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Investors target recession-resilient healthcare recruiting startups

Incredible Health’s $80 million Series B is the latest example of VC appetite for tech-enabled marketplaces, which are trying to help solve the nursing shortage by matching healthcare workers with hospitals.

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The US had a shortage of nurses before 2020, yet the pandemic greatly exacerbated the problem as a large number of medical staff left the profession, citing increased stress and risks.

Now, a handful of tech-enabled marketplaces for nurses are trying to help solve the shortage by matching healthcare workers with hospitals. It is a sector that continues to attract investor interest despite the market downturn.

The latest example of VCs’ appetite for this space is Incredible Health‘s $80 million Series B fundraise, led by Base10 Partners with participation from Andreessen Horowitz, Obvious Ventures and Kaiser Permanente. The round valued the 5-year-old San Francisco-based startup at $1.65 billion.

Other healthcare recruiting startups have mainly targeted temporary workers. Startups that help hospitals find so-called traveling nurses include Nomad, which grabbed $105 million Series D1 in June, and CareRev, which in March raised $50 million Series B at a valuation of $600 million.

The HR tech vertical has seen consistent growth in investor interest since mid-2020, reaching a record quarterly global deal value of $4.3 billion in Q2 2022.

 

While the looming threat of a recession could present a risk to this category, healthcare is seen as less sensitive to economic downturns.

Incredible Health’s CEO and co-founder, Iman Abuzeid, said the company has been cash flow positive since early 2021 and, for that reason, this latest round was “optional.” The capital will be used to enhance the company’s machine learning tools for screening and matching nurses and to add free career development tools for nurses, she said.

The company hopes to eventually expand to offering placements for other healthcare professionals, such as doctors, physical therapists and pharmacists. “Our goal is to be the market leader in healthcare labor,” said Abuzeid.

For now, the company is competing with traditional placement agencies, non-healthcare-specific recruiting boards such as Indeed and a handful of other AI-driven HR platforms for nurses.

What differentiates Incredible Health from its HR tech competitors is that it is focused only on recruiting permanent employees, who tend to be less expensive and ultimately more efficient than temporary staff.

Featured image by Guschenkova/Shutterstock

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    Written by Marina Temkin
    Marina Temkin covered the venture capital ecosystem from 2021 to 2024, based in San Francisco. Previously with Venture Capital Journal, Marina wrote about the VC industry, and she was a reporter with Mergermarket in New York and San Francisco. She also has been a financial analyst and is a CFA charterholder. Marina received an economics degree from the University of California, Davis, and she attended the CUNY Graduate School of Journalism.
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