TheChek News Flow

Innovaccer, a healthtech startup that aggregates patient data across systems and care settings, is in advanced stages of talks with investors to raise as much as $250 million in a new financing round, three sources familiar with the matter told TechCrunch.

The deliberation for the new funding round is ongoing, and the current talks propose a value of between $2.5 billion to $3 billion for nine-year-old company, the sources said, requesting anonymity as the details are private.

Innovaccer has developed a cloud-based software layer that integrates with existing electronic health record systems used by healthcare facilities. The platform enables the unification and analysis of patient data from various sources, providing healthcare providers with a comprehensive view of their patients’ health status. By tapping its cloud technology and architecture, Innovaccer aims to bring efficiencies and accelerate growth in the healthcare industry, which has been slow to adopt technology compared to other sectors.

Innovaccer – which counts Tiger Global, Mubadala, Lightspeed, Dragoneer, Microsoft’s M12 fund, and Steadview Capital among its backers – was valued at $3.2 billion in a funding round it disclosed at the end of 2021. The San Francisco-headquartered startup has raised more than $375 million to date.

Talks about some secondary transactions – where existing backers, employees, or the founders directly sell their shares to other investors, as opposed to the startup selling the shares – are also underway, the sources said. The proposed talks for the secondary transactions value Innovaccer at as low as $2 billion, the sources added.

According to one source, health system Kaiser Permanente is among those engaging to lead the funding round, which is expected to be split into many tranches. Kaiser Permanente and Innovaccer share a long history; Kaiser is a customer of Innovaccer and has seen many of its executives join the San Francisco-headquartered startup.

On Tuesday, Kaiser announced that it had deepened its partnership with Innovaccer to improve the health system’s value-based care services.

A spokesperson for Innovaccer denied that the firm was raising a round. Kaiser didn’t respond to a request for comment. A deal could materialize as early as this month, one source said.

According to its website, Innovaccer has helped unify more than 54 million patient records, served 96,000 clinicians, and helped save more than $1.5 billion for its customers. The startup’s ARR, at the end of December, stood at nearly $140 million, according to one source.

Innovaccer operates on a subscription-based business model, charging customers based on the number of patients, modules subscribed, and endpoints. The company’s cloud-based platform offers multiple layers of services, including core data, CRM, virtual care, and remote patient care.

It differentiates itself by addressing the traditional healthcare system’s lack of information interoperability, deploying a framework with a common language that brings data together and connects different healthcare systems.

Nvidia-backed company raises $1.1 billion from investors including Fidelity, Magnetar Capital

CoreWeave, a cloud-computing startup backed by Nvidia NVDA -1.53%decrease; red down pointing triangle, nearly tripled its valuation to $19 billion in a new funding round that highlights booming demand for the cutting-edge systems that power artificial intelligence.

The $1.1 billion funding round was led by Coatue, and follows a round about five months ago that valued seven-year-old CoreWeave at $7 billion.

The New Jersey-based company rents out chips housed in data centers across the U.S. that customers use to create and deploy AI systems. It is part of a new crop of companies offering cloud-computing tailored for AI, setting it apart from big tech companies such as Microsoft and Amazon, which offer a wider range of cloud services.

CoreWeave’s leaders, who came to the AI business via Wall Street, have made the company into one of the big winners of the AI boom by moving faster than the tech giants in offering access to the latest AI hardware. They have also been able to secure large allocations of Nvidia’s best chips to cater to the AI niche.

“We built our infrastructure specifically targeted for that specialized use,” said Michael Intrator, the company’s chief executive. “We’re not here to store your Mom’s photos, and we don’t support people’s websites.”

Building that infrastructure is enormously expensive, for CoreWeave and for tech giants including Microsoft, Google and Amazon that it competes with.

CoreWeave raised $642 million from investors in its prior funding round. It has also raised money through debt: In August, it collected $2.3 billion from investors in a deal secured by its Nvidia chips. Intrator said more such financings were on the horizon and would help further fuel the company’s expansion.

Other investors in the latest funding round include Magnetar Capital, Altimeter Capital, Lykos Global Management and Fidelity, the company said.

The company will use the funding to support the expansion of its data-center infrastructure, Intrator said, moving beyond a U.S.-centric footprint into Europe and eventually elsewhere. Already in the past year, the company has expanded from three data-center locations to 14 and has quadrupled its employee count to more than 550.

Having a broad geographic reach is increasingly important for cloud-computing companies as AI demand shifts to a deployment phase in which getting quick responses from data centers near the end user is more important.

The funding for CoreWeave comes amid growing concern about the rising valuations of AI startups that have yet to build viable businesses out of the technology. Sequoia Capital estimated in March that around $50 billion had been spent on Nvidia’s chips during the AI boom, but generative AI startups only gathered $3 billion in revenue.

Brannin McBee, CoreWeave’s co-founder, said the company saw no sign of a change in demand for AI computing power.

“It hasn’t peaked and I don’t see any signs of peaking,” he said. “If anything, I’d say it’s still materially increasing.”

Findings by Congressional Democrats follows three-year investigation that unearthed internal documents

The world’s largest oil groups were accused of “denial, disinformation and doublespeak” at a US Congressional hearing, after an investigation showed they had privately acknowledged for decades that burning fossil fuels causes climate change.

The findings followed a three-year probe that unearthed internal documents from the major energy companies with evidence of concerted campaigns “to confuse and mislead the public while working unceasingly to lock down a fossil fuel future”, said Jamie Raskin, the top Democrat on the House Oversight committee in the report.

The probe was conducted by Democrats on the House Oversight and Senate Budget committees.

Raskin on Wednesday said: “Big Oil’s denial, disinformation, and doublespeak — all in service of their campaign to deceive the public about the enormous climate crisis we are in and the role that Big Oil has played in bringing it about.”

The hearing comes as scientists conclude 2023 was the hottest year on record. Earlier this year, the World Meteorological Organization sounded a “red alert” on the climate change behind record surface and ocean temperatures, glacial retreat and rising sea levels.

The report, which is accompanied by documents from Chevron, BP, ExxonMobil, Shell, the American Petroleum Institute and the US Chamber of Commerce, finds the companies “worked for decades” to undermine public understanding about climate change.

In one example, in response to Washington state climate change policies, BP planned to spend between $2.5mn and $4.5mn on “hard persuasion” tactics, another $2.5mn on a salmon hatchery to associate BP with “robust sea life” and $300,000 on “soft persuasion” with elected officials.

It also reports the industry pushed gas, made mainly from methane, as a clean fuel while “internally acknowledging that there is significant scientific evidence that the lifecycle emissions from gas are as bad as coal”.

Companies also made public pledges to support the goals of the 2015 Paris Agreement and reach net zero emissions targets, while internally recognising they could not achieve those goals, the investigation finds.

Sheldon Whitehouse, the chair of the Senate budget committee which held the hearing on Wednesday, said the fossil fuel industry had “deceived the American public” while “raking in record profits”.

Oil companies across the world have reported bumper profits over the past two years after Russia’s full-scale invasion of Ukraine drove a surge in the price of crude.

Chuck Grassley, the top Republican on the Senate Budget committee, said it was “undeniable” that fossil fuels were “critical” to US energy security. He also accused Democrats of failing to “acknowledge the unpopularity of their many climate policy proposals”.

“What’s worse is they assume the American people who don’t want expensive and burdensome climate regulations are too dumb to think for themselves,” Grassley said in his opening testimony.

The API said the investigation was “unfounded election-year rhetoric”. The US Chamber of Commerce, Chevron, BP and Shell were approached for comment.

Exxon said the report included “tired allegations” that had been publicly addressed through previous Congressional committees on the same topic and litigation in the courts.

“As we have said time and time again, climate change is real, and we have an entire business dedicated to reducing emissions — both our own and others,” it said.

The company has a 2050 net zero plan for emissions from its own operations but does not address so-called scope 3 emissions, which are the result of the use of its products and make up the bulk of pollution when burnt.

In March, the WMO reported global surface temperatures last year was 1.45C above pre-industrial levels, with a margin of uncertainty of 0.12C.

Records were broken “and in some cases smashed” for greenhouse gas levels, ocean heat and acidification, rising sea levels, Antarctic sea ice cover and glacier retreat, the UN agency said.

US central bank says there has been a ‘lack of further progress’ towards 2% inflation goal

The Federal Reserve has signalled that US borrowing costs are likely to remain higher for longer, as a it wrestles with persistent inflation across the world’s biggest economy.

The Federal Open Market Committee said after its meeting on Wednesday that there had been “a lack of further progress” towards its 2 per cent inflation goal in recent months — an addition to its statement that in effect delays rate cuts until the second half of this year at the earliest.

“It is likely to take longer for us to gain confidence that we are on a sustainable path down to 2 per cent inflation,” Fed chair Jay Powell said during a news conference. “I don’t know how long it will take,” he added.

But the Fed also indicated that it was not yet considering new rate rises to counter the recent uptick in inflation, saying that the risks to meeting its joint goals of full employment and subdued price pressures had “moved towards better balance over the past year”.

“I think it’s unlikely that the next policy rate move will be a hike,” Powell said.

The comments from Powell came as the US central bank held interest rates at 5.25 per cent to 5.5 per cent, a 23-year high that has been in place since the summer of 2023. 

The higher-for-longer rate signal from the Fed follows recent data showing that inflation had crept higher again, largely driven by costlier fuel, while the US economy grew more slowly in the first quarter of the year than expected.

The comments from the Fed also mean that borrowing costs could remain higher for many US voters in the run-up to this year’s presidential election in November. President Joe Biden said recently that he “expected those rates to come down” this year.

“The Fed’s room for manoeuvre has shrunk drastically, with inflation ticking up, growth slowing, and the political calendar becoming an increasingly tight constraint,” said Eswar Prasad, an economics professor at Cornell University.

“The spectre of stagflation, which the Fed seemed to have decisively put behind it in 2023, is now back in the picture,” he added.

Powell pushed back against that prognosis of 1970s-style inflation coupled with stagnation in the economy, saying growth remained strong and price pressures were under 3 per cent.

“I don’t see the ‘stag’, I don’t see the ‘flation’,” he said.

The Fed also announced that from June it would reduce the cap on the amount of US Treasury bonds it allows to mature each month, without buying them back, from $60bn to $25bn. It would still allow up to $35bn in mortgage-backed securities to roll off the balance sheet. Any principal payments in excess of the $35bn cap would also be reinvested in Treasuries.

In a market where some Treasury auctions are currently at record sizes, the slowdown in quantitative tightening could help bolster prices, and lower yields.

US rate-setters had hoped to cut interest rates three times this year, but higher-than-expected inflation in recent months has raised the prospect that the Fed will keep borrowing costs at current levels for the duration of 2024.

Ahead of the meeting, traders in the futures market were betting on between on and two cuts this year, with the first reduction not fully priced in until December.

As Powell spoke on Wednesday, US stocks rose, reversing earlier losses, while Treasury yields dropped. The two-year yield, which moves with interest rate expectations, slid 0.09 percentage points to 4.94 per cent. Market expectations of rate cuts later this year, as observed in the futures market, were little moved in the middle of the press conference.

The Fed “believes that monetary policy is still restrictive”, said Priya Misra, fixed income portfolio manager at JPMorgan Asset Management.

“The Fed is trying to calm the market and telling us that they are not reassessing the state of monetary policy . . . Powell has been very careful to not bring up hikes. He stuck to the message, which is why we’ve seen the market reaction we have.”

The Fed statement on Wednesday came after recent price data showed its progress in lowering inflation in 2023 has stalled this year.

The headline personal consumption expenditures measure, on which the Fed’s 2 per cent goal is based, edged up in March — to 2.7 per cent, from 2.5 per cent in the year to February. 

Rate-setters’ preferred gauge of underlying price pressures, core PCE, which strips out volatile food and energy prices, was unchanged at 2.8 per cent.

FT : AI could kill off most call centres, says Tata Consultancy Services head

Chatbots will soon take over much of the work of human agents, forecasts chief of Indian IT group

The head of Indian IT company Tata Consultancy Services has said artificial intelligence will result in “minimal” need for call centres in as soon as a year, with AI’s rapid advances set to upend a vast industry across Asia and beyond.

K Krithivasan, TCS chief executive, told the Financial Times that while “we have not seen any job reduction” so far, wider adoption of generative AI among multinational clients would overhaul the kind of customer help centres that have created mass employment in countries such as India and the Philippines.

“In an ideal phase, if you ask me, there should be very minimal incoming call centres having incoming calls at all,” he said. “We are in a situation where the technology should be able to predict a call coming and then proactively address the customer’s pain point.”

He said chatbots would soon be able to analyse a customer’s transaction history and do much of the work done by call centre agents. “That’s where we are going . . . I don’t think we are there today — maybe a year or so down the line,” he said.

The prospect of rapidly advancing generative AI tools replacing many types of white-collar workers, including call centre agents and software developers, has alarmed policymakers around the world.

In India — a global hub for back-office services — more than 5mn people work in IT and business process outsourcing, according to industry group Nasscom.

TCS, an arm of India’s Tata conglomerate that works with multinationals to develop their IT systems, has more than 600,000 employees of its own and annual revenues of nearly $30bn.

The company has reported that its pipeline of generative AI projects doubled quarter over quarter to be worth $900mn to the end of March. Krithivasan said he expected that flow to “increase significantly” and almost keep on doubling over a few more quarters. The pay-off so far has been a record order book reported this month worth $42.7bn for the financial year ending in March.

However, Krithivasan cautioned that claims of the immediate impact of generative AI were overblown. “We are in the phase where we are in a hype that we are overestimating the benefits,” he said. “The impact would be seen more long term than expecting to get the benefits in the next two to three quarters.”

He disputed whether generative AI would lead to a reduction in overall jobs, arguing that “the world is going to need more and more people, not fewer people, in terms of technology talent — and India has so many people”.

The country needed more workforce training to take advantage of this demand for tech talent, he added. Many business executives say that large swaths of India’s graduates lack enough skills to be employable, amid concerns about the quality of many higher education institutions. Nasscom has previously estimated that fewer than 20 per cent of India’s 1.5mn engineering students graduating each year get industry jobs.

Krithivasan said that TCS, which runs its own vast internal AI-skilling programme, only hires directly from about 10 to 15 per cent of Indian colleges, with more work needed to make the remainder “employable”.

“If we can go to maybe 50 per cent of the colleges, we provide more employment, and more importantly, we will be able to address the technology demand the overall global industry is going to have,” he said.

On overall IT services spending by customers, Krithivasan said inflation, war and upcoming elections were driving “uncertainty”, putting off businesses in key markets from investing in new tech projects. TCS’s annual currency-adjusted revenue growth declined to 3.4 per cent in its last financial year, down from 13.7 per cent the previous year.

Salil Parekh, chief executive of rival Indian IT services company Infosys, said discretionary outlays by customers had been “slow” after it reported flat annual revenue growth last week.

“We see that continuing,” Parekh added, with Infosys forecasting muted sales growth of between 1 and 3 per cent over the next financial year on a constant currency basis.