Virtual pediatric behavioral health provider Fort Health is executing its partner-first, expand-after strategy, securing a round of funding while landing a new payer partnership.

The New York City-based provider raised a $5.5 million round led by venture capital firms Twelve Below and Vanterra, Fort Health exclusively told Behavioral Health Business. The funds will be used to expand into two new states, Texas and Illinois, in January 2025.

Fort Health has also partnered with NovaWell, a behavioral health care plan and Horizon Healthcare Services affiliate. Natalie Schneider, CEO of Fort Health, told BHB the partnership would accelerate the expansion by allowing the provider to work with pediatric provider groups and hospitals in the states.

“Our strategy is to go market by market, secure first a partner, which could be a payer or a hospital system, and start to grow real density in that market,” Schneider told BHB. “For example, in New Jersey, our first full year of operations was in 2023. Now more than 30% of all New Jersey pediatricians have referred to Fort Health at least once.”

The funding round brings Fort Health’s total raise to $16 million.

Fort Health offers therapy, psychiatry and parent coaching in New Jersey, New York and Pennsylvania through a collaborative care model that includes patients’ pediatricians.  The provider plans to continue moving into two to four new states a year while growing density in its existing markets. 

Schneider aims to reach 25% to 30% penetration for mild to moderate pediatric behavioral health conditions in the states it operates in.

Cementing the latest funding round to spur new growth was no easy feat, Schneider said.

“[There were] more significant expectations around traction, product, market fit, quality of the team,” Schneider said. “Even though it was a seed extension, it felt more like a Series A in terms of the qualifying factors.”

Despite the reportedly challenging environment, several other companies have also recently completed early fundraising rounds.

In October, population digital mental health platform CredibleMind raised $7.5 million in a Series A round. The provider was founded in 2018 and now covers more than 30 million lives.

The same month, Austin, Texas-based Legion Health raised $6.3 million in seed funds to grow its AI-powered digital psychiatry practice.

Digital mental health startup Nema Health raised $14.5 million in early November, a year after its $4.1 million seed round. Nema offers talk therapy, psychiatric medication management and peer support.

To convince investors to buy in, Schneider had to focus on the company’s differentiators, including its collaborative care clinical model and its go-to-market strategy, which involves working with pediatricians.

Pediatricians working with Fort Health can refer patients to the mental health provider, which then matches patients with a care team clinician for an evaluation and personalized care plan. The care team informs the pediatrician of the child’s care path and may recommend any necessary prescriptions.

Keeping the pediatrician as the prescriber makes the company more resilient to regulatory changes. Other companies, especially digital-only behavioral health providers, may be impacted by the resumption of the prescribing requirements of the Ryan Haight Act. While temporarily roled first during the COVID pandemic and through to the present moment, the act requires prescribers to complete an in-person medical evaluation before being treated with a controlled substance. The DEA recently extended this flexibility into 2025. By leaving the prescribing to the pediatricians, the company stays ahead of the puck, Schneider said.

Schneider envisions that Fort Health can leverage the “untapped resource” of pediatricians to expand Fort Health’s go-to-market strategy and work with payers to move toward value-based care contracting.

“That would help payers, because they would have a better way to qualify practices, and it would also encourage providers and practices to not only meet but exceed that quality bar,” Schneider said. “If we do our job well, we will be able to move the needle on population health and reduce the incidence of suicide, [substance use disorders] (SUDs) and eating disorders.”