Get Ready. 2025 Is the Year of Healthcare IPOs.

Hey SaaS Sentinel reader. Welcome back. Top bankers predict a wave of high-profile healthcare public listings, several AI companies have now raised well over $1B in funding, and Gusto’s Head of Technology shares their tips for building an AI-assisted workforce. Here’s what’s happening in SaaS this week.

• Over 20 AI companies have raised $1 billion or more in recent funding rounds

• Top bankers estimate that the next batch of high-profile healthcare public listings will emerge in 2025

• Gusto is using its non-technical teams to guide their AI product development

These Are The AI Startups That Raised Over $1B

AI startups are raising money at a record-shattering pace, with over 20 companies garnering $1 billion or more in recent funding rounds. Leading the funding pack are generative AI pioneers like OpenAI, Anthropic, and xAI, which have raised as much as $8 billion each from investors eager to back leaders in the red-hot generative space.

OpenAI made headlines this month with a massive $6.6 billion funding round led by Microsoft, valuing the ChatGPT creator at a staggering $157 billion. And they aren't alone—competitor Anthropic has raised over $8 billion total to date, while newly launched xAI has pulled in $6.4 billion in funding out of the gate.

The eye-popping funding sums reflect investor enthusiasm for the transformative potential of AI, as regulators continue to debate possible restrictions on generative models. With unicorn status no longer enough to stand out, AI startups are rapidly becoming decacorns and hectocorns.

But beyond generative AI, other AI categories are also attracting billion-dollar plus funding, from autonomous vehicle leaders Waymo and Cruise raising over $8 billion each, to vertical AI provider AlphaSense pulling in $1.4 billion for its financial analytics platform. With companies like Databricks raising close to $4 billion for its ML tools, the AI funding frenzy shows no signs of slowing down.

As AI seeps into every industry, investors are now thinking bigger than ever when backing startups pushing the boundaries of what's possible with artificial intelligence. The funding arms race is clearly on as more AI decacorns and hectocorns emerge to challenge legacy tech giants. For AI startups with lofty ambitions, it seems raising less than a billion is now small potatoes.

Here’s a list of the top five AI companies with the largest funding rounds:

1. OpenAI raised $17,600,120,000

2. Waymo raised $10,500,000,000

3. Cruise raised $8,866,800,000

4. Anthropic raised $8,404,000,000

5. xAI raised $6,384,679,312

You can view the complete list in the full article below.

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2025 Could Bring a Wave of Healthcare IPOs, According to a Top Banker

The prognosis for healthcare IPOs is finally improving after extended market turbulence took its toll over the last few years. But don't expect a quick turnaround—the next batch of high-profile healthcare public listings likely won't emerge until 2025, according to recent estimates.

Healthcare IPOs rapidly fell out of favor as stocks like Teladoc and Accolade nosedived 80% or more from their pandemic highs. High-profile SPAC deals also flopped, with digital health unicorn Nuvo declaring bankruptcy only a year after its $770 million merger. But recent stronger performances from companies like Waystar, which achieved profitability and growth before going public, point to the remedy healthcare startups need to succeed in the public markets.

"There's going to be more of a focus on growth and profitability" for the next round of healthcare IPOs, says Barclays banker Jon Swope. Swope expects companies applying AI and data analytics across areas like personalized medicine and consumer health to be among those generating enthusiasm when markets fully recover.

As healthcare startups plan their path to the public markets, pursuing profitability over rapid but potentially unsustainable growth will be key to reviving Wall Street's worn-out appetite. Though still recovering, the prognosis for healthcare IPOs in 2025 and beyond appears far brighter, thanks to this shift in focus. For startups seeking a healthy public market debut, the prescription is clear—growth and profits above all else.

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Gusto’s Head of Technology Says Hiring an Army of Specialists Is the Wrong Approach to AI

As AI fever grips the startup world, HR startup Gusto is taking a different approach to building its AI workforce—looking inward to upskill employees rather than hiring expensive outside experts.

The payroll and benefits provider sees its non-technical teams as better positioned to guide AI product development compared to specialized AI engineers. "The people who are going to be able to progress your AI applications are actually the ones that have the domain expertise of that area, even though they may not have the technical expertise," says Gusto co-founder Edward Kim.

Gusto outlined how its own customer service team writes "recipes" to teach its new AI assistant, Gus, how to handle support questions, passing its knowledge through machine learning without needing data science skills. By building tools to capture workflows from employees serving customers daily, Gusto is doubling down that institutional knowledge drives the most effective AI applications over hired-gun data science talent.

The strategy of upskilling its support staff instead of recruiting a new AI army has already paid dividends. Gusto highlighted how one IT staffer with an interest in AI built an internal "Copilot" tool allowing agents to get automated answers to customer service questions in natural language.

As the competition for elite AI talent pushes compensation into uncharted territory, Gusto's bottoms-up approach suggests double-digit million-dollar salaries may not represent the best investment. The path to AI excellence lies not only in state-of-the-art models, but also in the valuable institutional knowledge within a company’s walls.

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Parting Thoughts

Well, that’s the tech news for this week. Hit reply and let us know—did you learn something from today’s newsletter?

Until next time!