Investors back virtual future for mental health care

VC funding for behavioral health startups skyrocketed during the pandemic. Not only did the crisis expose the need for these services, but people were more willing than ever to meet with providers online.

Venture capitalists poured nearly $6.9 billion into US-based mental and behavioral health companies in 2021, almost three times what the category collected in 2019, according to PitchBook data.

And there is no sign that patients or specialists are rushing to see each other in person now that COVID-19 appears to be winding down. Telemedicine usage for behavioral health is here to stay, and so is investor interest in the startups that make it possible.

So far this year, VCs have invested $1 billion into US mental and behavioral health startups. And just this week, investors funded two companies in the sector.

Brightline, a provider of virtual behavioral health for children, teens and their families, has raised $105 million in a Series C round led by KKR with the participation of existing investors including GV, Optum Ventures and Oak HC/FT. The deal valued the Palo Alto-based startup at $705 million, Bloomberg reported.

Brightside Health, a Bay Area-based provider of another telemedicine platform for mental health care, landed a $50 million Series B from backers such as ACME Capital, Mousse Partners and Bullpen Capital.

Several factors drive investor enthusiasm for behavioral health companies.

Virtual health visits work well or even better than in-person ones, said Annie Lamont, co-founder and managing partner at Oak HC/FT.

Brightline, which was founded in 2019, was getting ready to sign a lease on a space for its first clinic in the spring of 2020.

"[Before the pandemic] child psychologists and psychiatrists said, ‘We need to see these children in person,’” Lamont said. But when the pandemic hit and Brightline’s providers began to work with patients remotely, the company quickly realized that it does not need physical space.

“I think children and even adults feel more comfortable communicating about their issues in their homes than in an office setting,” she added.

Lamont also said that companies and payors now understand that providing behavioral services increases employee productivity and helps reduce their total healthcare costs because mental health challenges often feed into other illnesses.

Virtual healthcare has another significant advantage. There is a shortage of mental health professionals in many areas of the country, but companies like Brightline and Brightside can serve any US-based patient with access to wifi.

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