The Venture Capitalist Playbook is Breaking Therapy

For decades, therapy worked a certain, predictable way. The practice of therapy consisted of: a therapist, with a caseload, on a structured path from graduate school to licensure to practice. The models evolved, but the profession itself remained a stable, if not always lucrative, career.

Now, that stability is unraveling, and therapists are feeling it in ways big and small. Caseloads are climbing. Colleagues are leaving. The jobs that once seemed like safe bets, like W-2 salaried roles at mental health companies, or even contractor gigs at large platforms, are becoming riskier, subject to mass layoffs or shifting pay structures. Even solo practitioners are feeling the shift as they watch clients fighting for the insurance reimbursements they were promised, while trying to keep a steady flow of new referrals. There’s a real sense that the field itself is tilting in a new direction.

Blaming this change on just one thing would be oversimplifying it. Insurance companies have long dictated the financial realities of therapy, and the pandemic drove demand for mental health care to unseen levels. The introduction of coaching and the increase in societal loneliness are players in this change, too. But one of the biggest forces in recent years has been venture capital.

I want to be clear: venture capital didn’t single-handedly create this moment. But it is one of the reasons therapy feels different. And if therapists want to have a say in where the field is going, they need to understand how these financial forces are reshaping the work they do every day.

When Therapists Become a Line Item

One morning in 2023, a therapist I know at a promising, investor-backed mental health platform woke up, logged in for her first session of the day, and found her accounts disabled. No email, no warning—just gone.

By the time she realized she was out of a job, her clients already knew. They’d received a boilerplate email: Their therapist was “no longer with the company,” but not to worry—a new one had been assigned. No mention of the trust they’d built. No acknowledgment of the months of hard work. No option to say goodbye.

If I hadn’t been following the mental health tech space, I might have assumed this was some bureaucratic mistake, maybe a one-off glitch in the system. But it wasn’t. This kind of thing has happened at multiple mental health startups in the past few years. They’re not mistakes—they’re business decisions.

The Mental Health Startup Boom

When I first moved into copywriting—writing the emails, blogs, and other materials mental health companies use to communicate—after years as a licensed clinical social worker, I was very hopeful that mental health startups could be part of the solution. The system was broken, and these companies promised to fix it—expanding access, lowering costs, and making therapy available to people who had never been able to afford or find it before.

I’ve met a lot of mental health company founders, and they all start out with good intentions. But once investor funding gets involved, things start to shift. The pressure to grow fast, cut costs, and scale in a way that looks good on paper takes priority. Instead of focusing on continuity of care, clinician support, or ethical business practices, they start optimizing for what investors want to see—rapid expansion, streamlined operations, and a business model that promises big returns. No founder sets out to deprioritize care, but at some point, the demands of profitability start making those decisions for them.

A friend of mine had this model turn his life upside down. He was the top clinical leader at a mental health company that actually prioritized high-quality care, clinician well-being, and strong client outcomes. And it was working. The company was growing, therapists were staying, and clients were getting real, consistent care.

Then, investors came in. The new executive the investors installed didn’t see the point of clinical oversight—literally didn’t understand what it was or why it mattered—and didn’t bother to ask. So they fired him.

It only took three months for things to start falling apart. Churn was up, therapists were leaving, and clients weren’t sticking around. He had flagged these risks before he was fired, and everything he had warned them about was happening.

They hired my friend back to try to undo the damage, but it might be too late. The company is still operating within the model investors pushed for—one designed for rapid growth, not sustainable care. Fixing it would mean making decisions that don’t fit the VC investor model, and from everything I’ve seen, making those kind of decisions isn’t how the story of mental health tech companies plays out.

The VC Playbook: Scale, Squeeze, Sell

In 2021, mental health startups raised $5.5 billion across 324 deals. With the pandemic, virtual care exploded, and investors took notice. Suddenly, mental health was a hot market. New companies flooded the space, all promising to “revolutionize mental health” or “democratize therapy.”

At first glance, this seemed like a win. More funding meant more access, more therapists, more options for clients. But the money came with expectations.

VC firms don’t invest in slow, steady growth. They look for businesses that can scale quickly and generate massive returns. In industries like tech, where a single product can be sold infinitely with little additional cost, that kind of growth is possible. Think, for example, of Adobe or Canva. The initial costs of building this kind of software-as-a-service (SaaS) is high, but then the product can be sold for very little additional cost. Therapy, though, isn’t a SaaS product. It’s labor-intensive, requires long-term relationships, and doesn’t come close to the 70% profit margins that investors expect.

That disconnect set the stage for what happened next. Once venture capital entered the space, companies weren’t just focused on expanding access—they had to expand fast enough to satisfy investors, and they did so using the tried and true VC playbook: First, companies push for rapid expansion, hiring as many therapists as possible and onboarding new clients at an unsustainable rate. Then, when growth slows, they turn inward, looking for ways to increase profitability—cutting therapist pay, increasing caseloads, automating wherever possible. Finally, when it’s time to cash out, they make the company look more profitable on paper, even if that means gutting clinical teams and scaling back quality of care.

A therapist I spoke with joined Ginger just as they were merging with Headspace. She was leaving private practice because she wanted income stability and benefits, which her new role provided. But as time went on, the demands escalated. Caseload requirements increased, burnout set in, and the job that was supposed to be a better alternative started to look just as unsustainable as everything else. After that experience, she left the field entirely for several years.

And she wasn’t alone. Her story is one I’ve heard over and over from therapists across the country. Clinicians take jobs at well-funded startups hoping for stability, only to find themselves burning out just as fast, or faster, than they would have in private practice.

This cycle doesn’t just affect individual therapists. In the past few years, multiple mental health startups that had made grand promises of fixing therapy have quietly shut down, sold off, or dramatically cut their clinical teams in a bid to stay profitable. The ones that remain have largely made the same calculation: it’s more important to please investors than to protect therapists or the clients they serve.

Who Decides What Therapy is Worth?

For therapists hoping to escape the VC model, the alternatives aren’t much better.

Venture-backed startups have just started reshaping mental health care in ways that prioritize growth over quality, but insurers have been setting the financial terms for decades. And their incentives are just as misaligned.

Insurance companies don’t make money by paying for therapy; they make money by controlling how much therapy they have to pay for. That means keeping reimbursement rates low, narrowing definitions of “medically necessary” care, and making it harder for providers to bill for anything beyond short, standardized sessions.

A chief clinical officer I spoke with has spent years fighting to keep clinicians at the center of care while ensuring they’re paid fairly. But in the last few months, that fight has become nearly impossible. Payors keep cutting reimbursement rates, making it harder and harder to sustain a model where therapists can afford to stay. As a result, therapists burn out, leave, and access to care shrinks. (Which, I suspect, is exactly the point.)

Stuck between the heavyweights of VC companies and payors, therapists have an impossible choice: take insurance and work unsustainable hours to make a living, go private-pay and risk shutting out lower-income clients, or work for a venture-backed company and accept the trade-offs—lower pay, less autonomy, more burnout.

Why Therapists Have Been Left Without Power

This isn’t just a problem of bad employers. It’s a profession-wide issue that starts in graduate school.

When you’re a therapy student, nobody sits you down and explains how insurance reimbursement actually works, or what to look for in a contract before you sign it. New therapists know all about attachment theory, cognitive distortions, and trauma-informed care, but they rarely know how to negotiate a contract, challenge an insurance denial, or figure out whether a company’s business model is sustainable.

That knowledge gap isn’t purposeful, but it is convenient. It makes therapists easier to exploit. Companies know that if therapists don’t understand the financial side of the industry, they’ll accept lower rates, sign contracts with restrictive non-compete clauses, and give up autonomy without realizing what they’re losing.

Not only do therapists not like what’s happening, they have little recourse. Unionizing isn’t a viable option for most therapists because they’re classified as independent contractors, making collective bargaining nearly impossible. High turnover makes organizing difficult for therapists who are employees.

It’s the same story that played out in medicine, pharmaceuticals, and law. Private equity firms and corporate consolidations swallowed up independent practices and turned highly paid professionals into low-control employees. Now, it’s happening to therapy. The question is whether therapists will fight to keep control.

How Therapists Can Push Back—Without Falling into the Guilt Trap

A lot of therapists have been told the same thing: if you care about access, you shouldn’t care about money. It’s a useful message for the people profiting off your labor, but it’s not true.

For years, therapists have been put in an impossible position. Either you take low-paying insurance rates and overload your schedule, or you go private pay and feel guilty about it. Either you work for a VC-backed company with steady referrals but little control, or you try to make it on your own, knowing you might not be able to afford to see lower-income clients.

The system depends on therapists believing these are the only choices. It keeps labor costs down when clinicians stay in jobs that don’t pay enough, accept reimbursement rates that don’t cover the cost of care, or take on extra clients just to make ends meet.

One way out is to stop playing by those rules. How?

Step One: Understand the Market

Venture-backed startups and insurance payors don’t make decisions on best guesses. They operate within financial models designed to maximize returns—whether for investors, executives, or shareholders. Understanding those models is one of the best ways therapists can avoid being undervalued.

To start, look beyond salary numbers. If a company isn’t charging therapists and isn’t making most of its revenue from client fees, then who’s paying? If a company’s main funding comes from employers or insurers, then those are the stakeholders it has to keep happy—not therapists or clients.

Therapists should always expect that decisions will be made to maximize profits for investors. That’s how venture-backed businesses work. But if therapists are the primary customers—paying for access to referrals, administrative support, or a network—then the company’s success depends on keeping them happy. In those cases, therapists have leverage, because their satisfaction directly impacts the company’s bottom line.

This means therapists shouldn’t automatically distrust companies that charge them fees. In fact, charging therapists directly can be a protective factor. If the money comes from an employer or large insurance contracts instead, priorities shift. What matters is not just whether a company charges therapists, but whether its financial structure aligns with supporting them.

Then there are contracts. Therapists should ask: who really benefits from the terms? Noncompete clauses, productivity quotas, and ownership structures often favor investors and executives over clinicians. If a company is scaling rapidly, what does that mean for workload expectations? If it’s paying higher-than-average rates, how sustainable is that model? If a platform keeps its fees low for clients, what’s the tradeoff for therapists?

And finally, there’s the question of who to hold accountable. Some companies are squeezing every dollar for profit, paying therapists as little as they can while investors collect returns. Others are trying to do the right thing while stuck within an insurance system that dictates how much they can pay. Before blaming a company for its rates, it’s worth asking: Is it keeping pay low to boost margins, or is it operating within financial limits imposed by insurers? Who’s really setting the rates—the company, the payors, or the investors behind it?

The less secretive this system is, the harder it becomes for companies to sell therapists on bad deals. Therapists don’t need to avoid every company that charges them. They just need to ask where the money is going, who is making decisions, and what that means for their work.

Step Two: Leverage Labor—Even Without a Union

Therapists don’t have traditional labor protections, but that doesn’t mean they’re powerless. Collective action doesn’t have to mean unionizing or organizing protests. Sometimes, it’s as simple as making informed decisions about where to work—and making sure companies know that therapists are paying attention.

That’s the idea behind The Fit Check for Therapists, a Facebook group I created where therapists compare pay, working conditions, and company policies. Too often, therapists take jobs without knowing how their rates compare to others or what’s buried in the fine print of their contracts. But knowledge is leverage. When therapists can see, side by side, which companies pay fairly, support clinicians, and uphold ethical standards—and which ones don’t—companies have to compete for labor.

The goal isn’t to expose bad actors but to move therapists toward better ones. When a company that pays and treats clinicians well starts attracting more and more therapists, others are forced to adjust or risk losing their workforce. And when new companies enter the space offering even better conditions, the cycle continues. The power is in the shift of labor flowing toward companies that actually invest in clinicians, forcing the others to either change or sink.

Many industries have forced companies to evolve by shifting labor toward better models. Doctors, pharmacists, and even freelance writers have leveraged transparency and competition to drive up wages and improve working conditions. Therapists can do the same—not by waiting for companies to change, but by making them compete for therapist support.

Step Three: Make Your Work Sustainable—Without Feeding the System

For many therapists, the most practical way forward is to go private-pay. There’s a narrative that says it’s our duty to sacrifice our financial well-being to help improve access. But the gameplan isn’t to vaguely underprice our services in the name of helping. Instead, we should charge our worth and intentionally offer a few sliding scale or pro bono spots.

Of course, this isn’t a system-wide fix, but it allows therapists to stay financially stable while still making space for clients who can’t afford full fees. More importantly, it stops funneling labor into a system that relies on therapists accepting unsustainable pay.

And I’m going to say the quiet part out loud: if we do this, things will get worse before they get better.

If enough therapists start walking away from exploitative systems, if they start refusing unsustainable insurance rates, if they turn down VC-backed jobs that don’t pay enough, access will suffer in the short term. Fewer therapists will take insurance. Clients who rely on those systems will struggle to find care. That’s real, and it’s painful.

But the alternative is worse.

Because if the field keeps going the way it is—burning out clinicians, underpaying new graduates, making private practice impossible to sustain—access won’t just get worse; it will collapse. Therapists will leave, new ones won’t enter, and the workforce shortage that insurers and companies claim to be solving will become a full-blown crisis.

That’s the real choice. Either access takes a hit now to force payors and companies to change the way they reimburse care and make therapy a sustainable career, or we keep pretending things can go on like this until there aren’t enough therapists left to provide care at all.