Two Chairs raises $72M to match patients to the right mental health provider

This is the company's first fundraising since 2019 and brings its total capital to $103M

At the height of COVID, there was seemingly a new mental health company popping up almost on a weekly basis to deal with the increased demand as every group of Americans suffered from the pandemic. Investments grew accordingly: in 2021, mental health companies brought in $5.5 billion globally, across 324 deals, a 139% increase year-to-year.

Now, a few years out, the dust has settled and it's clearer which companies were deserving of the increased attention and which companies were not meant to last.

In the former category is Two Chairs, a company that deploys a client-therapist matching system to pair the right patient with the right therapist, which announced a $72 million in  equity and debt funding on Tuesday.

The Series C round was led by Amplo with Fifth Down Capital and other investors also participating, while Bridge Bank provided the debt financing. This latest round, which is Two Chairs' first funding since back in 2019, brings its total capital raised to $103 million.

Founded in 2017, Two Chairs offers both virtual mental health, as well as in-person care at its own mental health clinics. In addition, every Two Chairs client has access to a care coordination team dedicated to providing concierge support with insurance, billing, and other problems they may encounter.

"A lot of things have stayed very consistent in our story. The number one thing is our focus on care quality for our patients: over the last several years, we've been able to consistently match patients with therapists for them so that 97% of our patients tell us they have a great relationship with their therapist and three quarters of our patients are getting clinically significant meaningful improvement," Alex Katz, founder of Two Chairs, told VatorNews.

"From the day I founded the company, we've been focused on not only how do we get connected with therapy generally, but how do we get patients connected with the right high quality therapy?"

Of course, some things have changed in the last few years, including a shift in the company's model, going from completely in-person to now mostly virtual care. With that shift has also come growth: over the last three years, the business has grown 8x in terms of revenue, clients, and therapists, which has been powered by a national partnership with Aetna, and a partnership with Kaiser Permanente in Northern California and Washington, which make its care affordable for many more people. 

Another part of what allowed Two Chairs to thrive was its focus on care quality for therpists as well, which starts with a full employment model for therapists, something that Katz says makes Two Chairs unique.

"Most of the players in digital have taken a marketplace model oriented approach and we're quite different. All of our therapists are W2 employees, the vast majority are full time, and  that enables is to select and vet really high quality therapists. We can invest much more deeply in training them, for example, on how to use measurement-based care," he explained.

"We can coach them, we can invest in their professional development and, ultimately, hold them accountable to delivering really high quality care to our patients. So, that is what has helped us get through the last few years successfully, form successful partnerships with health plans, and grow the business a lot."

Two Chairs now has over 500 licensed therapists across 90 areas of expertise and has more than 20 million covered lives, though the company does not disclose how patients are currently using it on a monthly basis.

The new capital will be used to expand the company's model into new markets; it currently operates its seven clinics in California, Washington, and Florida. Over the next several years, it plans to pick up the pace of multi-state expansion and bring Two Chairs to many more people.

As for why the company chose to raise a new funding round five years after its last funding, that's because the clinical model the company has built is working, Katz explained. 

"This capital raise enables that growth and enables us to double down on our investment in technology and the clinical programs we need to make sure that quality of care stays exceptionally high while we expand," he said. 

"We have a bunch of data points that show we're really doing something quite different here, and we feel ready to now bring this clinical model to many, many more people across the country."