☁️🍄 Issue No. 007: 2023’s First Unicorn

Hello and happy daylight savings to all that celebrate. You’re reading Headlines, a weekly newsletter covering the full breadth of the mental health industry. 

Top of mind: To anyone affected by the SVB collapse, wishing you all the best during this challenging time — we’ll keep a pulse on things as they unfold.

In the meantime, today we’re looking into the business model behind Headway, a therapist matching company.

2023’S FIRST UNICORN

Headway is poised to become 2023’s first mental health unicorn.

WHAT’S HAPPENING

Headway, a therapist matching platform, is in talks to raise $100M at a valuation of over $1B, per Bloomberg. 

Rumored investors include a16z, Spark Capital, and more. Headway was last valued at $770M in May 2021, when it raised $70M in a Series B led by a16z. 

WHAT IT IS

From the outside looking in, the company may seem like just another therapist marketplace. But peer a little closer and a more complex model emerges. 

Headway takes a three-pronged approach to connecting patients to care:

• For therapists, Headway’s suite of tools helps ease the burden of administrative tasks, such as adding insurance coverage.

• For patients, the platform provides access to thousands of therapists who take insurance, reducing session prices from $100–300 down to $20–50. 

• For insurance providers, Headway helps expand their network of mental health professionals, thus cultivating billable work.

Of note, the platform is 100% free for therapists and patients. It makes money by charging health plans, which don’t have the means to easily scale their offerings. 

In other words, it’s passing on key costs from patients/therapists to insurance providers while improving access to care.

WHY IT MATTERS

There’s a massive shrink shortage — you don’t need to be an industry expert to know that. And it’s exacerbated due to a number of reasons.  

On the therapist side, an estimated 45% of psychiatrists don't accept any form of insurance, and most that do only accept a narrow set of plans. Here’s why:

• In the numbers. Insurers pay back much lower (up to 50% less) than therapists’ normal rates. Someone who chooses to accept insurance without increasing their caseload could slash their potential salary in half. 

• Paperwork, paperwork. Meanwhile, even therapists who want to accept insurance run into barriers. There are considerable administrative burdens associated with adding a network, let alone several.

For those who do persevere, many end up needing to take more patients to make their practice financially viable. That leads to faster burnout and declines in care quality — not ideal for anyone involved. 

On the patient side, the big question is always: “Can I find a therapist who is a good fit for me that I can also afford?” Most people don’t have an extra $150 to burn per week, so they turn to their insurers’ directories. 

Thing is, anyone who’s tried to navigate these directories find that they can be notoriously inaccurate. And thousands of therapists are automatically filtered out of these searches (since they don’t accept insurance) — many of whom might have been a fantastic fit.

ALL HANDS ON DECK

Outlined above is one of the industry’s most notorious catch-22s. And as demand skyrockets, the challenge will require all hands on deck. 

With the behavioral therapy market projected to graze $300B by 2030, a flurry of companies are crafting innovative solutions. 

• SonderMind raised a $150M Series C to claim unicorn status last June for its behavioral health matchmaking service. 

• Alma, a membership-based take, closed its $130M Series D last August. 

• Grow Therapy landed $75M in September to help therapists launch their own practice and connect patients. 

Elsewhere, Trek Health, which uses AI to help therapists automate payment/insurance, closed a $2.7M oversubscribed seed round last year. 

LOOKING AHEAD

While it’s exciting to see so much investment and attention in this space, it’s not all sunshine and rainbows. These models may sound great in theory, but execution is another story. Therapists report major billing issues, issues with resolving disputes, and more. 

But ultimately, it’s a step in the right direction. Amidst a slow market, investor interest in Headway (and similar companies) signal that many still see opportunity in mental well-being. 

Punchline: As the mental health crisis worsens, improving access will be crucial. Before looking to other sources, there’s a vast, untapped market of therapists who already exist outside networks. Working smarter, not harder—like easing insurance coverage or addressing cross-state licensure—will be essential steps to take.

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QUICK HITS

• Cuts. atai Life Sciences shed 30% of its staff. 

• Zen popup. Tatcha drives sales with meditation pop-up rooms. 

• Testing 1, 2, 3. Researchers have developed a blood test for anxiety. 

• Tripless trip. A non-hallucinogenic LSD analog shows promise for mood disorders. 

• Doctor me. A new study investigated 3K survey respondents on their self-treatment experiences with LSD.

• More privacy woes. Cerebral shared millions of patients’ data with social media giants.

NEWS & TRENDS

1) Implosion

Synthesis Institute has imploded. Earlier this month, students of its psychedelic therapist training program were locked out of the online curriculum without warning or communication for days. This week, the institute finally sent an email confirming that the company was ceasing operation — it’s bankrupt. Many students are now left high and dry, unsure if they’ll receive a refund after paying thousands of dollars. 

Most worryingly, Synthesis was known as the “gold standard” of psychedelic facilitator training programs, right as the industry is coming under increasing scrutiny.→ Read more

2) K report

A recent survey interviewed 2K US consumers aged 16+ on their opinions and experiences with ketamine therapy as a mental health treatment. Some stats: 

Overdosing. Over 50% of at-home users reported “accidentally or purposefully using more than the recommended dose.”Self-medicating. 40% of Gen Z reported self-treating with psychedelics for anxiety, depression, or other mental illness. Narrow divides. While there are differences in generational willingness to try out ketamine therapy, it’s notably slight — 22%, 27%, and 23% across Gen Z, millennials, and Gen X. → Read more

DEALS & DEBUTS

🍇 Aiberry, an AI-powered mental health screening provider, closed $8M in a seed round led by Confluence Capital Group. The company uses an AI therapeutic assistant to detect mental health disorders via speech patterns and facial expressions.→ source 

🌊 Wave Life, a Gen Z-oriented mental health platform, landed a $6M seed investment led by Santé Ventures. The newly raised capital will be directed towards product offering refinement and further expansion into the employer space.→ source

👣 YourPath, a substance use recovery platform, raised $2.1M in new funding. The platform leverages medication-assisted treatment (MAT) to support those struggling with opioid use like heroin or painkillers.→ source

🔄 Alter Health Group, a mental health and substance abuse treatment program, received a $5M grant from the California Mental Health Services Authority (CalMHSA). Alter plans on extending its services across the state.→ source

🇪🇸 Doki, a Spanish mental health startup, secured €800k ($850K) in seed funding. The platform aims to improve mental health access in Spain through its digital platform.→ source

🗽 NYC Mayor Eric Adams announced a $20M mental health agenda in partnership with the New York City Department of Health and Mental Hygiene (DOHMH). The fund will focus on supporting child and family mental health, the overdose crisis, and serious mental illness (SMI).→ source

📰 The Washington Post teamed up with meditation app Headspace to offer a bundled annual subscription to both services. → source

🧠 Sooma Medical received Breakthrough Device designation from the FDA for its portable neuromodulation depression device. → source

WHAT I’M READING

• DMT entities x IFS x AI alignment. This essay winds long and includes a ton of esoteric references, but stick with it and be rewarded with a beautiful and incredibly psychoactive read. I highly recommend this to anyone who plans on tripping on DMT (or undergoing psychedelic therapy in general). If anything, read the Meeseeks section. → Qualia Computing 

That’s all for this week! Hope you’re taking care of yourselves out there.

As for me, I’ve been participating in a variety of cohort-based containers for emotional/creative growth and really loving it.

Next up, I’ve partnered with friends from Nervous System Mastery, a five-week bootcamp for rewiring stress responses. If you’re interested in joining this spring with me, Headlines readers can save $150* with the code: HEADLINES

*Note, we earn a small commission if you sign up. 

Until next Sunday,

-Mel