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Investors are clamoring to back AI startups across industries, and mental healthcare is no exception.
Slingshot AI, which launched this year to build large-language models for behavioral health, just grabbed about $30 million in a fresh funding round led by top VC firm Andreessen Horowitz, according to three people with knowledge of the deal.
Two sources said the round valued Slingshot at more than $100 million.
And the startup garnered so much investor interest that the A16z-led round wasn't enough. Menlo Ventures did a fast-follow on the round, per two of those people, to put its own money into Slingshot shortly after the fundraise closed. The startup was valued at $220 million after the Menlo Ventures investment, according to one source familiar with the deal.
The funding frenzy is emblematic of Silicon Valley's gold rush to back AI in all its iterations. Mental health presents a hefty opportunity for investors to apply the new tech — in the US, the mental health market hit around $115 million this year, according to Precedence Research.
Slingshot AI's founders already have strong connections in the VC market. One of its cofounders, Daniel Reid Cahn, is the brother of Sequoia Capital partner David Cahn. The startup's other cofounder, Neil Parikh, started mattress brand Casper back in 2014.
Slingshot, Andreessen Horowitz, and Menlo Ventures didn't respond to requests for comment for this story.
One investor who didn't participate in Slingshot's funding round said they saw potential for tech like Slingshot's to fill gaps in mental healthcare as the sector's labor crises surge. More and more people are seeking out mental healthcare, exacerbating existing therapist shortages and leaving desperate patients on long waitlists.
Based in New York City and London, Slingshot launched in May with its first model — an AI counselor that users can talk to and get advice from as they would a human therapist.
The startup says patients can communicate with its AI therapist, called Ash, by speaking or typing within the app at any time. The app also purports to remember its patients' past conversations to help users work through problems over time and reach their goals.
Slingshot isn't the first automated counselor to hit the market. It's following in the steps of Woebot, an AI-powered chatbot that's raised about $123 million to date, including a $90 million Series C in 2021. The company also got FDA breakthrough device designation for its chatbot to be used as a therapeutic for postpartum depression.
However, mental healthcare is complicated, and there are plenty of opportunities for things to go wrong when using AI to manage human emotions. The National Eating Disorder Association's AI chatbot was taken down last year after the bot gave some users harmful advice, like suggesting that patients significantly cut their caloric intake.
Plenty of people have also started using general-purpose generative AI models like OpenAI's ChatGPT to supplement their mental health needs, with mixed results.
