A number of digital behavioral health startups have been making waves as of late by reaching unicorn status, with Calm and Lyra Health being a couple examples. The latest digital behavioral company to join those billion dollar ranks is Modern Health, whose biggest days appear yet to be ahead.
Based in San Francisco, Modern Health partners with employers to offer mental health benefits to workers through a mobile app. Contracting with therapists and coaches for service delivery, Modern Health’s platform allows users to get help for a variety of emotional, social and behavioral needs, from the mild to the severe.
Modern Health currently counts more than 220 employers as enterprise clients, some of which include Pixar, Electronic Arts (Nasdaq: EA), SoFi, Clif Bar and Rakuten.
CEO Alyson Watson, who founded Modern Health in 2017, says her early inspiration for the company came from her background as a health care benefits consultant.
“We saw … employers really wanted to prioritize mental health,” Watson told Behavioral Health Business. “But the solutions out there … were fragmented [and] didn’t create a great user experience.”
Watson specifically felt there was a lack of all-in-one options that could treat a variety of mental health needs. Those needs can be likened to hospital emergency code colors, Watson said, with green indicating a low level of need, yellow signifying a moderate level and red representing a high one.
“There was a big opportunity in the space to build a much more holistic and preventative approach to mental health for employers [and] for their employees,” Watson said. “We think about mental health on this spectrum from green to red. Very similar to physical health, we all fall somewhere in that spectrum.”
Even as more employers started to offer a variety of mental health benefits, Watson still believed something was missing.
“For employers, what they started doing is saying, ‘Hey, we know mental health is important … so, let’s go roll out three different solutions to cover that full spectrum,” she said. “They might be rolling out a meditation app to support people in the green, a chat-based app to support people in the yellow [and] a therapy-first focused solution for people in the red.”
That’s when the light bulb went off for Watson.
“Why isn’t there one solution that does all that within one platform to triage people to the right level of care based on their needs?’” she remembered thinking.
Thus, Modern Health was born.
Today, the company’s platform grants users access to well-being assessments, self-service wellness kits, certified coaches and licensed therapists.
Modern Health evaluates each employee’s needs with an online self-assessment. From there, the platform identifies specific services a user would be best suited to receive. Modern Health then recommends a personalized plan, which includes a combination of digital programs, group learning and one-on-one therapy or coaching.
To provide services, Modern Health contracts with licensed clinicians such as social workers and psychologists, as well as mental health coaches certified by the International Coaching Federation. Employees don’t have to pay the company anything to receive those services.
Reaching unicorn status
Modern Health’s business model has led to several notable financial accomplishments. Last month, Modern Health announced that it had raised $74 million in Series D funding, pushing its valuation above $1.17 billion and cementing its status as a unicorn company. The funding comes as Modern Health has doubled its customer base since March 2020.
Modern Health has attracted funding from a bevy of investors including Y Combinator, Afore Capital, Battery Ventures, Felicis Ventures, Founders Fund and O1 Advisors. The company has also captured the attention of individual investors, having received funding from Frederic Kerrest, the founder of cloud software company Okta (Nasdaq: OKTA), and Oscar-winning actor Jared Leto.
Marc Schröder is another investor who is likewise bullish on Modern Health and, in particular, Watson. He’s the co-founder and managing partner of San Francisco-based Machsmayer Group Ventures (MGV), an early-stage venture capital and private equity firm that invests in technology companies, and which was one of Modern Health’s first funders.
During Modern Health’s seed round in 2018, Schröder was among the last group of investors to whom Watson pitched in an attempt to generate funding for the company. When she laid out her vision, Schröder was sold instantly.
“She must have spoken to at least 20 to 25 investors,” Schröder told BHB. “When I saw her on stage, I saw what everybody else saw in that room, [and] that is the prototype of a founder.”
Schröder ranks MGV’s investment in Modern Health as its best ever, proudly noting that the company is the fastest female-founded business to reach unicorn status.
“She’s a natural born leader,” Schröder said of Watson. “The company is where it is right now because of [Watson].”
Watson said there’s still much more in store for Modern Health, which provides services across 30 countries and in more than 35 languages. With its recently raised funding, Watson said the company is looking to invest in its technology infrastructure and expand its clinical team.
Long-term, though, Watson has her sights set on an IPO to achieve certain growth and scale goals, though she doesn’t have a timetable in mind for that. Watson also said she is open to Modern Health one day purchasing another digital behavioral health platform, if such a move aligns with the company’s strategic growth goals.
Regardless, she remains confident in Modern Health’s continued upward trajectory. She attributes that not just to the services the company provides users, but to its workforce, which has tripled over the past year.
The company — which has an employee retention rate of nearly 100% — has an executive team that’s over 60% female, with more than 19% of its rank-and-file employees identifying as Black or Latinx, a number that’s above the average among Silicon Valley firms.
“I’m very proud of the company,” Watson said. “There’s enough data to show that in order to be a successful business, you have to have a diverse workforce. … Not only does that create a supportive culture from within, but it also generates new perspectives and new ideas. That’s a priority for me and the entire company, to be able to build a workforce that is doing good in the world [by] impacting people’s mental health.”