There has been record demand for youth mental health services in the past few years. U.S. Surgeon General Vivek Murthy, M.D., called the decline in youth mental health the "defining public health crisis of our time."
This demand, made worse by a shortage of school professionals who are equipped to handle the growing need for support, disproportionately affects teens who are part of marginalized populations, live in rural areas or are LGBTQ+ community members, according to the founders of Daybreak Health.
The startup aims to advance access and equity to mental health resources for youth across the country by focusing on the place they spend the majority of their time—school.
Daybreak Health works with schools and districts to provide an online teletherapy platform that connects teens to counselors through live video sessions and a mobile app. The startup, which launched its services in 2020, has grown rapidly and now partners with 60 school districts, encompassing more than 1 million students, according to Alex Alvarado, co-founder and CEO.
The company provides services in six states and aims to be in 10 to 15 states in the next two to three years along with expanding its health plan partnerships, Alvarado noted.
The San Francisco-based company recently nabbed $13 million in series B funding to fuel its continued geographic expansion and build out its personalized mental health services. Daybreak raised $10 million in series A funding last year. The startup has raised $25 million to date.
The latest funding round was led by Union Square Ventures and joined by new investor Lux Capital and existing investors Lightspeed Venture Partners, Maven Ventures and Y Combinator.
"Daybreak is solving a critical crisis facing our nation’s youth and families,” said Rebecca Kaden, managing partner at Union Square Ventures, in a statement. “We not only believe in Daybreak’s mission, but also its long-term vision of serving as an extension of our schools’ mental health infrastructure to make lasting, positive change for this generation. The Daybreak team is leading the way in leveraging existing school infrastructure to reach kids through the right channels and at the right moment to maximize impact."
Daybreak works to personally match each student with a clinician that best meets their needs—based on presenting needs, cultural background, language and personal preferences. Daybreak clinicians specialize across different mental health conditions and modalities of care. According to the company, 81% of students who went through Daybreak’s program in the ‘22-’23 school year showed symptomatic and behavioral improvements.
“Our partnership with Daybreak Health has proven to be instrumental for both our staff and students,” said Hani Youssef, superintendent for Simi Valley Unified School District in California, in a statement. “Daybreak understands our mission of supporting students in becoming the best potential version of themselves. Our students have learned new strategies that they use at school and at home and have shown academic improvements despite the challenges they are facing.”
The startup generates revenue from school district contracts and health insurance claims. Daybreak aims to make services affordable for families so patients pay zero out-of-pocket costs.
"To make this financially sustainable, the health insurance companies can also provide some reimbursement for the care so that the school district doesn't necessarily have to pay for every single kid into perpetuity. And that's really what Daybreak is kind of the glue between those two systems right now, where we work with school districts and then we also help get health health insurance reimbursement to the school districts," Alvarado said.
By working with school districts, Daybreak can help expand their mental health teams’ capacity and close a critical gap. The National Association of School Psychologists recommends a ratio of one school psychologist per 500 students, but they estimate there’s currently a ratio of one per 1,211 students. Daybreak also offers other services like mental health classes for school staff and families as well as tools for early identification of students that could benefit from mental health support.
Daybreak Health's program data show that four out of five school counselors report noticeable improvements in students' symptoms and 92% of families report behavioral improvements at home, according to the company.
Alvarado was motivated to launch Daybreak because he didn't want another teenager to fall through the cracks. His younger brother struggled with mental health issues and his family faced financial barriers and other challenges getting access to needed care. "It really altered the trajectory of where he was headed in his life," he said, noting that his brother had to leave school. "That is what kind of sticks with me and motivates me to help millions of other families that are struggling. Our goal is to help all children and students reach their full potential."
The startup launched during the COVID-19 pandemic, an event that pushed school districts to quickly shift to virtual education and also put your mental health issues in the spotlight, noted Siddarth Cidambi, chief operating officer and co-founder.
"A lot of the needs were already there, and almost at alarming levels pre-pandemic. Now, there's a general awareness within communities that this is an even more important issue than we realized. You see the downstream effects of that and different types of funding sources trying to address the problem and school districts really prioritizing it as a top initiative," Cidambi said.
School districts are now more willing to explore tele-therapy options for students as there is an ongoing clinician shortage, he said. "There are advantages of a virtual model that you cannot get with an in-person model. For example, students can have access to a much wider base of clinicians, so they can be matched with someone who's going to be a great fit for them. We see a lot of schools complimenting in-person service with virtual," Cidambi said.