Mar 1, 2022 - Economy

Scoop: Mental health startup earns (Series) A+

Illustration: Sarah Grillo/Axios

Daybreak Health has done its homework. The school-facing behavioral health startup raised $10 million in a Series A round led by Lightspeed Venture Partners, the company tells Axios exclusively.

Why it matters: Most venture capital funding for behavioral health goes to employer-facing offerings, but investors are increasingly turning to new areas.

  • Although health tech consolidation is the name of the broader digital health game, niche offerings are still nabbing the attention of investors who see potential in specialized support.
  • Behavioral health is one such sector, and demand is continuing to outpace supply.

Details: Maven Ventures and individual investors including BetterUp's Alexi Robichaux, Remind's Brian Grey and GSV's Deborah Quazzo also contributed to Daybreak's funding round.

The company plans to use the money expand nationally and to increase its focus on health equity, co-founder and CEO Alex Alvarado tells Axios.

  • "Kids at home in a single room with three siblings and parents out of work have had a very different experience during the pandemic than parents who are comfortably working from home," Alvarado says.
  • To that end, Daybreak's clinicians are trained not just to focus on anxiety and depression but also on issues including gender identity and racism, he adds.

How it works: Daybreak currently partners with roughly 100 California schools and pediatricians, which is how young people find it.

  • Every child enrolled in Daybreak completes a virtual or live intake that matches them with a clinician by assessing what level and type of clinical support they need.
  • Parents complete virtual monthly check-ins and can view how frequently their child attends sessions. (The content from those sessions is kept confidential between the child and their therapist.)
  • Children complete a digital reassessment every two weeks via standard questionnaires for anxiety and depression as well as a set of wellbeing-focused questions from the WHO.

Context: Even before the pandemic, many young people were struggling with behavioral health issues.

  • A 2013 report from the Centers for Disease Control and Prevention estimated that one in five children was living with diagnosable mental health concerns.
  • And a meta-analysis published in the journal JAMA Network last summer suggests the global prevalence of depression and anxiety symptoms in kids and teens has doubled during the pandemic.

Alvarado says Daybreak's focus on schools came from Castlight Health, where he spent almost 5 years.

  • "One thing I learned at Castlight is benefits managers are super overwhelmed and they're at saturation for point solutions," he says, adding, "At schools, mental health is a burning pain point for them."

Yes, but: Selling to school districts is more complex than selling to employers, experts tell Axios.

  • "Understanding the decision-making process of school boards and district leadership is more nuanced than the decision-making process of a medium-sized corporation," says Shiv Bhavnani, founder of GIMBHI, an investment research institute focused on behavioral health.

What they're saying: Daybreak's focus on young people is logical since mental health issues tend to crop up before people reach adulthood, industry observers tell Axios.

  • "It makes a lot of sense that integrating mental health services and education into schools will equip individuals to deal with mental health issues as adults," says Bhavnani.

Plus, the company appears committed to inclusive care, offering its services in multiple languages and hiring a diverse pool of clinicians.

  • "It’s great that Daybreak is prioritizing cultural competence and delivering inclusive health care," Bhavnani says.

The bottom line: Investors and industry observers continue to see promise in focused solutions, where there is an opportunity to offer highly personalized support to different populations.

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