App that enables virtual mental health visits gets capital infusion
A startup whose app connects people with mental health clinicians for counseling through text messages and video chats raised $50 million.
The company, Talkspace, also announced that it is developing ties with the biggest U.S. health insurer, a sign that the market for delivering psychotherapy remotely is growing.
Talkspace said the investment round, led by Revolution Growth, brings the total amount it has raised through venture funding to about $110 million. Its deal with Optum, a unit of UnitedHealth Group, will make the Talkspace app available to about 2 million Optum customers.
About 57 million adults had mental health or substance-use conditions in 2017, and about 70 percent of them received no treatment, according to federal estimates.
“It’s what we would call a failed market,” said Oren Frank, Talkspace’s CEO, who co-founded the company with his wife, Roni Frank, in 2012.
Based in New York, Talkspace connects people with a network of 5,000 licensed therapists. For a fee starting at $49 a week, users can leave text, voice and video messages with counselors who respond five days a week.
Customers can pay more for live video chats.
Talkspace is one of several companies selling low-cost, high-tech alternatives to regular in-person therapy visits. Competitors include apps like Ginger and BetterHelp. Larger telehealth companies such as MDLive and Teladoc deliver remote mental health services as well as consultations for physical illnesses.
Investment in digital health companies grew to $8.1 billion in the U.S. in 2018, according to data compiled by investment firm Rock Health. Healthcare providers “are trying to extend beyond their physical geographic reach to one that’s more a virtual geographic reach,” said Gurpreet Singh, who specializes in healthcare at consultant PwC.
About three-quarters of doctors have recommended a digital app to patients, and a similar number of patients said they received in-person care that could have been delivered remotely, according to PwC research. The Food and Drug Administration has cleared prescription mobile apps intended to help people in treatment for substance-use disorders stick to their programs.
The emergence of therapy apps comes at a time when insurers are facing lawsuits and complaints from advocates and regulators over the persistent difficulty many people face getting care for mental health and substance abuse.
Although much of Talkspace’s business comes from retail customers who pay directly, Frank said the service is increasingly being packaged into employer benefit plans. With the new members added through the Optum agreement, a total of about 5 million people will have access to Talkspace through health plans, employee-assistance programs or educational organizations.
At any given time, the number of customers using Talkspace is in the “high tens of thousands,” Frank said.
Norwest Venture Partners, Qumra Capital, Spark Capital and Compound Ventures, all of which previously invested in the company, joined Revolution in the latest round. The company declined to disclose its revenue.
The infusion of capital will help Talkspace expand its commercial partnerships like the Optum deal. Frank said it also hopes to offer the product in China next year.
There’s little definitive research that shows how digital therapy compares with in-person visits. Talkspace says people may benefit from more frequent exchanges with counselors. Online treatment can also reach people who can’t get in-person appointments or resist visiting therapists because of the perceived stigma, the company said. “We are building this body of evidence, publication by publication,” said Neil Leibowitz, chief medical officer at Talkspace.