Pelago, a San Francisco-based virtual behavioral health startup specializing in enterprise behavioral health solutions, has secured $58 million in a Series C funding round. This latest capital injection brings the company’s total funding to $151.6 million, according to Crunchbase data. The funding comes amid a period of cautious optimism in digital health investing, where investors are increasingly seeking companies with proven outcomes and scalable business models, especially as employers grow weary of “point solution fatigue” in behavioral health offerings.
The round was led by London-based venture capital firm Atomico, which also co-led Pelago’s Series B round in 2021 alongside Stockholm-based Kinnevik AB. Both firms participated again in the Series C, joined by other investors including GreyMatter, Octopus Ventures, Y Combinator, and Eight Roads. Atomico Partner Laura Connell is slated to join Pelago’s board, signaling strong investor confidence in the company’s growth trajectory and vision.
Addressing Point Solution Fatigue with Depth and Scale
Pelago’s CEO Yusuf Sherwani explained in an interview with Behavioral Health Business that the company’s focus is to deliver deep, integrated care across the full continuum—from prevention through treatment—rather than offering narrow, one-off solutions. “Because of the point solution fatigue, we’ve had to really concentrate on depth — across the continuum of care from prevention to treatment — on depth — across multiple different conditions — and doing it on a national scale,” Sherwani said. He acknowledged that while many employers and payers are overwhelmed by the fragmented behavioral health landscape, there remains a strong appetite for comprehensive enterprise behavioral health solutions that demonstrate a clear business case tied to rising healthcare costs.
This strategic approach is a key reason Pelago has been able to differentiate itself in a crowded B2B behavioral health market. While many startups in the space focus on specific conditions or limited interventions, Pelago aims to be a one-stop solution for substance use disorder (SUD) management with proven clinical and financial outcomes. These outcomes position Pelago as a leader in the development of effective enterprise behavioral health solutions.
Responding to the Growing Demand for SUD Services
Sherwani highlighted a notable 500% increase in SUD-focused requests for proposals (RFPs) from payers and employers over the past year. This surge reflects growing recognition of a significant gap in behavioral health portfolios, especially since traditional mental health services or employee assistance programs (EAPs) often fall short in addressing SUD-specific needs. “SUD needs aren’t really solved by mental health solutions or EAPs: so there’s a gap in their behavioral health portfolios,” Sherwani noted. Investors in this round also recognized this unmet demand.
Pelago’s current contracts cover approximately 3.4 million lives, including clients such as MetLife, Phillips, and GE Appliances. These partnerships underscore Pelago’s ability to scale and meet enterprise demands with tailored, effective enterprise behavioral health solutions.
A Data-Driven Model with Proven Financial Returns
One of Pelago’s standout features is its 100% at-risk fee model. Unlike many competitors, Pelago ties its fees to outcomes, sharing the risk and reward with its clients. Internal data shows that Pelago’s SUD management platform has led to an average reduction of about $9,400 per member per year in medical claims. These savings come from lower medical costs and reductions in some behavioral health expenses, yielding an estimated three-times return on investment.
Sherwani emphasized that the company’s investments in robust data analytics and outcomes measurement have been essential, not only to improve clinical retention and care quality but also to convince investors of Pelago’s viability and growth potential. “When you’re speaking with investors, typically two things matter: being able to tell a good story for the evolution of a category, continue growth in the category and the company’s position … and there needs to be good fundamentals in place,” Sherwani said. “We’re actually saving money here and we’ve been able to prove that.”
This ability to demonstrate tangible savings and clinical impact sets Pelago apart in a market where many digital health companies struggle to show sustained value. Sherwani remarked that despite a challenging investment environment—what he described as digital healthcare being “in the valley of despair”—Pelago’s Series C round was “actually an easier fundraise than anticipated,” a testament to its differentiated model and growing demand for effective enterprise behavioral health solutions.
What’s Next for Pelago?
While Sherwani declined to reveal specific upcoming products or services, he confirmed that the new funding will accelerate product development and expand Pelago’s clinical capabilities. The company’s “north star” remains focused on delivering better care outcomes and generating meaningful health savings for enterprise customers. As employers and payers continue to grapple with rising behavioral health costs and increasing SUD prevalence, Pelago aims to be the comprehensive solution that addresses these challenges at scale. This focus ensures Pelago remains at the forefront of enterprise behavioral health solutions.
Conclusion
Pelago’s recent $58 million Series C round highlights the ongoing evolution of enterprise behavioral health solutions and signals a growing investor preference for companies with proven results and scalable models. By addressing the full spectrum of substance use disorder care and emphasizing measurable financial and clinical outcomes, Pelago is carving out a unique position in a crowded marketplace. With its strong backing and focus on data-driven impact, Pelago is poised to accelerate its growth and help enterprises better support their employees’ behavioral health needs—beyond the fatigue of fragmented point solutions.
