When founded by Alex Katz Two chairs in 2017strongly believed that interpersonal therapy is most effective for behavioral health.
Two Chairs used technology—a proprietary matching algorithm—to find the best possible therapists for its clients, but treatments mostly took place inside one of the startup’s half-dozen elegantly designed clinics located in prime locations throughout its region. San Francisco Bay.
But when COVID-19 broke out and the entire world moved online, the company was forced to rethink its face-to-face approach. While Two Chairs now operates at least one site in each of the three states—California, Washington and Florida—it serves, the majority of the company’s more than 500 therapists treat clients virtually.
Adapting the distance-first treatment model likely helped the company grow faster (and certainly less expensively) than if it had continued to emphasize seeing patients in person. Two Chairs says its revenue has grown eightfold in the past three years.
On Tuesday, the company announced a $72 million Series C in equity and debt financing led by Amplo and Fifth Down Capital, bringing Two Chairs’ total funding to $103 million. Amplo also led the company $22.5 million Series B; in August 2019. The debt portion, which was a minority of the latest capital, was provided by Bridge Bank.
Two Chairs is one of the most recent therapy startups to raise significant rounds of funding. Last week, Grow Therapy, a three-pronged mental health platform for therapists, payers and patients, launched a $88 million Series C; round led by Sequoia.
Katz says the main difference between his company and other virtual behavioral health platforms, including Talkspace and Teladoc-owned BetterHelp, is that Two Chairs employs the “vast majority” of its therapists, while most competitors keep pace with their clinicians. “This allows us to select therapists that we think are really high quality, and then we can train them in how to use metrics-based care,” he explained. Clinicians using metrics-based care (MBC) could improve outcomes and reduce costs by assessing patient progress against standard metrics, but only a small fraction of clinicians use MBC in their practice, according to Katz.
The availability of remote therapy from independent clinicians, established institutions and startups like Two Chairs has helped solve the shortage of mental health professionals in the U.S., but Katz says online psychotherapy isn’t the panacea.
“Although it has become easier to find a therapist because of different digital platforms, it’s still just as difficult to find the right therapists and really high-quality care, and that’s the problem we’re trying to solve,” he said. “We still have far more demand than we can serve.”
Two Chairs will use its new capital to hire more therapists, expand into new states and improve its technology. The company currently offers its services for the price of a co-pay to Aetna and Kaiser Permanente health insurance holders and charges $226 per session for other people.
As for whether artificial intelligence could one day replace mental health professionals and therefore make a business like Two Chairs even more efficient, Katz wasn’t so sure it would be possible anytime soon. “It’s such a human, emotionally driven job, and that’s only possible [to do well] with a great therapist in the room,” he said.
