meet in the middle.

"You have to have a holistic approach, where you say, these drugs are a useful tool in the toolkit for some people, but you also have to have a nutrition-first approach, and prescribe any drugs in a responsible manner," he said.

Most of Virta's patients aren't on GLP-1s today. Inkinen said about 30% of their incoming type 2 diabetes patients are taking GLP-1s when they begin Virta's program. He added that most of those patients can safely stop taking the drugs within the first year of Virta's diabetes-reversal program.

The startup said it plans to hire rapidly to meet increasing demand for its weight-loss offering, including by more than doubling the number of health coaches and medical providers on staff.

• 23andMe has been exploring a possible sale of its telehealth business, Business Insider has learned.
• The struggling health company bought the virtual-care startup Lemonaid in 2021 for $400 million.
• 23andMe's stock plummeted after a 2023 data breach exposed millions of customer accounts.

The struggling genetic-testing company 23andMe has been quietly exploring a possible sale of its telehealth offering, Business Insider has learned.

23andMe has been testing the waters for a buyer for Lemonaid Health, the virtual-care business it bought in 2021 for $400 million in cash and stock, people with knowledge of the efforts told BI.

It's not clear how formal the efforts have been. 23andMe didn't respond to multiple requests for comment from BI.

When 23andMe acquired Lemonaid, it said it wanted to provide personalized telemedicine care informed by its genetic-data collection.

Founded in 2006, 23andMe seized consumer interest with its genetic-testing kits that offered customers breakdowns of their ancestry. In 2017, it started selling tests designed to help assess a customer's risks for conditions like Alzheimer's disease and cancer.

23andMe went public in June 2021, a few months before the Lemonaid deal closed, at $11.13 a share.

Since then, 23andMe's stock price has tumbled, partly because of a massive data breach and a resulting $30 million class-action lawsuit. In November, strapped for cash, the company cut 40% of its staff, or about 200 people, and shut down its drug-discovery efforts.

In September, the company was trading at $0.35 a share. The following month, 23andMe completed a reverse stock split, exchanging every 20 shares of its stock for one share to prevent it from being forced to delist from the Nasdaq. On Friday it was worth about $3.60 a share.

Three-quarters of Lemonaid's $400 million acquisition was paid as shares of 23andMe stock. 23andMe was valued at $3.5 billion when it went public in 2021. On Friday it was valued at about $91 million.

23andMe's nosedive

In 2023, 23andMe said hackers had accessed ancestry data for nearly 7 million users. The data — including birth details and names — was sold on the dark web.

A data-breach-notification filing in January 2024 indicated that 23andMe took five months to realize the data had been accessed. This led to a class-action lawsuit, which 23andMe settled for $30 million in September.

In a Securities and Exchange Commission filing in July, 23andMe's CEO, Anne Wojcicki, proposed taking the company private. Five days later, a special committee assembled by 23andMe's board of directors rejected that bid.

In September, the company said in a separate SEC filing that Wojcicki was open to the possibility of a third-party takeover. Shortly after, 23andMe's entire board of directors resigned.

Wojcicki walked back the remarks in a separate filing, and a 23andMe spokesperson told BI in January that Wojcicki was no longer open to considering a third-party buyout. The spokesperson said Wojcicki still intended to take 23andMe private.

• Qventus just raised $105 million in Series D funding led by KKR.
• Its new AI assistant that gets patients ready for surgery is leading the startup's growth surge.
• Qventus aims to hit breakeven this year by adding more health system customers.

Healthcare startup Qventus just scored a mega-round of funding for its AI that gets patients ready for the operating room.

Qventus has raised $105 million in Series D funding led by private equity giant KKR, the startup announced Monday. Three of Qventus's health system customers, Northwestern Medicine, HonorHealth, and Allina Health, joined the round, along with previous Qventus investor Bessemer Venture Partners.

The funding comes as Qventus ramps up its new AI-powered assistant tech, built in partnership with Northwestern Medicine and other health systems. The startup's software, launched in August, aims to automate a range of non-clinical tasks before and after surgery, including messaging with patients, making phone calls to other healthcare organizations to retrieve a patient's medical records, and sending and receiving faxes.

Qventus has spent more than a decade building technology to automate hospital operations such as surgical scheduling. Founded in 2012, it's raised $200 million to date from investors including Bessemer Venture Partners, Norwest Venture Partners, and Mayfield Fund.

The new AI assistant tech is supercharging Qventus's growth, CEO Mudit Garg told Business Insider.

"They've had the fastest uptake of anything we've built in the past 10 years and very high resonance with customers," Garg said of the operational assistants. "That's accelerating the whole process and the speed at which we bring new solutions to market."

The $105 million Series D round included $20 million of venture debt and $85 million of equity financing. Garg declined to share what firm provided the debt financing.

Qventus's Series D funding is one of multiple mega-rounds announced already this year, joining January raises including Hippocratic AI's $141 million Series B round and Innovaccer's $275 million Series F round. The deals are a clear signal of healthcare VC's priorities in 2025 — Qventus, Hippocratic, and Innovaccer all center AI in their pitches.

Over a decade after Qventus's launch, more startups are cropping up to use AI to tackle healthcare's administrative burdens. General Catalyst-backed Fabric has been racking up acquisitions to help manage emergency room patients. In mental health, Jimini Health raised a $8 million pre-seed round in November for its AI that automates patient intake and offers around-the-clock messaging between therapy sessions.

Garg said Qventus hopes to hit cash flow breakeven by the end of 2025. The startup has never made an acquisition, but its team is considering M&A opportunities as the company continues to grow. Still, Garg noted, "It's always a tradeoff."

"We definitely will be looking, but it's not part of our core thesis," he said.

Despite Qventus's late-stage funding round, Garg isn't thinking about an exit just yet. "There's plenty of cash in the business," he said.

This year, Qventus is focused on building out new use cases for its tech, including automation tailored to complex surgical specialties like oncology and cardiology, Garg said.

The startup is also ramping up its hiring, especially in its engineering department, as it signs on more customers and brings new capabilities to existing contracts.

Here's the 17-slide pitch deck Qventus used to raise $105 million from KKR.

• Datavant is on the hunt for more acquisitions in 2025, Business Insider has learned exclusively.
• The healthcare data startup has made 11 acquisitions since its founding in 2017.
• While Datavant isn't rushing to IPO, the startup's growth could signal an exit in the future.

Datavant is hungry for more acquisitions as the $7 billion healthcare data startup inches closer to an IPO. The company is planning at least "one or two" more acquisitions in early 2025, CEO Kyle Armbrester told Business Insider exclusively.

Datavant, which manages patient data exchanges between providers, payers, and life sciences organizations, has made 11 acquisitions since 2017. The company kicked off a fresh M&A rush in the fall, picking up data privacy organization Trace Data and two data analytics products from healthcare AI startup Apixio in September.

Datavant hasn't publicly announced funding since its $7 billion merger with Ciox Health in 2021. Private equity firm New Mountain Capital is the company's controlling shareholder.

With "well over" $1 billion in revenue and steady profitability, CEO Kyle Armbrester said Datavant expects to make these acquisitions with the cash on its balance sheet.

The M&A flurry could be a good sign for Datavant's IPO potential. Flare Capital Partners' Parth Desai told Business Insider in December that he expects private-equity-backed healthcare companies to make tuck-in acquisitions in 2025 as they look ahead to potential IPOs in 2026.

While Datavant won't be first in line to IPO when digital health companies start going public again, Armbrester didn't rule out the possibility of a Datavant IPO in the next year.

"If market conditions are right, and there's a need for cash to continue to grow the business, that's great," he said. But, he added, "there's no drop dead date."

AI's big data business

Datavant works with a range of customers, including health systems, insurers, and life sciences organizations, to digitize and manage patient data exchange for tasks like clinical research and population health analytics. Today, the startup says it works with more than 70,000 hospitals and clinics.

As demand for digitized healthcare data has exploded — even more so with the advent of AI, with mass amounts of data needed to train advanced models — Armbrester said Datavant's business is booming.

"There's been a pretty rapid pace of digitization of a lot of manual workflows in healthcare, and we've been a benefactor of that," he said.

With cash flowing into the business, Armbrester said, Datavant is looking for "one or two" additional acquisitions going into 2025. The startup is looking for companies building technology for healthcare providers and life sciences organizations, he said.

Armbrester said he's primarily hunting for great products with existing market traction that Datavant can elevate with its deep data pools and customer bases.

"We're large and diversified, and I think we're in a really good space to take a smaller smarter and apply their logic or artificial intelligence or analytics across that vast network to see a lot of benefit," Armbrester said.

Datavant could be a strong IPO candidate for the next wave of digital health IPOs, investors and bankers told Business Insider in 2024.

Armbrester's entry as Datavant's CEO also bodes well for the company's IPO prospects. Armbrester stepped up into Datavant's CEO role last June after six years leading Signify Health, where he steered the healthcare analytics and services provider through its 2021 IPO and its $8 billion acquisition by CVS Health in 2023.

While Datavant has stayed quiet in recent years about any fundraising, the outlet Buyouts reported in September 2023 that New Mountain Capital was looking to extend its investment into Datavant through a continuation fund in a deal that would give Datavant additional capital.

Armbrester didn't comment on the fundraising reports but acknowledged that Datavant's business maturation could lend itself to a public market debut.

"We're certainly at a size and scale where going public could be something that we contemplate," he said.

But Datavant isn't feeling any short-term pressure from New Mountain or the rest of its board to make an IPO decision. "We've got plenty of cash on the balance sheet to do all the M&A I've just described and fund product roadmap investment as well," Armbrester said.

• A top M&A banker said Big Pharma will be on the hunt for more acquisitions in 2025.
• Major drugs including Keytruda and Eliquis will see patent exclusivity expire in coming years.
• Pharma companies look at areas such as obesity to supplement growth, Jefferies' Chris Roop said.

Big Pharma will hunt for more acquisitions in 2025 as industry giants face patent expiration for some of their best-selling drugs, according to a top M&A banker.

Merck's cancer drug Keytruda, the top-selling medication in the world, will lose patent exclusivity at the end of 2028.

Eliquis, made by Pfizer and Bristol-Myers Squibb to treat and prevent blood clots, will lose its exclusivity earlier that same year. The two drugs raked in $25 billion and $12 billion, respectively, for their manufacturers in 2023.

When patents expire, pharma company revenue can take a hit as rivals create similar offerings to take market share. Developing brand new drugs is a long, expensive, and risky process, so acquisitions of other companies with new medications in their pipelines offer a potentially faster way to generate new revenue.

This is partly why Chris Roop, head of M&A for the Americas at Jefferies, is expecting biopharma M&A to pick up in 2025.

"The gaps to fill are significant when you think about replacing drugs that achieve peak sales north of $20 billion or $30 billion drug before patent exclusivity expires," Roop told Business Insider in a recent interview.

Large, successful pharmaceutical companies can become victims of their own successes when patents run out on blockbuster treatments, he added.

AbbVie's popular arthritis drug Humira saw its patent exclusivity expire in 2023. In the third quarter of 2024, with patients increasingly turning to similar drugs or other prescriptions, AbbVie saw its revenue from global sales of Humira fall 37% from the previous year's quarter.

To make up for looming revenue gaps, Roop said Big Pharma will increasingly turn to M&A next year, buying smaller biotechs developing drugs in major markets such as obesity and oncology.

2025's top drug targets

Obesity is positioned to be biopharma's hottest market in 2025, Roop predicted.

2024's biggest pharma acquisition was in obesity. Novo Nordisk's controlling shareholder Novo Holdings closed a deal in December to buy development and manufacturing company Catalent for $16.5 billion. The deal gives Novo Nordisk more manufacturing power for its obesity drugs Ozempic and Wegovy.

Novo Nordisk and Eli Lilly, which makes Mounjaro and Zepbound, have a significant headstart in the exploding field of GLP-1 weight-loss treatments. Originally created to treat diabetes, injectable GLP-1 medications have surged in popularity. In May, the Kaiser Family Foundation reported that one in eight US adults had tried a GLP-1 drug.

Many other pharma companies want a piece of that pie, Roop said.

"Obesity is going to be a $100 billion to $150 billion market, so even if you come up with a third or fourth entrant in that market and only achieve 2% to 4% share, you still have a multibillion-dollar drug on your hands," he explained.

Beyond obesity, Roop sees immunology and inflammation drugs as big targets for biopharma M&A next year. That market saw a few large deals in 2024, including Vertex Pharmaceuticals' $4.9 billion purchase of Alpine Immune Sciences, which has a drug in development that targets Berger's disease, an autoimmune kidney condition.

Roop expects oncology to remain a focus area for Big Pharma next year.

He said pharmaceutical companies are especially interested in precision oncology M&A, including drugs targeting more specific cancers and even new methods of personalizing cancer treatment.

AstraZeneca made a precision oncology acquisition in March with its $2.4 billion purchase of Fusion Pharmaceuticals, which is developing a radiopharmaceutical drug, which uses radioactive isotopes to treat midstage prostate cancer.

Finally, Roop said Big Pharma will continue looking to buy companies with cardiovascular drugs in their pipelines. Heart disease and related conditions remain the leading cause of death. The global market for cardiovascular drugs was valued at about $150 billion in 2024, according to Precedence Research.

Novo Nordisk bought Cardior Pharmaceuticals in March in a deal worth up to $1.1 billion to strengthen its cardiovascular drug pipeline.

Roop said both private and public biopharma companies could be acquisition targets next year.

"A lot of what we're doing is trying to find that equilibrium to fund these companies to a point in time where pharma will say — on that data with that amount of patients and with a drug profile like this — I'm willing to take the risk, buy it from that point, and take it forward into late-stage development," he said.

"There are a lot of private and public companies that are in that lane today. We probably have more privates today with advanced data than we did three or four years ago," he added.

Roop said many of these private biopharma companies with advanced data are also well-positioned to potentially go public as the IPO window reopens.

• Jimini Health combines talk therapy with 24/7 support from an AI assistant.
• The mental health startup secured $8 million in funding in November.
• Jimini says it's taking a slow, evidence-based approach to using AI.

Technology hasn't done much to improve patient outcomes from talk therapy, according to recent research. Jimini Health is hoping AI can help.

Jimini's AI assistant, Sage, elevates talk therapy by conducting in-depth patient intakes and offering 24/7 messaging and personalized activities between sessions. That continuous engagement, the startup says, is the key to helping a patient retrain their brain.

"The way to improve this is not about that one hour a week of therapy. It's really about all the other hours in a week and helping people as much as possible there," Jimini co-founder and CEO Luis Voloch told Business Insider.

Founded in 2023, Jimini landed $8 million in funding in November from investors including Zetta Venture Partners, LionBird, PsyMed, BoxGroup, Arkitekt Ventures, and SCB.

The startup has been rolling out its tech since the spring. Voloch said Jimini has intentionally moved slowly to focus on safety and efficacy.

It's a response to previous healthcare startup controversies, such as government investigations into startup Cerebral, as well as concern about AI safety. Numerous unregulated chatbots on the market can simulate intimate relationships, prompting some experts to worry that AI companions may actually worsen isolation, according to a New York Times report.

Multiple lawsuits against startup Character.AI this year have alleged the startup's chatbots have harmed teenage users. Character.AI told BI earlier this year that it's introduced numerous safety features, and is working on more.

Voloch said he told potential investors that Jimini Health wouldn't be the fastest-growing startup, nor the first to bring its product to market. Other startups may make those moves faster, "and one of them is going to end up on the front page of The New York Times with a disaster story that could've been prevented," he said.

Jimini's careful, evidence-based approach draws on the expertise of its founding team. Before starting Jimini, Voloch cofounded cancer biotech Immunai, where he served as chief technology officer.

The team also includes president Mark Jacobstein, the former chief business officer at Immunai, and chief product officer Sahil Sud, a member of health data startup Ribbon Health's founding team. David Feinberg, former CEO of health data giant Cerner, is one of Jimini's advisors.

Voloch said Jimini's goal isn't to replace human therapists with AI but to integrate AI into their workflows. Therapists are interested in the startup's technology because they're so busy due to a shortage of experts in the field, according to Voloch. "They know there's so much more demand than they could ever handle," he said.

Jimini currently treats patients with low to moderate mental healthcare needs, but hopes to expand its capabilities to take on patients with serious mental illness in the future, Voloch said.

The startup has focused so far on selling directly to patients but plans to begin contracting with businesses next year. Voloch said Jimini will use its fresh funding to that end, as well as to continue improving its AI and building new features.

"We're going to be spending a lot more on fine-tuning and model training and development in 2025," Voloch said. "We feel like we've created an amazing patient journey that just scratches the surface of what we can do, and next year, we want to leave no stone unturned."

Here's an exclusive look at the pitch deck AI mental health startup Jimini Health used to raise its $8 million pre-seed round.

• After a slower-than-anticipated year for healthcare funding, investors expect sunnier skies in 2025.
• 13 VCs from firms like ICONIQ Growth and AlleyCorp share their predictions for digital healthcare next year.
• They expect more M&A, funding for AI agents and clinical decision support, and Medicare shake-ups.

The healthtech sector will see more private-equity-backed M&A and a fierce battle between AI-scribing startups next year, according to thirteen investors in the healthcare VC market.

At the beginning of the year, healthcare venture capital appeared poised for a rebound. Investors hoping to do deals again after a two-year funding drought watched as healthcare startups flooded back to the market to grab more cash.

Those VCs raced to break out their checkbooks for hot new AI startups in the first quarter, from scribing startups like Abridge to automated prior authorization players like Cohere Health.

A confluence of macroeconomic factors — from still-high interest rates to fundraising struggles for venture firms to the uncertainty of a looming presidential election — dampened the anticipated resurgence. 2024's funding appears to be, at best, on pace with 2023 levels, with $8.2 billion raised by US digital health startups in the first three quarters of this year compared to $8.6 billion through Q3 2023, per Rock Health.

Now, with interest rates expected to drop and a new administration on the way, VCs are anticipating sunnier skies in 2025.

A pickup in healthcare M&A and IPOs

After a slow year for healthcare M&A, investors want to see more deals in 2025.

With interest rates expected to come down — and investors facing pressure to deploy capital — private equity buyers should be more active in 2025, said .406 Ventures managing director Liam Donohue.

And Flare Capital Partners' Parth Desai said he's already seeing private-equity-backed healthcare companies looking to buy smaller startups. Their goal, as he understands it, is to make tuck-in acquisitions in 2025 that improve their growth stories as they look ahead to potential IPOs in 2026.

"Maybe they're not phenomenal outcomes, but at the end of the day, they'll create some liquidity," Desai said of those acquisitions. "I expect that to be one of the first exit windows starting to manifest in 2025."

Investors were hopeful but unsure that the IPO window would meaningfully reopen for digital health startups in 2025, despite startups like Hinge Health and Omada Health signaling their intentions to test the public markets.

Venrock partner Bryan Roberts said he expects the healthcare IPO market to remain relatively quiet. LRV Health managing partner Keith Figlioli suggested we won't see IPO activity kick off until the second half of the year after other exit windows open.

VCs said they're mostly looking for smaller deals next year, from mergers of equals to asset sales. Figlioli and Foreground Capital partner Alice Zheng said we'll see even more consolidation and shutdowns in digital health next year as startups run out of cash.

"Investors will have to make tough decisions on their portfolio companies," Zheng said. "We want to support all of them, but we can't indefinitely."

Healthcare AI competition will get fierce

Healthcare startups using AI for administrative tasks were easily the hottest area of healthcare AI investment in 2024. Investors think the crop of well-funded competitors will face increasing pressures next year to expand their product lines.

ICONIQ Growth principal Sruthi Ramaswami said she expects the group of AI scribing startups that landed big funding rounds this year, from Abridge to Ambience Healthcare to Suki, to scale significantly next year using the fresh cash as hospitals scramble for solutions to the healthcare staffing shortage.

As these startups scale, however, they'll face pressure to expand beyond ambient scribing into other product lines, like using AI for medical coding and billing, said Kindred Ventures managing partner Kanyi Maqubela. Scribing technology could become a commodity sooner than later, with many providers trying free off-the-shelf scribing software rather than contracting with startups, Maqubela said.

"It'll be a race to who can start to build other services and build more of an ecosystem for their provider customers," he said.

Some AI startups, like Abridge, have already been vocal about their plans to expand into areas like coding or clinical decision support. The best-funded AI scribing startups may be able to acquire smaller startups to add those capabilities, but other scribing companies will be more likely to get bought out, Maqubela said.

Flare Capital Partners' Desai suggested that healthcare companies already focused on RCM will try to pick up scribing solutions as the tech becomes a must-have for hospitals. He pointed to Commure's $139 million take-private acquisition of Augmedix in July.

Ramaswami said that demonstrating a high return on investment would be critical for these startups as hospitals pick their favorites among various AI pilots.

Health insurance in flux in Trump's second term

While many VCs quietly celebrated the potential for more M&A and IPOs in 2025 following Trump's election in November, the incoming administration could bring some big shake-ups for healthcare markets.

Trump could move to boost private health insurers, including Medicare Advantage plans, in his second term, Venrock's Roberts said. That could be a boon for young insurers like Devoted Health and Alignment Healthcare fighting for Medicare Advantage market share, as well as startups contracting with insurers to improve healthcare payment processes.

He suggested the new administration may even roll back changes made in the Center for Medicare and Medicaid Services' latest reimbursement model for Medicare, which went into effect this year and resulted in lower payments for many Medicare Advantage plans in the agency's attempt to improve payment accuracy.

Brenton Fargnoli, a general partner at AlleyCorp, said he expects to see health insurers respond to these risk adjustment changes and move to control higher-than-expected medical costs over the past year by launching a bevy of new value-based care partnerships in 2025 for specialties, including oncology, cardiology, and musculoskeletal care.

Some healthcare experts are also concerned that the federal government could cut funding for Medicaid plans. These changes could force states to scramble for new strategies and potentially new partnerships to control healthcare costs for their Medicaid populations.

"If there is a significant shift in direction at the federal level, I think you're going to see certain states do much more than they have in the past to try to continue to address health disparities," said Jason Robart, cofounder and managing partner of Seae Ventures. "As it happens, that creates opportunities for private companies to leverage their innovative solutions to address the need."

Similarly, Muse Capital founding partner Rachel Springate said that while investors in reproductive health startups will be closely watching state-level regulatory changes that could impact their portfolio companies, those startups could see surges in consumer demand as founders step up to fill gaps in reproductive care access.

Some of the Trump administration's proposed moves could stunt progress for health and biotech startups by stalling regulatory oversight. Robert F. Kennedy Jr., Trump's pick to lead Health and Human Services, has said he wants to overhaul federal health agencies, including the Food and Drug Administration and the National Institutes of Health. Marissa Moore, a principal at OMERS Ventures, said the promised audits and restructuring efforts could lead to major delays in critical NIH research and FDA approvals of new drugs and medical devices.

What's hot in AI beyond scribes

In 2025, AI will be an expectation in healthcare startup pitches, not an exception, said Erica Murdoch, managing director at Unseen Capital. Startups have pivoted to position AI as a tool for improved efficiency rather than as their focal point — and any digital health startups not using AI, in turn, will need a good reason for it.

With that understanding, investors expect to see plenty more funding for healthcare AI in 2025. While many tools made headlines this year for their ability to automate certain parts of healthcare administration, .406 Ventures' Donohue and OMERS Ventures' Moore said they expect to see an explosion of AI agents in healthcare that can manage these processes autonomously.

Investors remain largely bullish about healthcare AI for administrative tasks over other use cases, but some think startups using the tech for aspects of patient diagnosis and treatment will pick up steam next year.

"We will begin to see a few true clinical decision support use cases come to light, and more pilots will begin to test the augmentation of clinicians and the support they truly need to deliver high quality, safe care," said LRV Health's Figlioli. He hinted the market will see some related funding announcements in early 2025.

Moore said she's also expecting to see more investments for AI-driven mental health services beyond traditional cognitive behavioral therapy models — "for example, just today I got pitched 'the world's first AI hypnotherapist."

Dan Mendelson, the CEO of JPMorgan's healthcare fund Morgan Health, said he's watching care navigation startups from Included Health to Transcarent to Morgan Health's portfolio company Personify that are now working to improve the employee experience with AI. The goal, he says, is for an employee to query the startup's wraparound solution and be directed to the right benefit via its AI, a capability he says he hasn't yet seen deployed at scale.

"These companies are racing to deploy their data and train their models, and we'd love to see a viable product in this area," he said.

After three years of tense reductions, the skies are clearing over Silicon Valley, and startup investors seem broadly optimistic about a resurgence in tech dealmaking.

We asked venture capitalists at 35 firms like Andreessen Horowitz, Insight Partners, IVP, and Sapphire Ventures, to tell us what's hot and what's not in tech next year, how potential regulatory changes could rouse a sleepy exit market, and where artificial intelligence goes from here.

In 2025, venture capitalists expect a loosening of antitrust regulations under the new presidential administration. This could reignite acquisition activity by strategic buyers, which would allow funds to distribute proceeds from those deals to their own investors, or limited partners, and raise new funds to invest in the next generation of startups, said Brian Garrett, managing director at Crosscut Ventures.

In recent years, startups weren't the only ones facing a cash crunch. Established funds raised the lion's share of funding dollars, while many newish and boutique funds struggled to raise. A torrent of dealmaking, combined with Trump's return to the White House and an end to the political uncertainty, could mobilize investors in these funds who had been sitting on the sidelines to whip out their checkbooks, said Ivan Nikkhoo, a managing partner at Navigate Ventures.

"Uncertainty breeds defense, optimism breeds offense," said Matt Murphy, a partner at Menlo Ventures and early Anthropic investor. "We're going into a cycle where acquirers are feeling they need to play offense and startups feel like it's time to invest in leadership. And the IPO market is open for best-in-class assets."

From IPOs to robotaxis, these are the tech trends to watch in 2025, according to venture capitalists.

Infrastructure cools off, apps soar

Jai Das, president and partner at Sapphire Ventures: "A larger number of 'application layer' companies will have a breakout year with several crossing $100 million in revenues. I predict 50 companies will cross $50 million ARR while still growing 60%+, and at least 10 will hit $100 million ARR. A lot of these companies will be prosumer companies, but there will be several business application companies as well."

Ben Lerer, managing partner at Lerer Hippeau: "When you get the cost of compute going down as quickly as it has, and the number of options in terms of foundational models growing as it has, you end up with a really interesting time for the application layer to thrive. If you're a startup, you can go with the flavor of the month — not just a ChatGPT wrapper, or a Claude wrapper, or a Gemini wrapper, or you name it — but some combination of all of them to optimize functionality, results, and the cost of those results."

Lower rates kick the IPO market into gear

Sofia Dolfe, partner at Index Ventures: "2025 is the year we will see the IPO market opening back up. There are already signs that this is on the horizon: we're seeing gradual recovery, rates have started to come down, and there are many later-stage companies with the financial profiles to go public."

Michael Yang, senior managing partner at Omers: "Two kinds of companies will go public as the IPO window opens back up next year. First, the truly great businesses that are really scaled and have forecastable growth and would've gone public earlier if the IPO market was more favorable, and second, companies that entered into structured financings with dirtier terms that need to go public for timing reasons."

Nima Wedlake, managing director at Thomvest Ventures: "The IPO market will remain closed for most tech companies, with a high bar for entry — $300 million-plus ARR, fast growth, and cash-flow breakeven or better."

As crypto prices surge, founders return to the drawing table

Nihal Mehta, general partner at Eniac: "Guidance on what the regulations could be for crypto and AI would encourage founders to build productively within those areas."

Jai Das, president and partner at Sapphire Ventures: "The new administration is crypto-friendly, bringing with it an expected acceleration of crypto-based business models (especially those using stablecoins). I predict we'll have another crypto mania in 2025."

Some venture funds go belly-up

Wesley Chan, cofounder and managing partner at FPV Ventures: "In 2025, I predict a lot of contraction for VCs, except for top funds. We're still in a downturn. Some firms shut down, a lot of firms are not doing new deals, and you will see a lot of junior-mid level employees leave."

The great funding bifurcation continues

Molly Alter, partner at Northzone: "The 'sexiest' deals will continue to raise at sky-high valuations, but for the rest of the pack, companies will need to show very specific metrics to command a strong valuation. There will be a great bifurcation into the 'haves' and the 'have-nots.'"

Don Butler, managing director at Thomvest Ventures: "Startup shutdowns will increase, particularly at the seed stage, as companies run out of cash. This will influence valuations, with investors likely focusing on startups that have shown resilience or achieved meaningful milestones."

Matt Murphy, partner at Menlo Ventures: "Valuations will rise as growth rates and market multiples recover, but many companies still might not grow back into their ZIRP valuations. People are over that and won't let it get in the way of pursuing opportunity. Valuations for GenAI companies will continue to be outliers based on any historical metrics."

Robotaxis cover new terrain

Brian Walsh, head of Wind Ventures: "2025 will be the year that we enter the age of 'robo taxis' with, first, Waymo now well along its adoption S-curve in San Francisco and expanding quickly, and, second, Tesla favorably positioned with quickly maturing best-in-class autonomy technology (no human in the loop) and an existing large fleet to scale it."

Kasper Sage, managing partner at BMW i Ventures: "Autonomous fleet deployments will gain traction in controlled, high-density environments such as for applications like campus environments and logistics for heavy industries."

Trump policy heralds return of megadeals

Aaron Jacobson, partner at NEA: "With the change of administration, I expect the return of mega M&A deals. We are going to see a 'WhatsApp' like $20 billion-plus M&A outcome for a leading AI company."

Michael Yang, senior managing partner at Omers: "Big Tech will be back at the M&A table with a new administration and regulatory regime in place. They've been quieter in recent times but should be chomping at the bit to capitalize on what is still a buyer's market."

Funding rounds become even more fluid

Sasha McKenzie and Van Jones, both deal leads at Wellington Access Ventures at Wellington Management: "The concept of letter rounds in VC is becoming more amorphous. We're seeing $30 million and $100 million seed rounds, raising questions about what seed even means anymore. The model is shifting towards evaluating how quickly founders can run and how disciplined they are with results, rather than hitting historically stated milestones (e.g., $1 million in revenue to raise a Series A). There will be more nuance in how VCs evaluate progress, focusing more on the operator and their ability to balance vision with execution, based on the capital they have."

Multi-agent systems take center stage

Aaron Jacobson, partner at NEA: "Chatbots are overhyped. Agents are under-hyped. Enterprises will move beyond the low-hanging fruit of 'GPT-wrappers' to deploy digital workers that can reason and take action to make a real business impact."

Praveen Akkiraju, managing director at Insight Partners: "If 2024 was the year of LLMs, we believe 2025 will be the year of agentic AI — where highly capable state-of-the-art reasoning LLMs are combined with orchestration frameworks like memory, tool calling, and user-in-the-loop processes to build AI agents that can address progressively complex business workflows."

Seema Amble, partner at Andreessen Horowitz: "In the short term, human workers will be the reviewer in the loop; in the future, as trust is established over time, I expect many data-derived actions will shift toward being entirely a set of narrowly defined task-driven agents."

S. Somasegar, managing director at Madrona: "The world where we each have a digital assistant that works with a collection of AI agents is probably five to ten years out. But having AI agents that can do specific tasks really, really well is happening sooner and I think we will see a ton of progress on this in 2025."

Tender offers grow for a selective group of companies

Ravi Viswanathan, founder and managing partner at NewView Capital: "The venture secondaries market will continue to be an important source of liquidity — a trend we think is here to stay due to structural dynamics of the venture asset class."

Simon Wu, partner at Cathay Innovation: "The size of tender offers has grown from millions to billions as the desire to own top-performing names by mutual funds and VCs increases, thus allowing some of the best names to stay private longer. Tenders are likely to get bigger to a selective group of companies in tandem with a more active IPO market next year."

Industry-specific software takes over

Molly Alter, partner at Northzone: "Vertical SaaS will become more highly valued than ever, due to the increasing difficulty of differentiating a product in horizontal categories."

Cathy Gao, partner at Sapphire Ventures: "Vertical software will evolve rapidly as AI moves to the agentic phase, enabling end-to-end automation of complex, industry-specific workflows that were once beyond the reach of software. By pairing deep domain expertise with intelligent automation, vertical AI will unlock new use cases, deliver outsized ROI, and become table stakes for staying competitive."

Fintech roars back

Alexa von Tobel, managing partner at Inspired Capital: "Given the new political climate, we, of course, expect to see less regulation across the board. I think we'll see acceleration in a few core categories, including fintech."

Marlon Nichols, managing partner at MaC Venture Capital: "Fintech is an area I'm excited to invest in, particularly fintech startups leveraging AI to create transformative personal finance tools."

Sydney Thomas, general partner at Symphonic Capital: "We are watching the regulatory environment towards fintech ease which has enabled massive speculation on what asset class will win. … This also means, many startups will be required to regulate themselves, which isn't always an easy thing to do."

Robots join society

Claire Yun, investor at Piva Capital: "Generative AI will continue to accelerate and supercharge robotics; simultaneously, we will see a choke point in human labor as an aging domestic workforce and protectionist policies create a sharp supply and demand imbalance. The result will be a colorful Cambrian explosion of robots as they step in to fill this gap."

Bob Ma, partner at Wind Ventures: "Urban areas will have fleets of robots on sidewalks, while drones will manage suburban and rural deliveries. Enhanced speed, cost-efficiency, and sustainability will redefine retail and e-commerce, with regulations supporting wider adoption and innovation."

Yuri Lee, partner at IVP: "As AI advances enable robots to move from structured, repetitive tasks to more complex and dynamic real-world applications, we'll see rapid progress in robotic perception, manipulation, and decision-making capabilities."

Small language models rise in popularity

Tasneem Dohadwala, partner at Excelestar Ventures: "Small language domain-specific models are starting to show more value. Instead of using vast swaths of the internet to train large models, these smaller models can be trained on specific datasets, such as medical journals, newspapers, or email collections. As a result, they are highly tailored and more accurate in reflecting a user's particular constraints and voice.

Michael Yang, senior managing partner at Omers: "If 2024 was the year of the LLMs, 2025 will be the year of small language models (SLMs) and proprietary data sets spawning the next generation of enterprise SaaS applications. Companies have realized that data in their midst can be harnessed in new and better ways than the 'structured workflow apps' of old and by leveraging targeted SLMs, they can do work differently, more efficiently."

Founders flock to private equity

Brad Bernstein, managing partner at FTB Capital: "Despite the IPO market showing better performance in Q3'24 with proceeds already surpassing 2023 totals, structural issues like regulatory burdens and governance challenges still pose obstacles for small and mid-cap companies. Private equity markets are stepping in to fill the gap, with growth equity deals comprising a larger share of activity and providing opportunities for startups in high-growth sectors like insurtech and healthcare tech."

Jai Das, president and partner at Sapphire Partners: "With the new administration, I predict we will see an uptick in exits, and much more tech M&A activity. We'll also see PE firms buying up a lot of companies once boards and management teams realize these businesses won't be able to grow at 30% at scale and ultimately, IPO."

Open-source foundation models come for OpenAI and xAI's lunch

Aaron Jacobson, partner at NEA: "Open-source foundation models will close the gap with the leading proprietary models. On top of this we will see a significant shift away from pre-training models from scratch to fine tuning OSS models and distilling them to smaller models for faster performance."

Mo Jomaa, partner at CapitalG: "I predict that in 2025 we will continue to see open source technologies consume the infrastructure layer in software. We have seen this trend play out in several categories already, including data and analytics (which led to our investment in Databricks) and observability (which drove our investment in Grafana). Enterprises will continue to adopt open source because it helps them save money, avoid vendor lock-in, and shape the product roadmaps of the technologies that they procure."

Record deals and dollars flow to cyber and national security

Andrew Schoen, partner at NEA: "We will see a surge of investment into technologies critical to restarting the US industrial base and enhancing national security. A record number of deals and dollars will go into AI, automation, cybersecurity, and frontier technology serving manufacturing, supply chain, and defense markets."

Jake Seid, general partner at Ballistic Ventures: "Over the next 18 months, we're going to see a lot more cybersecurity exits. While this may include an uptick in M&A activity, I expect we'll see cybersecurity companies go public in 2025 and in the first half of 2026 given how large the market for cyber products has become."

Trump's tech advisors bend his ear

Samir Kumar, general partner at Touring Capital: "We should expect a lot less regulatory headwinds in 2025 for AI given David Sacks will be the AI and crypto czar for the new administration. This is likely to even result in the repeal of President Biden's executive order on AI."

Francesco Ricciuti, associate at Runa Capital: "In the US, Trump is bringing prominent people from the startup and VC world in the government, and I wouldn't be surprised if the regulatory landscape will evolve towards entrepreneurship and technology."

For the past decade, Rock Health cofounder and prolific startup investor Halle Tecco has made her name as a voice for the voiceless in fertility care.

She founded fertility e-commerce startup Natalist in 2019 and egg freezing and donation startup Cofertility in 2022. She bet early on several fertility startups like unicorn Kindbody and healthcare provider Tia. She espoused radical transparency about her previous struggles to have a child.

While she raised funding to help other people get pregnant, though, Tecco's battles with infertility continued. She suffered eleven miscarriages, including losing twins at 17 weeks pregnant.

Now, she's taking a huge step back from the industry she helped cement.

"People expect me to continue that narrative. But I've moved on, and I don't want to continue talking about it," she told Business Insider. "I'm not trying to be an infertility influencer."

As she built businesses that aimed to give women control in their fertility journeys, Tecco struggled with a lack of control over her own. Behind closed doors, her dogged optimism clashed with grief and frustration. Her therapist told her, "This is you getting PTSD treatment while still at war."

Today, Tecco is done making new fertility bets. She wants to return to what got her excited about digital health in the first place — encouraging new and exciting ideas in a sluggish industry.

She's writing a book about what to expect when innovating in healthcare. She started teaching a course at Harvard Medical School this year about the complex network of stakeholders involved in healthcare entrepreneurship. She co-hosts the digital health podcast The Heart of Healthcare, and she sits on the boards of healthcare benefits company Collective Health and Cofertility.

She'll continue to support the women's health companies she's invested in. But as far as she's concerned, the fertility-centered chapter of her life is closed.

"I'm a healthcare investor, not a fertility investor. And I want to get back to that," she said.

When Tecco went to Harvard Business School to get her MBA in 2009, she was already interested in healthcare innovation. But it was her time at Apple, where she spent the following summer working on healthcare offerings in the tech giant's app store, that brought her frustrations with the industry to a head.

"There's so much money in healthcare, and such a big opportunity to improve healthcare. Why is nobody building fun, useful things over here?" she recalls thinking.

Returning to business school for her second year, Tecco reconnected with classmate Nate Gross as he was getting his clinician networking startup Doximity, now a publicly traded company, off the ground. Together, they began an independent study about how to get entrepreneurs to bring fresh ideas and technologies to healthcare.

From that study, Rock Health was born — named for the many hours Tecco and Gross spent in front of a whiteboard in Harvard's Rock Center for Entrepreneurship.

Tecco and Gross started Rock Health in 2010 as an accelerator program at a time when few vertical-focused startup accelerators existed. Y Combinator and Techstars both launched about five years earlier to supercharge seed-stage tech startups with venture funding and expert guidance. Rock Health offered founders the chance to do the same in healthcare, with backing from VC firms like Accel Partners and NEA plus companies like Microsoft and Nike.

The firm has made some impressive investments through its venture fund, including in Waystar and Tempus AI, which both went public in 2024; Omada Health, which appears to be eyeing an IPO in 2025; and Lyra Health, which last raised capital at a nearly $5.6 billion valuation in 2022.

Gross and Tecco both attested that they were told "no" many, many times during Rock Health's creation. They faced plenty of pushback from longtime healthcare builders and investors who rejected their vision to bring more tech into the industry.

Those dismissals only strengthened Tecco's resolve.

"I made the promise that I will never be the cranky old guard. There's no use in it," Tecco said. "We need as many smart people helping us solve these problems as possible."

After Tecco moved with her husband Cloudera cofounder Jeff Hammerbacher from San Francisco to New York City in 2016, she stepped away from Rock Health. She'd set her eyes on her next goal: building a family.

Getting pregnant turned out to be "a huge struggle," Tecco said, as she confronted the high costs of fertility treatments, a stunning lack of support and education, and no guarantees of pregnancy. She told Business Insider in 2019 that her own fertility journey was fraught with "a lot of misinformation, a lot of secrecy and shame."

Tecco's son was born through IVF in 2017 after four years of trying. Adamant about improving the fertility care experience for others, Tecco officially launched Natalist two years later to provide products and educational materials to people trying to get pregnant, from at-home ovulation tests to prenatal vitamins.

"It gave me a lot of satisfaction to support others in a way that I hadn't been supported," she said.

Tecco was early in the femtech investment wave, too, founding and backing fertility startups when few others did. She first invested in Kindbody's seed round in 2018; by some estimates, VC funding for women's health increased more than 300% between 2018 and 2023, even as healthcare funding slumped overall last year.

While running Natalist, overseeing women's health strategy at Everly Health after Natalist was acquired, and then cofounding egg donation startup Cofertility, Tecco wanted to have a second child.

Getting pregnant a second time proved even more difficult. Tecco endured multiple unsuccessful rounds of IVF and eleven miscarriages, over nearly five years.

Throwing herself into her work did little to help her escape the heartbreak. Infertility and pregnancy, as she spent her spare time helping thousands of patients trying to conceive, were always on her mind. She wrestled with jealousy over other people's "miracle babies" as she waited desperately for her own.

Secondary infertility, the difficulty of having another child after a previous successful pregnancy, robbed Tecco of countless hours of her life and plenty of happiness. Miscarrying twins at 17 weeks pregnant was "the first time in my years where I didn't have a plan B," she wrote in a 2023 blog post.

She paused fertility treatments in the summer of 2022 to spend time with her family. After much reflection and therapy, she realized that "overcoming" her secondary infertility wouldn't mean having another child. It meant making peace with the idea that she never would.

"It was harder than I can explain to make that decision, especially if you're someone like me, where you're like, I want this thing, I'm going to get this thing," Tecco said.

But, she said, "I wanted to go into my 40s being really clear about my intentions of moving on."

Tecco entered healthcare not solely to invest in startups, or to build her own, but to help other aspiring healthcare entrepreneurs with fresh perspectives and technologies in clearing the industry's many hurdles. Now 41 years old, she wants to get back to that.

This year, she's been focused on writing a book with that very thesis, aiming to pass along her knowledge to the next generation of healthcare builders. She sees it as the natural next step up from her blog, where she's covered topics from the value of an MBA versus a master's degree in public health (both degrees that Tecco holds) to why a startup may not be venture-backable.

But, true to form, Tecco is juggling multiple other ventures as she writes. She's still recording The Heart of Healthcare podcast alongside industry experts including Bessemer Ventures Partners investor Steve Kraus and Fenwick & West startup lawyer Michael Esquivel. In her classes at Columbia University and Harvard Medical School, she's teaching and learning from hopeful healthcare innovators. She's stopped angel investing, choosing instead to focus on the startups she's already backed, but she's also invested her personal wealth in top venture funds, including Oak HC/FT, Seven Seven Six, and Union Square Ventures.

While Tecco's Cofertility cofounder Lauren Makler oversees day-to-day operations at the startup as CEO, Tecco remains deeply involved with the company's strategy and fundraising efforts as a board member. And Rock Health is "still running Halle's game plan," Gross said.

Makler and Gross both called Tecco's ambition "relentless."

"If Halle has conviction in something, she does not look back," Makler said. "And even having gone through what Halle has gone through, her conviction, effort, and enthusiasm for what we're doing has never wavered."

Tecco doesn't regret the many years she spent speaking out about infertility. She still feels strongly about the twisted financial incentives in fertility care and the stigmas associated with assisted reproduction, even though she's not a patient anymore.

"I don't want to add anything, but I wouldn't want to take anything away. It is still such an important part of my story," she said.

Tecco's book, which she hopes to publish in late 2025, will be infused with her personal experiences, which Tecco said she understands people are interested in. But at its core, she hopes it'll be the "welcome guide" she never got for people interested in healthcare innovation, as motivating as it is practical.

"My goal is that readers close the book, and they're like, let's do this," she said.

• Health insurers are coming under fire for increasingly denying patient claims for medical care.
• Investors are rushing to back startups using AI to automate the complex healthcare billing process.
• These 10 startups are helping patients, providers, and insurers improve health payments with AI.

In the wake of the fatal shooting of UnitedHealthcare's CEO last week, public hostility toward health insurers has reached a boiling point.

After Brian Thompson was shot and killed in Manhattan on December 4, social media exploded in morbid celebration. Shell casings found at the scene of the crime reportedly showed the words "deny," "defend," and "depose," mirroring a phrase commonly used by insurance critics to describe tactics used by health plans to avoid paying claims. Suspect Luigi Mangione was arrested Monday with a note in his possession containing the line, "These parasites had it coming."

It's a reckoning for how healthcare in the US is paid for — or not paid for — as health insurers increasingly deny paying for patient care. UnitedHealthcare and other health insurers have come under fire in recent years for using algorithms to deny patient claims, particularly Medicare Advantage claims. Claim denial rates have been on the rise for more than a decade, and denied or delayed payments cost hospitals hundreds of billions of dollars a year.

A growing crop of startups think AI can help.

Investors are rushing to back startups using AI to help providers, patients, and health plans more accurately and efficiently pay for medical care.

These 10 startups are using AI to automate key parts of healthcare's complex billing process, from prior authorization to claims adjudication.

Alaffia Health

Founded: 2020

Total raised: $17.6 million

What it does: Alaffia Health works with health plans to automate time-consuming tasks in claims processing, such as reviewing large patient medical records and policy documents. The startup says its generative AI tools can help insurers supercharge their in-house clinical teams and reduce claims spending.

Alaffia Health last raised a $10 million Series A round in April led by FirstMark Capital.

Anomaly

Founded: 2020

Total raised: $30 million

What it does: Anomaly uses machine learning to parse health insurers' policies and historical claims data to help clinicians predict and prevent claims denials. The startup was incubated by Redesign Health and has raised money from investors like RRE Ventures and Madrona.

Anterior

Founded: 2023

Total raised: $23 million

What it does: Anterior provides tech to clinicians working inside health insurers to automate prior authorizations for covered medical care. The startup raised a $20 million Series A led by NEA in June. It's also backed by Sequoia Capital and Microsoft AI head Mustafa Suleyman.

Claimable

Founded: 2023

Total raised: Undisclosed

What it does: Claimable launched in October to assist patients in creating appeal letters for denied medical claims. Its platform analyzes a range of data, including clinical research, insurer policies, and existing appeals data, to generate a personalized letter for $40.

The startup last raised a seed round from Walkabout Ventures, Humanrace Capital, and other investors in March. It's also part of Nvidia's startup accelerator program Inception.

Cofactor AI

Founded: 2023

Total raised: $4 million

What it does: Cofactor AI's platform analyzes information, including medical records, insurer policies, and claims data, to help hospitals appeal claims denials. The startup announced a $4 million seed round led by Drive Capital in November.

Cohere Health

Founded: 2019

Total raised: $106 million

What it does: Cohere Health contracts with health plans like Humana and Geisinger to automate prior authorizations for medical care. The startup claims its tech can reduce the number of unnecessary prior authorization denials to help patients get the care they need faster. Cohere Health last raised a $50 million Series B extension in February led by Deerfield Management.

Humata Health

Founded: 2023

Total raised: $25 million

What it does: Humata Health works with hospitals to automate the collection of documents included in requests for prior authorizations sent to insurers and flag likely denials. The startup raised a $25 million Series A in June, led by LRV Health and the Blue Venture Fund.

Dr. Jeremy Friese started Humata Health after serving as the president of health AI startup Olive, which shut down last year after selling its prior authorization business to Humata.

Goodbill

Founded: 2021

Total raised: $5.3 million

What it does: Goodbill works with patients and employers to reduce medical costs by cross-referencing medical records with incoming hospital bills to identify potential errors and overcharges. The startup last raised a $2 million funding round in March from Founders' Co-op, Maveron, and Liquid 2 Ventures.

Guardian AI

Founded: 2024

Total raised: Undisclosed

What it does: Guardian AI provides hospitals and physician groups with tools to analyze insurance reimbursement patterns and automate the handling of unpaid medical claims and denials. The startup was part of YCombinator's summer 2024 cohort; its founders previously worked on Palantir's AI revenue cycle management programs for hospitals.

Thoughtful AI

Founded: 2020

Total raised: $40 million

What it does: The startup's AI agents help healthcare clinics process medical claims, check patient insurance coverage, and record payments. Thoughtful AI last raised a $20 million Series A in July, led by Drive Capital.

• Particle Health has raised $10 million from its existing investors, Business Insider has learned.
• The raise comes shortly after the startup filed an antitrust lawsuit against EHR giant Epic Systems.
• Particle has been embroiled in a monthslong dispute against Epic over patient data sharing.

Healthcare startup Particle Health has been battling electronic health records giant Epic Systems all year. Now, the startup just raised some extra cash to add fuel to the fire.

The startup has raised an additional $10 million from its existing investors, three sources with knowledge of the raise told Business Insider.

The raise comes three months after Particle Health filed an antitrust lawsuit against Epic, alleging Epic has been stifling competition in the emerging "payer platform" market.

Particle Health, founded in 2018, acts as a middleman between electronic health records systems like Epic and healthcare companies, drawing patient healthcare information from the EHR for use by providers and digital health players. It's backed by venture firms like Menlo Ventures, Canvas Ventures, and Pruven Capital, and last raised a $25 million Series B round in 2022.

The $10 million financing, which included all of Particle's major investors, intends to give the company additional runway for its next phase of growth, according to one person with knowledge.

The cash won't be used for Particle's antitrust lawsuit against Epic, because Particle itself isn't paying for the lawsuit, per two sources. Those people didn't share how exactly the lawsuit is being funded.

The lawsuit is the latest action in a complex, monthslong dispute between Epic and Particle.

Last year, Particle launched a payer platform to provide health plans with data aggregation capabilities for tasks like analytics and claims processing. Epic released its own payer platform in 2021.

In March, Epic filed a formal dispute with Carequality, the data interoperability network that both Epic and Particle Health use to access and exchange patient information for their payer platforms. Epic alleged that some of Particle Health's customers were using Carequality to access patient data for non-treatment purposes, potentially violating HIPAA. The EHR company then cut off data requests from those Particle Health customers.

As part of Carequality's review process, which reached a final resolution in October, Particle terminated its contracts with two of the customers in question and agreed to obtain written documentation from a third customer demonstrating appropriate use of Carequality's platform. Epic also agreed to revisit its own policies for determining whether an organization is using data for treatment.

But Particle's September lawsuit, filed in the Southern District of New York, doubles back. The suit alleges that Epic used its market dominance to hinder Particle's business by "coercing" Particle's customers, including both its healthcare provider customers and its payer customers, to cut ties with Particle. The lawsuit claims Epic cut off Particle customers' access to medical records stored in Epic's software, and told companies it would resume that access only if they stopped using Particle's payer platform.

Those actions and others by Epic, Particle's lawsuit claims, have led many Particle customers to drop their contracts and deter prospective customers, leading to a meaningful revenue loss for Particle.

Particle's lawsuit hinges on Epic's so-called monopoly as the nation's top EHR provider. KLAS research shows Epic covers over half of all hospital beds in US acute care centers; its closest competitor, Oracle Health, covers about 24%.

In turn, Epic sent a letter to the New York court in October asking the judge to throw out the suit. The company said the lawsuit "is Particle's attempt to distract from the public reckoning stemming from Particle's customers violating patient privacy."