In May, Hafeezah Muhammad, founder and CEO of Backpack Healthcare, celebrated a significant milestone—the closing of her company’s $14 million Series A funding round.
Muhammad, a mother of three, launched Backpack Healthcare in response to a personal crisis involving her son and the growing youth mental health crisis.
The Elkridge, Maryland-based company focuses on providing mental health services to children on Medicaid, addressing a critical gap in the healthcare system.
Muhammad’s journey to entrepreneurship began in 2020 when her then-six-year-old son, Azeem, who was on Medicaid, expressed suicidal thoughts.
Despite working for a large mental health company at the time, Muhammad struggled to find quality mental health care for her son who accepted Medicaid.
This personal challenge led her to establish Backpack Healthcare in 2021, originally named Youme Healthcare, to provide accessible and culturally responsive mental health services to underserved children.
The company was rebranded as Backpack Healthcare following the acquisition of Washington, D.C.-based Hurdle Health, which brought in a scientific tool to measure the cultural responsiveness of therapists for children of color.
Backpack Healthcare’s mission is driven by Muhammad’s personal experience and her commitment to helping other families navigate the challenges of mental health care.
The company currently operates in Maryland and Virginia, where it has served over 1,500 families and conducted more than 20,000 therapy sessions.
With the recent $14 million investment led by PACE Healthcare Capital, the company plans to expand its services to six additional states, aiming to reach more children in need.
Muhammad’s path to securing this funding was not easy. She faced numerous challenges, including initial skepticism from investors due to the lower reimbursement rates associated with Medicaid compared to commercial insurance.
However, her vision and determination, along with her ability to demonstrate the effectiveness of Backpack’s services, ultimately convinced investors like PACE Healthcare Capital founder Julia Monfrini Peev to support her mission.
Peev, who has become a mentor and close ally to Muhammad, was initially hesitant to invest but was eventually won over by Muhammad’s progress and the impact Backpack was making.
“The ability to describe as an entrepreneur what you say you’re going to do, and then actually do it, is very impressive,” said Peev.
With Peev’s guidance, Muhammad successfully navigated the complexities of venture capital, leading to the Series A funding round that will enable Backpack Healthcare to scale its services and impact.
Muhammad’s vision for the future of Backpack Healthcare is ambitious. She aims to ensure that children across the United States have access to the mental health care they need, whether through Backpack’s self-care app or one-on-one therapy sessions.
The company is also working on AI tools to help therapists manage documentation and reduce burnout, further enhancing the quality of care provided.
Reflecting on her journey, Muhammad remains focused on the mission of Backpack Healthcare.
“The $14 million Series A will let us reach more kids, but it also sends a signal that Medicaid businesses can be funded, make money, and be profitable,” she said.
Muhammad says she is determined to build a sustainable business that does not rely solely on venture capital, ensuring that her company can continue to provide vital services to children in need.
