Headway

Magic AI

Headway

Headway makes money by taking a percentage of the insurance reimbursement for each session facilitated through the platform. When a patient sees a Headway-credentialed therapist and pays their copay, Headway processes the insurance claim and takes a service fee from the reimbursement before paying the therapist.

The model aligns incentives well. Headway only makes money when therapy sessions actually happen, which means they're incentivized to help therapists see more patients and reduce no-shows.

Therapists make more than they would on their own (because Headway's negotiated rates are often better than individual therapists can get), and patients pay only their insurance copay ($0-$50 typically) instead of full out-of-pocket rates.

Scale creates a data and negotiation advantage. With 40,000+ therapists on the platform, Headway can negotiate better reimbursement rates with insurers.

More therapists attract more patients. More patients justify better rates.

The flywheel spins.

Magic AI

Magic is building an AI that works like a software engineer, not a chatbot. The goal is a model you can hand a whole code base and a task, and it writes, reviews, and debugs like a teammate.

Their edge is memory. In 2024 they showed off LTM-2-mini, a model with a 100 million token context window.

To put that in perspective, that is about 10 million lines of code the model can look at in one shot, by far the biggest of any model at the time. The plan is to sell this as an AI coworker to companies that write a lot of software.

As of the 2024 rounds, the product was still not for sale.

Headway

Andrew Adams and Jake Sussman founded Headway in 2019 after watching people in their lives struggle to access affordable mental healthcare. The problem was specific and structural: most therapists operate as solo practitioners who don't accept insurance.

Not because they don't want to — because the process of getting credentialed with insurance companies, submitting claims, and chasing reimbursements is so bureaucratically painful that most therapists give up and go cash-only.

The result is a two-tier mental healthcare system. People with money pay $150-$300 per session out of pocket.

People without money either can't afford therapy or wait months for the few in-network providers available. Meanwhile, therapists who only accept cash are leaving money on the table — insurance pays reliably once the system works, and the patient pool is vastly larger.

Headway's solution was to build the infrastructure layer that makes insurance billing painless for therapists. They handle credentialing (getting the therapist accepted into insurance networks), claims submission, payment processing, and compliance — all the administrative work that therapists hate.

The therapist shows up, does therapy, and Headway handles everything else.

Magic AI

Eric Steinberger and Sebastian De Ro started Magic in 2022. Steinberger is an AI researcher who became convinced that the missing piece for a true AI software engineer was memory.

Chatbots forget what you told them a few thousand words ago. He wanted a model that could read your entire code base and remember all of it.

They raised a small seed in 2022, then a $23 million Series A in early 2023 led by Alphabet's growth fund CapitalG. From day one the pitch was not a chatbot.

It was an AI colleague that could handle real engineering work.

Headway

Headway grew by solving the supply-side problem first. If you can get enough therapists on the platform and credentialed with insurance, patients will come because affordable therapy is in massive demand.

They recruited therapists with a compelling pitch: "keep doing therapy, we'll handle the business side."

Insurance partnerships were the growth unlock. Headway partnered with major insurance companies (Aetna, Cigna, United Healthcare, Anthem) to become an authorized credentialing partner.

This meant Headway could get therapists in-network faster and with less friction than the traditional process.

The mental health destigmatization wave amplified demand. Post-COVID, demand for therapy skyrocketed.

The conversation around mental health became mainstream. Headway was positioned perfectly to absorb that demand by connecting patients with affordable, insurance-covered therapists.

Magic AI

Magic's strategy is research first, product later, which is both unusual and expensive. Instead of shipping an app and iterating in public, they raised huge sums to chase a technical breakthrough in model memory.

The headline move was the 100 million token context claim, which got the whole AI world talking. They also cut a deal with Google Cloud in 2024 to build two supercomputers, called Magic-G4 and Magic-G5, using NVIDIA chips, to train bigger models.

Star backers like Eric Schmidt served as validation. The bet is that if the tech is far enough ahead, the product and the customers follow.

Headway

Therapist retention is a challenge. Solo practitioners are independent by nature, and some leave the platform once they've built a full patient roster through Headway.

The platform needs to continuously demonstrate value beyond initial credentialing to keep therapists from going direct.

Insurance reimbursement rates are notoriously low. Therapists who accept insurance often earn 30-50% less per session than cash-pay rates.

While Headway negotiates better rates than individual therapists typically get, the fundamental economics of insurance-based mental healthcare remain challenging.

Regulatory complexity varies by state. Each state has different licensing requirements, insurance regulations, and telehealth rules.

Expanding to all 50 states means navigating 50 different regulatory frameworks, each with their own credentialing requirements and compliance standards.

Magic AI

Magic has raised close to half a billion dollars and, years in, still has no product the public can buy. That is the whole problem in one sentence.

A giant context window is a great demo, but rivals like Cursor, GitHub Copilot, and Cognition's Devin already have real users and revenue. Magic has to prove that more memory actually makes a smarter engineer, not just a bigger number on a slide.

And it has to do that while burning enormous sums on compute against competitors who are already shipping. The clock and the cash both keep running.

Headway

Headway Provider Platform — the core system where therapists manage their practice: scheduling, credentialing, claims submission, payment tracking, and patient communications. Headway Patient Matching — a directory and matching service that connects patients with in-network therapists based on insurance, location, specialty, and availability.

Insurance Credentialing Service — Headway handles the months-long process of getting therapists accepted into insurance networks, reducing what typically takes 6-12 months to weeks. Claims and Billing Engine — automated insurance claims submission and tracking that eliminates the paperwork therapists dread.

Practice Management Tools — scheduling, intake forms, session notes, and telehealth capabilities integrated into one platform.

Magic AI

The centerpiece is Magic's LTM, or Long-Term Memory, model family. In 2024 they unveiled LTM-2-mini, a model with a 100 million token context window, pitched as the key to an AI that can understand an entire code base at once.

The broader product is an AI software engineer, or coworker, that can write and change code across a whole project. The company also announced Magic-G4 and Magic-G5, two supercomputers built with Google Cloud and NVIDIA to train these models.

Much of it is still research rather than a shipping product.

Headway

Andreessen Horowitz led the Series C at a $2.3 billion valuation. Accel and Thrive Capital invested in earlier rounds.

GV (Google Ventures) and Spark Capital also participated. The company has raised approximately $226 million total.

Magic AI

Magic's backers are a murderers' row of AI insiders. It started with a $5 million seed round in 2022 and a $23 million Series A in early 2023 led by Alphabet's CapitalG.

Then in February 2024 came a $117 million round led by Nat Friedman and Daniel Gross, two of the most connected investors in AI. The blowout was August 2024.

Magic raised $320 million with checks from former Google CEO Eric Schmidt, CapitalG again, Atlassian, Jane Street, Sequoia, and Elad Gil. That pushed total funding to around $465 million, all for a company still building toward its first sellable product.