OpenEvidence, the 'ChatGPT for doctors,' doubles valuation to $12 billion

OpenEvidence, often referred to as the 'ChatGPT for doctors,' has announced a significant new funding round, elevating its valuation to an impressive $12 billion. The Cambridge, Massachusetts-based startup secured $250 million in financing, with Thrive Capital and DST leading the investment, as reported by CNBC. This funding follows a remarkable journey for OpenEvidence, which began raising external capital in February with $75 million from Sequoia, at a valuation of $1 billion. By October, its worth had skyrocketed to $6 billion. In total, the company has garnered $700 million from prestigious investors, including Google’s venture arm, Nvidia, and the Mayo Clinic. Founded in 2022 by Daniel Nadler, who previously established Kensho Technologies, OpenEvidence aims to assist physicians in making critical clinical decisions through a specialized AI chatbot. Nadler emphasized that the AI models are crafted from high-quality data sourced from top scientific journals, distinguishing it from general internet sources that may provide unreliable medical information. Claiming to be the most utilized AI platform among U.S. doctors, OpenEvidence reports that over 40% of physicians are currently using their tools. Nadler highlighted the vast potential within the healthcare sector, which represents nearly 20% of the U.S. GDP, amounting to $5 trillion annually. He remarked, "Health care is the largest segment of the real economy," suggesting a wealth of opportunity for innovative companies. While competition is growing, with OpenAI’s recent launch of 'ChatGPT Health' and Anthropic’s 'Claude Healthcare,' Nadler believes OpenEvidence’s emphasis on quality data and its established position in the market provide a significant edge. "We've gathered hundreds of millions of real-world clinical consultations from verified physicians, creating a feedback loop that's challenging to replicate," he noted. OpenEvidence reported exceeding $100 million in annualized revenue last year, primarily driven by organic growth. Notably, 95% of new users learn about the platform through recommendations from fellow physicians. Nadler pointed out that much of U.S. healthcare occurs in smaller practices lacking substantial IT resources, making OpenEvidence's accessible solutions vital. The startup has been pioneering an advertising-based revenue model, allowing for broader adoption compared to traditional subscription services. Companies can promote their content through various formats on the OpenEvidence app. This approach aligns with a growing trend in the AI industry, as seen with OpenAI's recent testing of an ad-supported version of ChatGPT. Nadler aims to navigate growth while ensuring profitability, expressing caution against the high-risk strategy of heavy financial burn that some companies pursue. He reiterated a commitment to building OpenEvidence as an independent entity rather than opting for acquisition, stating, "This time, I want to build something that compounds over many years." Regarding an initial public offering, Nadler mentioned that he anticipates foundational AI companies like SpaceX and OpenAI will go public first, setting the stage for application layer companies like OpenEvidence to follow. As the AI sector continues to evolve, OpenEvidence stands poised at the forefront, navigating a landscape rich with potential and competition.