Healthcare AI Startup OpenEvidence has secured $75 million in new funding to expand its chatbot designed for doctors. The Series A round, led by Sequoia, will push the company’s valuation to $1 billion and place it in unicorn territory.
Based in Cambridge, Massachusetts, OpenEvidence was founded by Daniel Nadler, who built Kensho Technologies, an AI-led financial analytics company that Standard & Poor acquired for $700 million in 2018.
Fresh Capital supports further development of medically distinctive leading language models (LLMs) and efforts to introduce top researchers focused on medical AI applications.
Founded in 2021, OpenEvidence focuses on organizing and expanding access to medical knowledge, providing AI assistants to help physicians make informed decisions at the points of care. The platform has already gained traction, with hundreds of thousands of validated physicians relying on over 10,000 US medical centers. Unlike the generic AI model, OpenEvidence is trained through an exclusive partnership in specialized medical content, including materials from the New England Journal of Medicine. This tool is free to US verified physicians
Nadler describes OpenEvidence as an AI assistant built specifically for medical professionals. The company claims that a quarter of US physicians are already using the tool.
After selling Kensho, Nadler originally recorded open evidence of his own funding in 2021 before raising a round of small friends and family in 2023. This latest funding has shown support from the startup’s first institution, raising total funding to over $100 million.
“As we approach the platform’s second anniversary, OpenEvidence is used daily by hundreds of thousands of doctors, and we’re just starting out,” Nadler said. “This funding from Series A Sequoia allows us to continue to build the most reliable AI platform for healthcare professionals.”
The company plans to use some of its funds to expand its content partnership. OpenEvidence has also announced a collaboration with the New England Journal of Medicine.
The growing role of AI in healthcare
OpenEvidence may be similar to ChatGpt in its interface, but Nadler emphasizes its features. “The trust in medicine is important. The fact that it is built from scratch for doctors and trained in the New England Journal of Medicine, brings a black and white difference in accuracy,” he told CNBC.
The company licenses peer-reviewed medical journals to prevent models from being connected to public internet during training. This controlled data approach helps minimize “hagazes.” This is a known issue in AI models where responses can be inaccurate or misleading.
OpenEvidence runs on a freemium model and offers free chatbots while generating revenue through advertising. This product has gained popularity mainly through word of mouth. “Doctors work in hospitals, especially hospitals,” Nadler explained. “One doctor pulls out his phone and looks for something, and the other doctors notice and ask about it.”
This organic growth was a key factor in Sequoia’s investment decisions. Pat Grady, a partner at Sequoia who led the round, has seen OpenEvidence’s adoption reflects consumer adoption of internet products. “There aren’t many healthcare tools that spread the way consumer apps work, but this is one of them,” he told CNBC.
OpenEvidence’s funding comes amid a surge in investments in AI startups. According to CB Insights, AI accounted for a quarter of venture capital funds last year. Healthcare is considered a particularly promising sector, and AI’s ability to process vast amounts of data demonstrates its potential in areas such as drug discovery and medical imaging.
Despite enthusiasm, healthcare AI is facing challenges. Concerns range from regulatory hurdles to broader ethical discussions about the impact of AI on society, including work movements and long-term risks.
Nadler believes that the role of AI in medicine is overwhelmingly positive. He points to burnout and predictions of a shortage of 100,000 doctors by the end of the decade as evidence that AI-driven tools can be useful. “People are asking if AI is good for humanity. I think the answer is clear. That’s what will happen.”
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