Tag: bessemer

Bessemer Venture Partners State of Health AI

Posted on by Jason Barry

Bessemer Venture Partners’ always-stellar State of Healthcare AI report did a great job explaining why we (probably) aren’t in a bubble even though the health AI rocket has hit escape velocity.

AI is more than hype. BVP points to signals from the private markets to make its case. 

M&A activity is surging. Global health tech M&A reached 400 deals in 2025 (up from 350 in 2024), but the strategic rationale matters more than the volume. Healthcare orgs and investors recognize that AI simultaneously drives revenue growth and margin improvement.

  • Prime example: the Smarter Technologies roll up was designed to leverage Thoughtful and SmarterDx’s growth engine and clinical AI platform to drive margin expansion across the Access Healthcare RCM services conglomerate.

VC funding is nearly back to pandemic levels. BVP counted 527 venture deals in 2025 (~$14B total), with the average round size climbing 42% to $29M.

  • AI startups captured 55% of that, up from 37% in 2024. Even more importantly, for every $1 invested in AI companies overall, $0.22 was deployed to healthcare AI startups, outpacing the fair share of 18% of GDP that healthcare spending represents in the U.S.

The question now is, are we in a bubble? BVP has a nuanced answer for why health AI is in a better spot than the Dot Com Bubble.

  • First, AI’s technological shift has spurred the invention of new business models, with the emergence of “AI-services-as-software” companies delivering service-level outcomes (human-quality work) with software-level margins (70%+ gross margins).
  • Second, buyers are now pulling instead of being pushed. While EHRs took 15 years to scale, AI scribes have pulled it off in three. Demonstrable ROI and ease of implementation were key here.

Health AI has an X Factor. New health AI “supernova” startups are bending traditional growth curves entirely. BVP attributes these supernovas’ unprecedented growth to four X Factors.

  • Continuous hyper-growth velocity (not just growth projections)
  • Revenue durability through defensibility
  • Productivity gains that translate to better margins and full-time employee metrics at scale
  • Point solution to platform expansion

Maybe sane valuations, maybe VC mental gymnastics. BVP argues that a supernova with $30M ARR and $1B valuation isn’t overvalued, it has fundamentally different growth dynamics.

  • When you’re growing 6x instead of 2x, you reach $100M ARR in 18 months instead of 36+ months. That compression in time-to-scale commands a premium, and BVP says a 7x revenue multiple for supernovas is justified versus 2-3x for a strong SaaS company.

The Takeaway

Health AI is going supernova, and the explosion might actually be big enough to let the leaders grow into their astronomical valuations.

The Healthcare AI Adoption Index

Posted on by Jason Barry

Bessemer Venture Partners’ market reports are always some of the best in the business, but its recent Healthcare AI Adoption Index might just be its finest work yet.

The Healthcare AI Adoption Index is based on survey data from 400+ execs across Payors, Providers, and Pharma – breaking down how buyers are approaching GenAI applications, what jobs-to-be-done they’re prioritizing, and where their projects sit on the adoption curve.

Here’s a look at what they found:

  • AI is high on the agenda across the board, with AI budgets outpacing IT spend in each of the three segments. Over half (54%) are seeing ROI within the first 12 months.
  • Only a third of AI pilots end up reaching production, held back by everything from security and data readiness to integration costs and limited in-house expertise.
  • Despite all the trendsetters we cover on a weekly basis, only 15% of active AI projects are being driven by startups. The rest are being built internally or led by the usual suspects like major EHRs and Big Tech.
  • That said, 48% of executives say they prefer working with startups over incumbents, and Bessemer encourages founders to co-develop solutions with their customers and lean in on partnerships that provide access to distribution, proprietary datasets, and credibility.

The highlight of the report was Bessemer’s analysis of the 59 jobs-to-be-done as potential use cases for AI. 

  • Of the 22 jobs-to-be-done for Payors (claims, network, member, pricing), 19 jobs for Pharma (preclinical, clinical, marketing, sales), and 18 jobs for Providers (care delivery, RCM) – 45% are still in the ideation or proof of concept phase.
  • Providers are ahead in POC experimentation, while most Payor and Pharma use cases remain in the ideation phase. Here’s a beautiful look at where different use cases stand.

Bessemer topped off its analysis with the debut of its AI Dx Index, which factors in market size, urgency, and current adoption to help startups map and prioritize AI use cases. One of the best graphics so far this year.

The Takeaway

Healthcare’s AI-powered paradigm shift is kicking into overdrive, and Bessemer just delivered one of the most comprehensive views of where the puck is going that we’ve seen to date.

Bessemer’s Key Benchmarks for Health Tech

Posted on by Jason Barry

Bessemer Venture Partners put out an update to its top-tier blog series on benchmarks that health tech startups can use to see how they stack up against the competition.

We won’t dive into the full industry overview, but here’s a look at a few of the key metrics Bessemer shared to illustrate how the health tech segment has evolved since last year.

Graduating is hard. Health tech “graduation rates” from Seed to Series A and B have fallen significantly compared to previous cohorts.

  • Of the companies closing Series A rounds, the median time it takes to reach that milestone is 50% longer in 2024 than prior years, and is longer in health tech than any other sector.

We’re so back. Although the funding environment remains challenging, the good news for those that are able to raise capital is that valuations have rebounded to peak levels.

  • “Phoenix” companies that have risen from the ashes of the market correction are commanding premium valuations in massive late stage rounds (see Equip and Maven), while frothy investments in AI startups are fueling an early stage boom.

The AI factor can’t be ignored. The share of health tech investment directed at AI-focused companies has increased by 9 percentage points in just two years – hitting 38% in 2024.

  • These startups are reaching 30-50x ARR multiples, with valuations 2-5x higher than their non-AI counterparts.

Services-as-Software is the new paradigm. These businesses use AI to automate workflows historically performed by humans, and benchmarks show an accelerated go-to-market trajectory compared to traditional SaaS models. 

  • Services-as-Software companies are reaching $10M ARR at unprecedented speeds as the industry rushes to test if they can deliver on their value promises, and the following chart has the full breakdown – at least for the readers that know their finance acronyms.

The Takeaway

Bessemer’s full post goes much deeper on the overall health tech landscape and the intricacies of AI Services-as-Software, but the four charts above give you a solid lay of the land. Bessemer remains as optimistic as ever on health tech heading into 2025, and it’s definitely impressive to see the resilience that these companies have showcased over the last year.

How to Scale a Health Tech Business to $100M ARR

Posted on by Jason Barry

Bessemer Venture Partners recently put out a top-tier blog post outlining how to scale a health tech business to $100M in annual recurring revenue (ARR) and the benchmarks to look out for along the way.

We won’t dive into the full finance lesson, but here’s an overview of the key benchmarks Bessemer gave to help understand how top performers compare to similar companies. 

Every company is different, but Bessemer segments health tech businesses into two main buckets.

  • Healthcare SaaS – Cloud-based software alongside data and analytics with highly recurring revenue. Examples include Doximity, Mindbody, and Veeva.
  • Tech-Enabled Services – Care or navigation support to patients via either B2B2C or direct-to-consumer models. Revenue is mostly recurring from either an enterprise or consumer via subscriptions. Examples include Hims & Hers, Livongo, and Accolade.

It takes roughly a decade to reach $100M in ARR across most health tech businesses. However, tech-enabled services businesses scale to their first $10M ARR in an average of three years, whereas healthcare SaaS businesses take an average of six years due to longer sales and implementation cycles.

Growth slows as companies scale their ARR. Bessemer found that both business categories see revenue growth of over 200% until $10M ARR, and each grow half as fast by the time they reach $25M ARR. Tech-enabled services grow faster than SaaS at every step.

Improving margins unlocks scalability. Tech-enabled services businesses steadily improve gross margins as they scale due to several factors (pricing power follows proven outcomes, tech improvements improve care quality, provider panels get more efficient). Healthcare SaaS businesses see more stable 65-70% gross margins across all stages.

The Takeaway

Bessemer’s full analysis breaks down pretty much every metric a health tech startup could ask for to inform their scaling decisions, but the three charts above give a quick snapshot of top performers. For a full benchmark overview by company size, make sure to bookmark these cheat sheets for Healthcare SaaS and Tech-Enabled Services.

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