OpenEvidence has raised nearly $700 million since its founding in 2021. Last month, the Miami-based company closed a $250 million series funding round that raised its valuation to a whopping $12 billion.
What happens to the startup that has attracted so many investors?
They point to OpenEvidence’s bottom-up, doctor-first model, which has led to more than 430,000 doctors signing up for the service. The startup offers doctors a free AI-powered search platform that provides them with answers to medical questions, a platform they can easily access by signing up directly, without going through hospital IT or lengthy enterprise sales processes.
This drives rapid adoption and daily engagement among physicians. That scale, combined with strong pharmaceutical advertising monetization, appears to have convinced investors that OpenEvidence is on track to become the default platform doctors turn to for medical knowledge.
Put doctors first
OpenEvidence CEO Daniel Nadler said his company is unique because it develops its product for doctors, not hospital CIOs.
“Doctors sign up directly, allowing us to be by their side and help them wherever they go: in the hospital, between shifts, on the way to work, at night when they’re reviewing patient records,” he said.
Nadler explained that since its inception, OpenEvidence has focused on earning the trust of physicians and making it clear that the platform is designed to meet their needs.
“Doctors know that we are working with them and that we are aligned with them: we are active in the communities, we are in constant conversation, we listen to their comments and their ideas,” he commented.
The tool is gaining traction among all physicians, from new residents to esteemed physicians, with users including Dr. Robert Wachter, chair of the department of medicine at UCSF, and Dr. Aneesh Singhal, vice chair of neurology at the stroke center at Massachusetts General Hospital.
Nadler noted that doctors appreciate that OpenEvidence has content and data partnerships with peer-reviewed medical sources they already trust, including JAMA, the American Medical Association and the New England Journal of Medicine. Doctors know how the platform gets their answers.
Appealing to doctors has led to clinical use at scale, Nadler added, stating that, on average, OpenEvidence users ask a question at least once a day.
Last year, an independent study involving more than 1,000 doctors across 106 specialties found that 45% of reported AI use was on OpenEvidence.
“Doctors are smart consumers. Some health technology companies can fake activity through email interaction, but you can’t fake the number of clinical conversations doctors have within OpenEvidence: now over 20 million per month. We had over 900,000 one day last week,” Nadler stated.
With all due respect to Nadler and the entrepreneurs aiming to make a difference in healthcare, one could argue that faking it is a rite of passage for many startups. Many have taken the “fake it till you make it” approach, and for the worst offenders, faking it has landed them in prison, like Elizabeth Holmes. The founders of Outcome Health are another example: one was sentenced to prison and another sent to a rehabilitation center. Both companies were once healthcare unicorns, and the latter’s revenue model is somewhat similar to that of OpenEvidence.
Bottom up approach
In an interview last month about the trends shaping this year’s digital health investment landscape, Morgan Cheatham, partner and head of healthcare and life sciences at Breyer Capital, pointed to OpenEvidence’s bottom-up adoption model as a key strength. He said that approach resonates in today’s marketplace, where real-world engagement matters more than aggressive sales cycles.
Rather than navigate slow and complex procurement processes in health systems, Cheatham believes it is prudent for OpenEvidence to reach users directly with a product they like and trust. Other companies that provide point-of-care medical testing, including Atropos Health and DynaMed, sell to health systems.
The strategy isn’t entirely new: Doximity also grew quickly by reaching out directly to doctors and building one of the largest physician networks in the U.S. But investors see OpenEvidence as something different because it’s integrated into day-to-day clinical decision-making, not just professional networking and communication.
Under the bottom-up model, the tool is often quickly adopted by physicians and then expanded to all institutions, Cheatham noted.
Another investor, Katie Jacobs Stanton, general partner at Moxxie Ventures, who has not invested in OpenEvidence, agreed.
“While institutional adoption remains important, the strongest healthcare companies are driven by the attraction of physicians and caregivers who feel the pain firsthand. That bottom-up demand creates trust, habit, and advocacy in a system where care and workflow access are scarce. When a product is integrated into the way care is actually delivered, scale comes naturally,” he explained.
Investors are increasingly looking for companies that address “the most difficult and important problems” in healthcare, including diagnosis, treatment, patient safety, referrals and claims, Stanton added. He said investors have a big appetite for technology that can help doctors do their jobs better so they can ultimately improve patient outcomes.
A revenue model that offers
It’s clear that doctors are turning to OpenEvidence to answer their questions, but they’re using it for free, which begs the question: How does this startup make money? And how does it make enough money to justify a $12 billion valuation?
Advertisements, of course.
OpenEvidence monetizes by selling ads on its platform to pharmaceutical companies, explained Michael Robinson, partner and head of the investment team at Craft Ventures, which participated in OpenEvidence’s Series D last month.
“We look at the [total addressable market] for spending on digital pharmaceutical advertising. In the United States, there is approximately a $20 billion to $25 billion digital advertising market for the pharmaceutical sector, and this does not include global expansion. As query volume increases, additional ad inventory is generated that can be monetized,” Robinson explained in an emailed statement.
According to its privacy policy, OpenEvidence collects information about how doctors use the platform, including interaction with particular topics and device data. This data can be used to tailor ads to each user’s specialties and interests.
Nadler, CEO of OpenEvidence, noted that the way any AI search works is that it takes a few seconds to find and collect the evidence that is used to generate an answer.
“We take advantage of that moment to show the ad. The reason doctors don’t feel this is intrusive is that they would have to wait for the response at that moment anyway. The ad and the response are always separate: once the response is generated, the ad disappears,” he explained.
Robinson noted that OpenEvidence is “one of the fastest companies” to reach $100 million in revenue in less than 12 months, faster than other major AI players like Wiz, Sierra and Perplexity, and certainly the fastest among healthcare-focused AI companies.
“The potential here is huge and they are already working with major pharmaceutical companies that have expressed a desire to increase spending,” Robinson said.
Not only is the user base growing, but they are also highly engaged and continue to increase their total searches per month, he added.
This helps differentiate OpenEvidence’s bottom-up medical adoption model from Doximity’s approach: essentially, doctors use OpenEvidence more regularly, so they’re more likely to be exposed to ads on the platform.
As for additional growth potential, Robinson noted that OpenEvidence has initially focused on the U.S. medical market, but there is progress in other user groups such as pharmacists, nurses and medical students, as well as global expansion with the platform’s multilingual capabilities.
Product expansion could also be another growth opportunity in the future, Robinson said. OpenEvidence could continue to release new products that integrate into clinicians’ workflow to help with tasks such as documentation and care coordination.
What lies ahead?
Robinson believes in OpenEvidence’s ability to maintain its competitive advantage because its value proposition is aligned with both physicians and pharmaceutical companies. For doctors, the platform is free and easy to use, as well as reliable. For drug manufacturers, ads can be served right at the time of search, when intent and engagement are high.
This gives the company “more precise targeting than other channels,” according to Robinson.
In his opinion, the startup’s Series D validates the trend of mega fundraising rounds in the category leaders.
“We’re seeing more investment dollars focused on consensus winners. The timeline for companies to become category winners is shortening, driving huge funding rounds in rapid succession. This is true across categories, not just healthcare,” he said.
Nadler believes that time will be the company’s main competitor in the future. Nadler described his company’s priority as “getting this into the hands of every doctor” in time for his patients to benefit.
To achieve this, the startup will continue to invest in high-quality content partnerships with trusted health information owners and use its growing scale to improve.
“Each question represents a gap in clinical knowledge and understanding, and gives us the opportunity to fill that gap. Additionally, each clinical conversation within OpenEvidence increases our understanding of how clinicians reason through difficult clinical questions. The benefit is obvious: being exposed to the clinical thought process at our scale allows us to learn from it and, in turn, leverage it to improve reasoning on each and every clinical question,” he explained.
Doctors love it, pharmaceutical companies fund it, and investors are taking notice: only time will tell if OpenEvidence can maintain and leverage its dominance.
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