SAN FREANCISCO (BLOOMBERG) - Blackstone Group is leading a US$100 million (S$134.6 million) funding round in on-demand mental-health company Ginger, accelerating a push into fast-growing technology start-ups.
The funds will come out of the investment firm's growth equity arm, Blackstone and Ginger said. The stake values the San Francisco-based service at about US$1 billion, vaulting it to unicorn status.
Demand for resources provided by Ginger, which connects users to behavioural health experts via a mobile app, is surging amid the Covid-19 pandemic. The company's revenue has tripled in the past year.
"There's a widespread prevalence of mental health issues in this country," said Mr Ram Jagannath, who heads healthcare investing for Blackstone Growth Equity. "Like other sectors of healthcare, the pandemic exacerbated the underlying trends and accelerated people's adoption of digital platforms."
Blackstone recently announced the final close of its first growth equity fund at US$4.5 billion. Its New York-based growth vehicle has made several investments, including backing online dating company Bumble prior to its initial public offering, vegan food products maker Oatly, enterprise software provider ISN Software Corp and Epidemic Sound, a royalty-free music company.
Ginger chief executive Russ Glass plans to use Blackstone's investment to acquire companies and platforms focused on mental health, or data that could complement what Ginger is already doing.
"There's going to be a massive mental health need for the foreseeable future," Mr Glass said in an interview. "The more we can focus on innovation, everyone who has a need will get access."
Statistics bear that out. During the week of March 8, demand for therapy and psychiatry services jumped 365 per cent compared with pre-pandemic averages measured from August 2019 to January last year, the company said.
In the first half of the year, Ginger plans to extend its reach to underserved populations through new government relationships and collaborations with non-profits, Mr Glass said.
Ginger has already made inroads with large brand-name companies - including Delta Air Lines, Sanofi and Domino's Pizza - which provide Ginger's mental health resources to their employees.
In August, Ginger raised US$50 million from investors including Advance Venture Partners and Bessemer Venture Partners. Earlier this month, former Massachusetts representative Joe Kennedy III and cyber-security executive Myrna Soto joined its advisory board. Ginger has also announced a partnership with digital pharmacy Capsule to provide medication delivery to members.
"I see this as an investment, not a cost," said Mr Clint Wallace, the head of human resources for North America at Sanofi. "We can't solve all of people's problems but we can help them give their best."