Newbie mental health startup nabs $35 million in Series A funding

Lyra Health, a new startup that aims to help patients find treatment for mental health and substance abuse conditions, has raised $35 million in Series A funding, in a round led by Greylock Partners and prior investor Venrock.

The Burlingame-based startup first announced its existence in early June, when it was launched by its CEO and former Facebook and Genentech CFO David Ebersman.

The company says it's working on innovative technology to make it easy for patients "to find the best available care" for those conditions, by matching patients to the best treatments and providers, assessing results and linking patients with case managers to provide "a human touch."

Customers, however, won't be patients directly, but health care providers, insurers and employers.

Dr. Dena Bravata, the company's chief medical officer and one of its co-founders, told me Tuesday afternoon that Lyra Health's proprietary algorithm uses three key databases, on patient data and preferences, health provider profiles, and clinical guidelines to match patients to the best form of treatment.

"It's like a dating site," she said, noting that the best treatment could be "cognitive behavioral therapy" from a computer, a pharmaceutical prescription, or consultation with a mental health expert.

An estimated 50 million Americans — and many more worldwide — suffer from conditions such as depression, anxiety and substance abuse, according to Lyra. The country spends $100 billion annually in direct costs to treat mental illness and absorbs another $600 billion in related and indirect costs, the company said, including complications related to treating patients with multiple conditions that include mental illness or substance abuse, disabilities, absenteeism and reduced levels of performance at work or school.

Only 1 in 7 of those patients currently receives effective care, the company said.

Its new digital technology should be available to a small group of big employers and health plans early next year, and more broadly in 2017.

Ebersman started the newbie company just months ago with help from co-founders Bravata, and Venrock partners Bryan Roberts and Bob Kocher. Its senior leadership group also includes Chief Data Scientist Daniella Perlroth and Chief Technology Officer Daniel Tunkelang.

The Series A round also included support from existing investor Castlight Health, and new investors Providence Health & Services, Breyer Capital, and Origin Capital Management.

The new financing is "a very powerful validation" by investors of Lyra Health's technology and potential to fix much of what's ailing in a broken U.S. mental health system, according to Bravata.

The company hopes to use analytical models to identify the people most at risk, use digitized diagnostic tools for rapid screening and diagnosis, and use other digital tools to match them with the best health care providers, measure outcomes and help patients manage their care.

Its name refers to a constellation first identified by the astronomer Ptolemy.