Affect Therapeutics, a substance addiction therapy startup, has raised $16 million in a Series A funding round to expand its operations to new markets and further develop its mobile app.
The McLean company delivers therapy and treatments for specific substance use disorders, including alcohol, marijuana, methamphetamine and prescription stimulants, through its app. Counseling services — from individual therapy to group meeting to doctor visits — are done through video on the app with counselors both employed and contracted with Affect Therapeutics.
The company’s approach is “a treatment program that's driven through a smartphone app that enables us to gather so much data that it enables us to engage people all day long, every day, no matter what they're doing,” explained Kristin Muhlner, its co-founder and CEO.
The funding round was led by San Francisco's ARTIS Ventures with participation from previous investors New York venture firm AlleyCorp and Falls Church social impact-focused investment firm CityLight. New investors included London venture firm LifeArc Ventures, Samsung Next, the investment group for the cellphone manufacturer within Samsung Electronics, and Texas venture firm What If Ventures.
Stuart Peterson, founder of ARTIS Ventures, and Dr. Imran Hamid, senior investment principal at LifeArc Ventures, are joining Affect Therapeutics' board as part of the deal.
It took Affect Therapeutics 10 months from start to finish to close the funding round.
“What I tell other entrepreneurs who are fundraising right now is that there is still money to be put to work and investors who are looking for great opportunities,” said Muhlner. “But anticipate that it’s going to take longer. You’re going to be held to a higher bar and the metric you might consider to be important in a later stage will be important earlier in the process.”
Affect's revenue comes primarily from health insurers who reimburse the company for members' treatments.
The company plans to use much of the money it raised to expand into new states. It operates primarily in Western states, including Arizona, California, Nevada and Idaho, and intends to expand into Oregon and Washington next month. It targeted the West on the recommendation of its insurance partners who said the need for its services was greatest in that region, explained Muhlner.
After that it plans to move into Colorado, Illinois, North Carolina and Virginia, and it has filed applications to do business in D.C. and Maryland.
Muhlner said the process to get licensed in individual states and partner with insurers is long, noting that the seeds for its current expansion were planted late 2021 and early 2022. The company has 80 employees currently and Muhlner expects headcount to double every six months as it works toward its goal of operating in all 50 states and D.C.
Muhlner declined to discuss revenue but said the company has treated close to 2,500 patients since launching early last year. The potential for rapid growth is there, she said, because so many Americans struggle with addiction or mental illness.
A 2015 National Institutes of Health study that found one in 10 adults have a substance abuse disorder while a more recent report from the U.S. Department of Health and the Human Services’ Substance Abuse and Mental Health Services Administration said that nearly one in three adults had either a substance use disorder or a mental illness in the past year.
“For far too long people have looked the other way as it relates to addiction,” said Muhlner. “I think what we now know is that substance disorders are chronic conditions that need to be treated like diabetes or cancer. So we want to make sure that not only we can bring science to the court but that we also start to destigmatize treatment.”
