The Story Behind Our Investment in Birches Health

On paper, there are many reasons we should not have invested in Birches Health. The company is focused on providing mental health services to millions who suffer from various addictions, but it’s also operating at the frontier of behaviors amplified by being online, by social media, and by modern advertising. On the surface, it is not your run-of-the-mill “tech software startup selling subscriptions.” Most of our close investor friends likely wouldn’t fund this—I don’t think—though they’d like the founder, Elliott, a lot—more on him below.

There’s a saying in venture capital, paraphrased, that goes something like this: “Venture is a business of exceptions.” That phrase carries weight today, as a handful of AI companies grow at rates we’ve never seen before. AI is very exciting and important, no doubt, but I still believe, perhaps foolishly, that venture-scale outcomes exist for true early-stage investors, and that great entrepreneurs are out there solving big problems that don’t directly focus on AI at their core.

Almost a decade ago, one of my best friends in venture at the time—Steve Schlafman—became obsessed with the growing number of addictions newer generations were adopting. I remember he carved out time from his day-to-day to go deep into this area, looking for an investment or possibly starting his own company. I have never done a deep dive like this, so when I saw a good friend go for it, I was curious. From Steve, I learned about so many emergent addictions, how certain addictions were correlated with others, and more.

Fast-forward ten years, and all of those conversations lunged to the foreground when I met Elliott Rapaport, the CEO and founder of Birches Health. In the first five minutes of talking to Elliott, all of the chats I’d had with Steve came rushing back, now at warp speed with Elliott’s energy. I would insert a nugget into our chat, and Elliott’s eyes would get bigger, he’d lean forward quickly, and then he’d take the idea to a new place I had never thought of before. Elliott was the type of founder Steve was looking for, and, as luck would have it, the universe delivered him years later.

I could try to sound smart and pontificate about how the internet, mobile phones, social media, and now AI—of course—are making us not only more addicted to screens, but deepening the social, emotional, and behavioral bonds we make in the process. Some of these are good—the wisdom of the crowd solving a crime, or strangers coming together to help a person in need. But there is a dark underbelly, too—parasocial relationships, isolation in real life, decreased emotional and physical connection.

It’s fair to say we could simply use our imagination and envision the dire costs of this, too. That’s where Birches Health comes in, a company whose mission is to help those afflicted, and their loved ones, identify issues, seek remedies, and help steer them back onto brighter pastures.

There’s a chance if you’re reading this far, you may say to yourself, “Wow, that’s a big idea, and unique.” You’d be right. And that’s because of Elliott. We ultimately invested in Elliott, and he happened to build this kind of company. And we have seen him get rejected all the time—by partners, by media, by investors. It doesn’t faze him one bit; he believes so much in this frontier that he has committed his entire life to providing the solutions. That was apparent to me in the first few minutes of meeting him. Despite that instinct, we passed on the first shot we had. Can you believe it? It was a hard choice. A few months later, we went back to Elliott, told him we were upset with ourselves over our initial decision, and, if an opportunity ever arose again, to please call us. He laughed, and we deserved that. And guess what? A few months later, he called us and used our interest to shape another round in the company. That’s how Elliott rolls. He’s someone to watch.