Nearly one in five U.S. adults live with a mental illness, according to the National Institute of Mental Health, and market research indicates that the industry working to treat these people will be worth more than $240 billion by 2027. Lately, the global pandemic has caused renewed interest in mental health and how it gets addressed, and companies like Modern Health, Ginger, and Lyra Health have snagged massive funding rounds to keep up with a surge in demand.
The latest company to garner investor attention is Headway, an NYC-based tech company that works to make mental healthcare more affordable by connecting patients to therapists and therapists to insurance providers. The startup announced Tuesday it closed on a $70 million Series B led by Andreessen Horowitz, with participation from Thrive, GV and Accel. The round comes just six months after Headway raised a $26 million Series A, bringing its total funding raised to $103 million and valuation to $750 million.
Founded in 2019, Headway is working to tackle an issue that has been plaguing the mental health industry for years: affordability. Co-founder and CEO Andrew Adams says one in four Americans with treatable mental health conditions fail to find affordable care. A big reason for this is that most therapists don’t accept insurance — 70 percent, in fact.
“Often, therapists are these solo, fragmented entrepreneurs. They’re not consolidated enough to be able to deal with the administrative burdens that come with accepting insurance,” Adams told Built In. “It’s just increasingly hard to be a solo practitioner and accept insurance because the health insurance world is not designed around solo entrepreneurs.”
So, Headway’s software makes it easier for therapists to accept insurance, which, in turn, makes it easier for patients to find a therapist they can afford. Plus, Headway says its system helps patients get an appointment with a therapist within five days, a big improvement from the average 30-day wait individuals seeking mental health treatment typically face when going through insurance.
So far, this model appears to be doing quite well. Back in November, when the company announced its Series A, Headway was only operating in NYC. Now it’s in 10 states, and its net revenue has grown 9x, indicating that demand among patients, therapists and insurance companies alike is growing. In just two years, the company has brought on more than 3,000 therapists, psychologists and psychiatrists to its platform, treating more than 2,000 patients a month.
This rapid growth, and Headway’s unique approach to solving such a pervasive problem, is what attracted Accel to the company, according to Cherry Miao, a former partner at the VC firm who was just hired as Headway’s new head of finance and data.
“I’ve had the enormous privilege and good fortune of having worked with some really impressive companies and some really high-powered teams,” Miao told Built In, citing Accel’s previous investments in major brands like Slack, Facebook and UiPath. “I would take the Headway team, pound for pound, against any of them. I’m really excited about building one of the most important startups in the United States right here in New York.”
There are lots more new hires in Headway’s future as well. The company has about 75 employees now, and would like to use some of this fresh funding to grow its team to 300 in the next year.
Adams said the main reason for this latest round had nothing to do with money, though. In fact, Headway hasn’t even touched the $26 million it raised last year. Really, the company wanted the opportunity to work with Andreessen Horowitz, a VC firm Adams considers to be one of the best startup investors out there. He says their expertise in growing healthcare-focused tech companies will be crucial in helping Headway reach its ultimate goal of scaling to full national coverage.
“We’re just getting started,” Adams said. “We’re just beginning to land in 10 additional states, we’re just beginning to deliver our services across the United States. And then, we’ll have the opportunities to expand even further and better serve even more patients and therapists. These feel like early, early days — and they’ve been such exciting days at that. This is a long journey that I’m excited to embark upon.”