Talkspace is one of several companies selling low-cost, high-techalternatives to regular in-person therapy visits. (Photo:Shutterstock)

A startup whose app connects people with mental healthclinicians for counseling through text messages and video chatsraised $50 million and forged ties with the biggest U.S. healthinsurer, a sign that the market for delivering psychotherapy remotely isgrowing.

The company, Talkspace, said Wednesday that the investment roundled by Revolution Growth brings the total amount it has raised sofar to about $110 million. Its deal with Optum, a unit of UnitedHealth Group Inc., willmake the Talkspace app available to about 2 million Optumcustomers.

About 57 million adults had mental health or substance-useconditions in 2017, and about 70 percent of them receivedno treatment, according to federal estimates.

Related: Employees more likely to seek mental health help,but services are lacking

“It's what we would call a failed market,” said Oren Frank,chief executive officer of Talkspace, who co-founded the companywith his wife, Roni Frank, in 2012.

Based in New York, Talkspace connects people with a network of5,000 licensed therapists. For a fee starting at $49 a week, userscan leave text, voice and video messages with counselors whorespond five days a week. Customers can pay more for live videochats.

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. Largertelehealth companies such as MDLive and Teladoc deliver remotemental health services as well as consultations for physicalillnesses.

Investment in digital health companies grew to $8.1 billion inthe U.S. in 2018, according to data compiled by investment firmRock Health. Health-care providers “are trying to extend beyondtheir physical geographic reach to one that's more a virtualgeographic reach,” said Gurpreet Singh, who specializes in healthcare at consultant PwC.

About three-quarters of doctors have recommended a digital appto patients, and a similar number of patients said they receivedin-person care that could have been delivered remotely, accordingto PwC research. The U.S. Food and Drug Administration has clearedprescription mobile apps intended to help people in treatment forsubstance-use disorders stick to their programs.

The emergence of therapy apps comes at a time when insurers arefacing lawsuits and complaints from advocates and regulators overthe persistent difficulty many people face getting care for mentalhealth and substance abuse.

Although much of Talkspace's business comes from retailcustomers who pay directly, Frank said the service is increasinglybeing packaged into employer benefit plans. With the new membersadded through the Optum agreement, a total of about 5 millionpeople will have access to Talkspace through health plans,employee-assistance programs or educational organizations.

At any given period, the number of customers using Talkspace isin the “high tens of thousands,” Frank said.

Norwest Venture Partners, Qumra Capital, Spark Capital andCompound, all of which previously invested in the company, joinedRevolution in the latest round. The startup's valuation is now in“the mid-hundreds of millions,” Frank said. The company declined todisclose its revenue.

The infusion of capital will help Talkspace expand itscommercial partnerships like the Optum deal. Frank said it alsohopes to offer the product in China next year.

There's little definitive research that shows how digitaltherapy compares with in-person visits. Talkspace says people maybenefit from more frequent exchanges with counselors. Onlinetreatment can also reach people who can't get in-personappointments or resist visiting therapists because of the perceivedstigma, the company said.

“We are building this body of evidence, publication bypublication,” said Neil Leibowitz, chief medical officer atTalkspace.

Read more: 

• Drugmakers turning attention to apps and digitaltreatments
• Digital EAPs: a new value proposition forbrokers
• Bridging the mental health gap with telebehavioralservices

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