Therapy enabler Headway intakes $125M at $1B valuation

Headway, a startup that links people with in-network mental health providers, took in $125 million in Series C funding on a $1 billion valuation, Reuters reports.

Why it's the BFD: The raise is reflective of a larger trend in behavioral health tech that's seen venture dollars continue to flow into the sector even as overall digital health funding has plummeted, Erin writes.

Details: Spark Capital led the round.

• Previous backers Thrive Capital, Accel, and Andreessen Horowitz joined, alongside insurance company Health Care Service Corporation.
• Funds will go toward marketing and expanding the company's provider network, per Reuters.

How it works: The New York City-based company connects people with therapists and psychiatrists who accept insurance and offers providers access to its billing and claims tools.

• When insurance companies pay Headway providers, the company takes a percentage.
• Headway has 26,000 in-network providers affiliated with 19 insurance plans including Aetna, Anthem Blue Cross and Blue Shield, United, Cigna, and Oscar, per its website.

Be smart: The mental health sector continued its status as the top-funded clinical indication among health tech startups in the third quarter of this year, with nearly $1 billion deployed year to date, per a recent Rock Health report.

By the numbers: As of March, 160 million people in the U.S. live in areas with a shortage of behavioral health providers, and an estimated 8,000 more professionals are needed for an adequate supply.

• And although demand for mental health services spiked during the pandemic, less than half of psychiatrists accept insurance.

What they're saying: "We've seen a whole class of entrepreneur therapists because we have unlocked the barriers to launch and grow your businesses. We've made accepting insurance easier, which means attracting way more patients," Headway CEO Andrew Adams told Reuters.

State of play: Venture-backed suppliers, providers, and enablers of mental health services have attracted significant interest in recent years, and the last few months have seen several large rounds go to those with a focus on in-network providers.

Some of those providers include:

• Crisis care provider Connections Health Solutions this week raised $28 million in Series B financing (see next item).

• Insurance-accepting telemental health startup UpLift in July collected $10.7 million in Series A capital.
• School-focused telemental health startup Cartwheel in September raised $20 million in Series A funding.

Some of the mental health enablers include:

• Blueprint, a developer of patient tracking and outcomes assessment tools for therapists, this June closed a $9 million Series A round.
• Heard, which offers therapists tools for bookkeeping, payroll, and taxes, in June raised $15 million after closing a $10 million Series A last May.
• Eleos Health, whose provider-facing AI-powered tools analyze behavioral health sessions, last April input $20 million in Series A financing.