Babylon is no doubt one of the hottest AI startups in United Kingdom
The company is currently hoping to raise approximately $400 million after using over $75 million in 2018 to expand its operations and after its hopes to land investment from SoftBank failed to bear fruit.
Aside from enjoying deals with the National Health Service, especially for a 24-hour video consultation service and an application that can analyze patient’s symptoms, Babylon has received praises from the UK Health Secretary Matt Hancock for being among the “biggest names in AI (artificial intelligence).”
Babylon’s ability to raise new funds marks a critical test of confidence in its founder, Ali Parsa, who formerly headed Circle, the first private manager of a National Health Service (NHS) hospital.
According to some people familiar with the story, Babylon was in talks with SoftBank regarding an investment in 2018, even though the discussions did not progress.
Four sources in the industry revealed that the health tech startup had informally talked about a substantially higher fundraise in 2018. “They have been trying for a while to raise funds,” claimed one person.
Babylon’s current $400 million target is expected to be one of the largest fundraising for a UK-based technology company, with only several enterprises such as Improbable and Deliveroo having raised more funds in private investments.
The health tech company has increased its fundraising target range citing its strong interest in the particular process, even though the amount is expected to remain within a range that can be justified commercially.
Babylon revealed that it had not targeted a larger amount and had not in any way scaled down its expectations.
Both Goldman Sachs and Morgan Stanley, the two banking institutions recruited by Babylon to help it in managing the process, refused to comment.
Since raising $60 million back in April 2017 from Kinnevik, a Swedish investment vehicle, and the family of billionaire Nassef Sawiris, Babylon has grown rapidly.
Back in 2017, the health tech company recruited nearly 300 individuals but currently employs over 1,000.
Also, people familiar with the matter revealed that the company had over $75 million in total expenses while generating revenues of about $10 million.
According to Babylon, its workforce currently consists of 200 doctors, 600 technologists and scientists and several sales staff.
Babylon is composed of three UK subsidiaries: Babylon Partners is involved in developing the company’s technology and generated £1.5 million in revenue back in 2017.
Babylon Healthcare Services, on the other hand, runs the GP at Hand video consultation services and generated £1.8 million worth of revenue.
Both subsidiaries had £30.5 million worth of combined “administrative expenses” in 2017 before the company’s employee numbers increased rapidly.
The third subsidiary, Babylon International, was incorporated in 2018 and is yet to submit its accounts to Companies House.
Babylon’s holding entity is located in Jersey, with its leading shareholder, ALP Partners that is owned by Nedgroup, a Parsa Family Foundation’s trust.
The trust is controlled by South Africa-based insurer Old Mutual, which since 2018 has featured on Babylon’s United Kingdom (UK) filings as the company that runs the businesses.
Since its previous fundraising, Babylon has received several massive payments from its commercial partners.
According to two sources familiar with the story, last year, the company made a deal worth $100 million with Prudential’s life insurance and asset management subsidiary in Asia.
A month later, Ali Parsa revealed that the company would spend about $100 million in doubling the size of its London-based team.
Babylon has also signed deals with companies like Samsung and Tencent.
“We have actually increased our fundraising target range due to strong interest in the process, but the amount will still be within a range that can be commercially justified,” said Babylon.