In a bold move to address the escalating mental health crisis among youth, Backpack Health—formerly Youme Healthcare—has raised $14 million in Series A funding. This major investment highlights growing interest in pediatric digital mental health services, particularly those that offer scalable, tech-enabled solutions.
Backpack Health specializes in delivering comprehensive care for children and adolescents, including virtual therapy, psychiatry, medication management, and a digital self-care app. The company stands out for its AI-powered emotional monitoring tool, which intelligently matches young clients with the right therapist based on real-time emotional inputs.
Founder and CEO Hafeezah Muhammad emphasized the broader importance of this funding round in a statement:
“The funding we have raised underscores the U.S. healthcare system’s need for more inclusive, tech-enabled solutions to tackle the growing pediatric mental health crisis. This milestone will help us deliver on our commitment to breaking down barriers and ensuring equitable access to mental health support for all children, regardless of their socioeconomic status.”
Prioritizing Equity Through Medicaid Partnerships
One of Backpack’s core values is equity in pediatric digital mental health services. By actively partnering with payers that accept Medicaid, Backpack helps close the access gap for families who often face limited options for behavioral health care. The company currently operates in Maryland and Virginia and plans to use the Series A funding to expand its services into other state markets.
This funding will not only increase geographic reach but also help Backpack scale its teletherapy platform, strengthen its AI tools, and forge deeper partnerships with schools, government agencies, and healthcare payers. These partnerships will be vital in expanding pediatric digital mental health services to underserved and rural communities.
A Diverse and Mission-Aligned Investment Coalition
The funding round was led by PACE Healthcare Capital, with participation from ECMC, Techstars, Collab Capital, Bridge Builders Collaborative, Portland Seed Fund, Hopelab, Rethink Education, Genius Guild, and Unlikely Collaborators. This group of investors brings together leaders in healthcare, education, and social innovation—all aligned in their mission to improve access to care for youth.
These funds will support not only product development and operational growth but also innovations that make pediatric digital mental health services more adaptive and personalized through artificial intelligence and data-driven care pathways.
A Sector in Need, A Market Ready for Innovation
Despite a decline in overall digital behavioral health funding since its peak in 2021, youth mental health remains a top concern for families, educators, and policymakers. According to Rock Health, virtual behavioral health companies raised just $1.2 billion across 65 deals in 2023, down from $2.3 billion in 2022 and $5.7 billion in 2021.
Yet, startups focused on pediatric digital mental health services continue to gain traction. For instance, Blackbird Health raised $17 million in early 2024, while Cartwheel Care closed a $20 million round in late 2023. These successes show that while the digital health market is maturing, targeted solutions for youth still resonate with investors and stakeholders.
Even larger platforms like Talkspace (Nasdaq: TALK) are expanding their pediatric services, as seen in recent partnerships with New York City and Baltimore County Public Schools. The continued investment in this space signals both market demand and a public health imperative.
Charting the Future of Pediatric Mental Health
The rise of pediatric digital mental health services marks a significant shift in how care is conceptualized and delivered. Backpack Health is not just using technology as a tool—it’s redefining how young people engage with mental health support by prioritizing access, personalization, and equity.
With this new funding, Backpack is well-positioned to deliver smarter, more connected, and more inclusive care solutions. By combining AI, Medicaid accessibility, and school-based partnerships, the company is tackling some of the deepest systemic challenges in youth mental health.
As mental health issues among children and teens continue to surge, innovative providers like Backpack Health are proving that tech-enabled care can be both effective and compassionate. With its expanding footprint and sharpened focus, Backpack is leading a new wave of pediatric digital mental health services that meet young people where they are—emotionally, socially, and digitally.
