Diversity Health, Wellness & Biotech Venture

Something Ventured Part 3: For Daybreak Health, A Back-To-School Season Like No Other

Photo of Alex Alvarado, Daybreak Health founder with Something Ventured logo.

Editor’s note: This profile is part of Something Ventured, an ongoing series by Crunchbase News examining diversity and access to capital in the venture-backed startup ecosystem. As part of this project, we’re following seven seed-stage entrepreneurs over the course of several months as they build their businesses. Read all of our profiles of Alex Alvarado and Daybreak Health here, here, here and here, and access the full project here

For California students, this is a back-to-school season like no other. After the pandemic disrupted the status quo in early 2020, most are heading back to in-person classes after more than a year of predominantly online learning.

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It’s a generally positive development–but also a uniquely stressful one. For Alex Alvarado, co-founder and CEO of teen-focused mental health platform Daybreak Health, that means demand for services is higher than ever.

“What we see is a lot of pent up hidden issues that have happened with students, and that the administrators haven’t been able to see,” Alvarado told Crunchbase News. “Already there is so much social anxiety, so much pandemic-related stress.”

As teens return to classrooms, a persistent source of anxiety is the sense of last school year being a “lost year” from a social, academic or athletic perspective. In addition to missing out on the social element of school, many struggled with virtual learning, and worry that the past year put them behind academically.

Increasingly, students, parents and school administrators are looking to therapy, and telehealth in particular, to help cope with the pressures of this most unusual year. For a startup like Daybreak, that means shifting from growth mode to hypergrowth mode.

Alvarado said the Daybreak team added as many patients in the first week of August as it did in all of July. He’s expecting to roughly double the amount of patients Daybreak serves from Q2 to Q3 and to more than double new referrals.

Funding timelines are also accelerating. San Francisco-based Daybreak, a Y Combinator alum founded in early 2019, raised its last seed round of $1.8 million back in February, with financing led by Maven Ventures. Alvarado said his initial plan was to raise a Series A round in 2022. However, with more inquiries coming in from potential investors lately, raising the round sometime this year looks increasingly likely.

Daybreak’s growth comes as investor enthusiasm around telehealth and tech-enabled mental health services remains remarkably robust. Just last week, two big players in the online wellness space, Headspace and Ginger, announced plans to merge after collectively raising over $400 million.

Already, funding to mental health startups in 2021 is on pace to eclipse 2020 totals, which was already the highest on record, per Crunchbase data. While much of that is later stage, early- and seed-stage mental health startups have also been attracting considerable investor attention.

The rapid rise in adoption and acceptance of telehealth offerings has been a big growth driver. At Daybreak, Alvarado points to a step change in health plans’ willingness to reimburse such services. On the education side as well, he notes “there’s been this realization that not all services you provide need to be on site.”

Daybreak currently operates exclusively in California. Alvarado plans to eventually expand to other states but has not set a firm timeline. For now, there’s plenty to take care of in the Golden State alone, as demand for its cognitive behavioral therapy (CBT) offerings rises.

Typically Daybreak offers teens a 12-week CBT program that includes one weekly 50-minute counseling session, and also incorporates check-ins with parents, counselors and pediatricians. The startup also introduced psychiatry services this summer.

Median treatment is between 16 and 20 weeks, and some students go longer. For most, the sessions appear to be helpful, Alvarado said, with Daybreak assessing that more than 75 percent who go through the 12-week program show significant improvement.

While he’s hopeful telehealth counseling can provide help to more teens in need, Alvarado also sees other positive signs for those facing mental health challenges. In particular, he’s seeing more acceptance around publicly addressing these issues, with athletes like Naomi Osaka and Simone Biles bringing mental health awareness to the forefront.

Teens and young adults are taking note.

“A lot of Gen Z is becoming more open and willing to talk about mental health,” Alvarado said. “It’s an important piece of progress.”

Illustration: Dom Guzman

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