A Howard County company that provides virtual mental health care to children has raised a $14 million funding round, as part of a wave of startups and hospitals trying to address a national mental health crisis.
Backpack Healthcare's Series A funding round is led by Pace Healthcare Capital, with participation from Techstars, Collab Capital, Bridge Builders Collaborative, Portland Seed Fund, Hopelab, Rethink Education, Genius Guild, ECMC and Unlikely Collaborators. Robert Johnson, the chief equity officer at Jeff Bezos founded Montessori school network Bezos Academy, is joining the Backpack Healthcare board of advisers as part of the deal.
The company, founded by CEO Hafeezah Muhammad, provides telehealth therapy to children as well as an artificial intelligence platform to help therapists plan visits. The investment is one of the largest venture capital rounds in Maryland raised by a Black founder.
Muhammad said the additional capital will help the company improve its mobile application by adding more content in languages other than English and prepare for a launch in new states in the Midwest and East Coast. The company currently operates in Virginia and Maryland.
Muhammad is targeting children who are eligible for Medicaid, a federal health insurance option for low-income families. The firm mainly gets referrals from local foster care services, since all children in foster care are Medicaid eligible, and local pediatric offices. Many mental health providers refuse to accept Medicaid, so Backpack stands out in the market. The company was named a Baltimore Business Journal Startup to Watch in 2024.
“I’m excited that we can help the kids who need it most,” Muhammad said.
One aspect that makes Backpack unique is its use of AI. The firm uses generative AI software to help save therapists time in an attempt to reduce medical professional burnout. Muhammad said one tool the firm uses can help a physician create a treatment plan in 10 minutes, compared to the standard 45 minutes. The firm also uses algorithms to help match patients with clinicians who can meet their needs.
The startup's ability to blend AI and health care is one of the reasons the federal government selected Backpack in February to join technology luminaries like Google and Meta as part of the U.S. AI Safety Institute Consortium. The firm will help develop federal guidelines for everything from detecting flaws in AI systems to ensuring personal data is secure.
Muhammad also values educating parents. Backpack Healthcare hosts parent training sessions to give advice on caring for their children. This is personal for Muhammad, who started the firm in part because her child struggled with mental health issues.
“Parents don’t get a lot of training in regards to mental health,” Muhammad said. “But it's really important to know what your child is going through.”
Backpack Healthcare expanded rapidly through two acquisitions in 2023, purchasing a startup, Hurdle Health, focused on providing care to people of color, and another firm, SHE Health, based around women and young adults.
Backpack is not the only Greater Baltimore company that sees the potential to serve children in poverty as demand for mental health care continues to grow. Concentric Educational Solutions is adding a health care division to provide therapy to Medicaid-eligible students to diversify its revenue outside of local school districts.
The lack of access to mental health care has also forced many hospitals to expand. Sheppard Pratt bought two properties on the border of Mount Vernon and Seton Hill to build a new 16-bed facility. The University of Maryland Upper Chesapeake Health created a new 33-bed ward as part of a $260 million expansion in Harford County.
