Digital behavioral health startup Octave raises $52M in Series C funding to transform mental health care

The impact of the mental health pandemic is a grave concern that affects countless individuals across the United States and beyond. Regrettably, this issue extends far beyond the borders of the United States. Recent data from the United Nations reveals that nearly one billion people worldwide are grappling with various forms of mental disorders.

What makes this situation even more disheartening is that less than half of those who experience mental health depression receive the necessary treatment. One of the major contributing factors to this treatment gap is the enduring stigma surrounding mental health. The stigma attached to mental health issues often prevents individuals from seeking the help they need, exacerbating the overall problem. It’s for this reason that one HealthTech startup is on a mission to address the mental issue.

Enter Octave, a San Francisco-based digital behavioral health that’s creating a new standard for mental health care delivery that’s both high-quality and accessible to more people. Originally, Octave started out as a clinic-centered business, establishing physical locations in New York and California. However, as time progressed, its services expanded beyond the traditional clinic setting to incorporate virtual care options and outcome monitoring. This allowed the company to adapt to the changing needs of its clients.

The provider network associated with the company offers treatment for a wide range of behavioral health conditions. These conditions include but are not limited to depression, ADHD, bipolar disorder, chronic insomnia, eating disorders, and substance use disorders. By offering comprehensive care for various mental health conditions, the company aims to address the diverse needs of its patients.

To further expand its in-network mental health access, Octave announced today it has raised $52 million in a Series C funding round led by Cigna Ventures, Novo Holdings, and Avidity Partners. The startup will use the fresh capital infusion to fuel its virtual care provider’s expansion into all 50 states by 2024. The latest round brings the company’s total raise to $86 million.

Sandeep Acharya, a One Medical vet, founded Octave in 2018 after he noticed that about a third of all primary care patients were also dealing with anxiety or depression – or both.

“I was focused from the beginning on two things that I learned from being a health care operator. … How do we offer effective care for patients? And how do we do it in a manner that’s sustainable?” Acharya, co-founder and CEO of Octave said in a statement. “And there’s a tension, right? Because the mental health system today doesn’t really interface with insurance enough. And I think there’s been a lot of effort to get providers to work with insurance.”

Acharya added, “The demand for mental health services is higher than ever, but our mission is not just to ensure that care is accessible, but actually effective for the patient and sustainable for the mental health provider. With this raise, we’re aiming to move beyond directly facilitating care, to trying to influence how the whole system functions — how care is paid for, how it is found, and the tools we use to support it.”

“I’m grateful to our new investors, all of whom bring a wealth of experience from scaling healthcare companies across the private and public markets, for recognizing the unique value we bring,” Acharya said. “Our team is excited to partner with them to transform mental health care.”

According to Rock Health, investments in behavioral health have decreased over the years, from 56% of $4.8 billion in 2021 down to $2.1 billion in 2022, with the downward trend continuing in the first quarter of 2023.  In the current economic climate, investors are looking for strong financial models and sustainable growth strategies to dictate success.

“Cigna Ventures collaborates with innovative, forward-thinking companies who have the ability to solve healthcare’s biggest challenges and improve health outcomes for many,” said Craig Cimini, Head of Cigna Ventures. “We’ve collaborated with Octave since 2021 and believe in what the company is doing to set a new standard for behavioral care delivery.”

“Octave’s patient-centric model, which increases access to mental health while balancing provider objectives, aligns with our strategy to invest in the health and sustainability of our communities,” said Eric Snyder, PhD, Partner in the Venture Investments group at Novo Holdings. “We are impressed by Octave’s rapid expansion, strong clinical focus, and highly experienced team.”

“We are excited to invest in Octave and support their innovative approach to delivering quality mental health care. We look forward to supporting Octave as they expand their reach, enhance their technology offering, and make a lasting impact on patients’ lives,” said Avidity Partners’ Jacob Garfield.