Six months after announcing $32 million in a combination seed/Series A round, mental health care system provider Headway is back with an even bigger funding raise. This time, the company raised $70 million in Series B financing.
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The New York-based company provides free software to connect patients to therapists and therapists to insurance companies so therapists can offer more affordable care while also having an easy way to submit insurance claims online.
Headway’s round was led by Andreessen Horowitz, with participation from existing investors Thrive Capital, GV and Accel, to give the company north of $100 million in total funding since Headway was founded in 2019, co-founder and CEO Andrew Adams told Crunchbase News.
“We’ve continued to grow at a torrid pace, growing 9x in net revenue over the past year,” Adams said. “We have a big mission in front of us to build a new mental health system for the U.S.”
Back in December when Headway announced its Series A, the company was only operating in New York, but now it is in 10 states.
In fact, the company hasn’t touched its Series A funding, but saw the Series B as an opportunity to bring on a partner with Andreessen, which Adams said has the health care and startup expertise to catalyze that rapid growth.
With that and the new funding, Adams intends to invest in new talent in the areas of engineering and business development, as well as bolster its relationships with insurance companies. The company’s headcount grew to 80 from 30 last year, he added.
One of those new hires was Cherry Miao as head of finance and data. A former Accel partner, Miao joined Headway earlier this year.
Headway has also made inroads in therapist relationships, bringing on more than 3,000 therapists, psychologists and psychiatrists since 2019 who accept insurance, and facilitated around 300,000 therapy appointments, Adams said.
“We are fortunate to work with therapists in new geographies,” he said. “They recognize this is a ubiquitous problem and that the fragmentation within the industry is universal.”
Adams pointed to studies that show it’s difficult for patients to find therapists, in some cases taking dozens of phone calls before a patient will be connected to a live person, and up to 30 days, on average, to see a therapist. With Headway, after someone creates an account, the average time to get into therapy is two days, according to Miao.
All of these services available in one platform, along with a virtual option, enables therapists to eliminate “the paperwork headache” and frees them up for more patient time, she said in an interview.
Meanwhile, Headway continues to penetrate the market and increase affordable health care, Adams said.
“Everything is continuing to unfurl,” he added. “On the one hand, there is a national crisis which is translated into a national need from insurance companies. On the other, there is a need to educate insurance companies. We have to help solve administrative work for therapists. We know and understand the solution, but growing a company across the country will take time.”
Nearly one in five U.S. adults live with a mental illness, according to the National Institute of Mental Health. Overall, the global behavioral health market is expected to reach $242 billion by 2027, according to Precedence Research.
Scott Kupor, managing partner at Andreessen Horowitz, said via email that the firm looks for a “unique combination of great entrepreneurs solving big, important problems in a way that can produce a long-term, self-sustaining business. The Headway team, opportunity, and progress to-date had all three.”
“We’ve long known that mental health hasn’t received the same attention as physical health,” Kupor added. “Obviously, the events of the last 12-plus months have further exacerbated that issue, underscoring the need for greater access to mental health care. Where Headway fits into the industry is by increasing the supply of practitioners who accept insurance coverage, thus making it easier for patients to access much-needed care.”
The market continues to gain attention from investors. We put together a list of global startups working in mental health and found 524 venture-backed deals since 2016. Over that time, investors pumped $4 billion into these companies, according to Crunchbase data. So far in 2021, 52 transactions were made with some of the biggest funding raises led by:
- Lyra Health, which raised a $187 million Series E in January to give it a $2.3 billion valuation;
- ATAI Life Sciences, a clinical-stage biopharmaceutical company, secured $157 million in Series D financing in March. In April, the Berlin-based company announced plans for an initial public offering; and
- Also in March, Ginger raised $100 million in Series E financing.
Feature photo of Headway CEO Andrew Adams courtesy of the company.
Blogroll illustration: Dom Guzman
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