The Toronto-founded, Y Combinator-backed startup built an AI agent for the paperwork therapists dread: notes, treatment plans, insurance claims, and the busywork that fills their evenings. The therapy stays human. Everything around it does not.
A therapist finishes a 60-minute session, and then a second job begins. There is the progress note to write. The treatment plan to update. The insurance claim to file, and, often, the denial to appeal. A referral letter here, a set of homework worksheets there. By the numbers, the average clinician spends only 20 to 25 hours a week in the room with clients. The rest of the working week is spent on the paperwork that surrounds the room. Klarify was built to take that second job away.
Klarify, founded in Toronto in 2024 by Moody Abdul and Alexander Bergholm, describes itself plainly: an AI agent that handles every job a therapist does other than the therapy itself. Clinical notes drafted in seconds. Treatment plans personalized to each client. Insurance claims prepared, coded, and, when they bounce, appealed. Between-session resources generated on demand. Even the unglamorous work of finding new clients. The company joined Y Combinator's Spring 2026 batch and, around its public launch, reported more than 8,300 therapists using the product across five countries.
The therapy itself stays with the human. That line is the product's whole thesis.
The context Klarify launched into is not subtle. More than half of psychologists - 53% by the figure the company cites - report no open appointment slots. Roughly a third report burnout, a number that climbs to about half among early-career clinicians. The demand for therapy is there. The supply of therapist attention keeps getting eaten by administration. Klarify's read is that the bottleneck in mental health is rarely the therapy and often everything stacked around it.
Money leaks out of the gaps, too. The company points to therapists spending on the order of $26,000 a year assembling a patchwork of documentation, billing, and marketing software, and losing somewhere between $1,000 and $2,500 a month in reimbursements they simply never chase. In a small practice, that is not rounding error. It is the difference between a sustainable business and a side hustle that quietly burns out its owner.
There is a structural reason the paperwork is so heavy. Most therapists run what is effectively a solo small business without any of the back-office staff a small business usually has. A physician's office has billers and front-desk coordinators. A private-practice counsellor has, most nights, only themselves. Every claim, every progress note, every insurer phone tree lands on the same person who just spent the day holding space for other people's hardest moments. The result is a workforce that is both overbooked and underpaid relative to the hours it actually works, because so many of those hours are unbillable.
Therapists are entering an increasingly automated reimbursement environment badly outgunned.Moody Abdul, Co-Founder & CEO
The core of Klarify is an AI assistant the company nicknames Klara. Feed it a session, and it produces the note, drafts the treatment plan, and can spin up worksheets or a client check-in for the week ahead. It also builds visual mindmaps of a session that surface recurring themes - a way of reading the hour back to the therapist and catching the thread they might have missed. On the business side, it prepares claims, optimizes CPT coding, verifies eligibility, and, when an insurer says no, drafts the appeal. That last piece is the interesting one: Klarify is automating not just the form, but the fight.
What makes the note-drafting more than a party trick is the templating. Clinicians work in different modalities and answer to different regulators, so a generic AI summary is close to useless in a real chart. Klarify lets the note follow custom templates, which is the difference between output a therapist has to rewrite and output they can sign. The between-session layer is the quieter innovation. Therapy does not stop when the hour ends; the week between appointments is where a lot of the actual change happens, and it has historically been the hardest part to support at scale. Automatically generating tailored homework and check-ins turns the gap between sessions from dead air into something the clinician is present in without adding hours to their day.
Klarify gave me something I didn't realize I had lost: time and energy. It has changed not only how I work, but how I live.Kelly Copeland, M.Ed., Registered Counselling Therapist
Who actually uses it tells you something about the strategy. The customer is not a hospital procurement committee but the individual clinician - the solo counsellor, the small group practice, the therapist who is also, by necessity, their own biller and marketer. That bottom-up motion is why the reported growth from roughly 6,000 to more than 8,300 therapists happened quickly and largely by word of mouth in a profession where practitioners talk to each other constantly. It is a harder market to sell into than enterprise, with smaller individual contracts, but it is also stickier: once the notes and claims for a live caseload run through one system, ripping it out mid-year is its own kind of paperwork nightmare.
In software that touches a person's therapy records, features are table stakes and trust is the whole game. Klarify leans into that. It says it is compliant with HIPAA in the US, PHIPA and Quebec's Law 25 in Canada, and UK GDPR - the four regimes that cover the countries where it operates. More pointedly, it says it is contractually bound not to train its AI models on clients' clinical data. In a category where a single privacy misstep can end a company, that pledge reads less like a marketing line and more like the moat itself.
Moody Abdul is a second-time founder. He previously co-founded Circleback.ai, an AI meeting-notes platform, and sold roughly $20M in enterprise contracts during a stint at LinkedIn. He also hosts The Future of Therapy podcast, with an audience of around 103,000 mental-health professionals - which means Klarify's roadmap was shaped less by guesswork and more by a long-running conversation with its own customers. His co-founder and CTO, Alexander Bergholm, built LLM infrastructure at Workday, holds a computer-vision patent from work on autonomous vehicles at the University of British Columbia, and once researched deep learning with a Finnish military special-task unit. He was also, for the record, a top-50-in-Canada collegiate Counter-Strike player. It is an unusual resume for healthcare software, which is part of the point.
The podcast is worth dwelling on, because it explains something about how Klarify was built. A founder with a standing audience of six figures' worth of therapists has a research channel most startups would pay dearly for. Instead of shipping a product and hunting for problems it might solve, Klarify had the reverse: a running record of what therapists complained about, in their own words, before a line of code was written. That tends to show up in the details - which is why the pitch is not "AI for healthcare" in the abstract but a specific list of the exact chores a working clinician resents, addressed one at a time.
Klarify frames its opportunity not as the therapy market but as the operational economy around it - the notes, the claims, the compliance, the growth. It sizes that at roughly $22 billion across its five countries today, with room to grow past $50 billion at maturity. The competitive field is real but fragmented: tools like Mentalyc and Upheal for notes, Blueprint for measurement, SimplePractice for practice management, and general AI scribes such as Heidi and Freed. Klarify's wager is that therapists would rather run one agent than pay for six point tools that half-talk to each other.
| Approach | Typical scope | Klarify's angle |
|---|---|---|
| AI note scribes | Notes only | Notes are one of six jobs, not the whole product |
| Practice management suites | Scheduling & billing | Adds an AI agent on top of the admin, not just forms |
| Insurance tooling | Claim submission | Files the claim and drafts the denial appeal |
| Point marketing tools | Content & ads | Client acquisition bundled into the same agent |
The multi-country footprint is a bigger deal than it looks. Reported adoption spans the US, Canada, the UK, Australia, and New Zealand, and the product supports 104 languages. Building for that from the start forces a discipline most US-first health startups skip: you cannot bolt Canadian privacy law or a second national insurance logic onto a product designed only for American workflows. Klarify's compliance across HIPAA, PHIPA, Law 25, and UK GDPR reads like overhead until you realize it is also a barrier to entry - the kind of unglamorous groundwork a fast follower has to redo from scratch.
Klarify sells this as B2B SaaS - a subscription pitched to individual therapists and practices, with the value story told in hours returned and reimbursement recovered rather than seats filled. That framing matters for who buys. A tool sold on time saved has to prove it inside the first week or it gets cancelled; a tool sold on recovered revenue can point to a line on a bank statement. Klarify is trying to be both at once, which is ambitious, and which is also why the insurance module - the part that most directly touches money - may end up being the wedge that everything else rides in on.
The demand backdrop helps: outpatient mental-health utilization grew roughly 40% between early 2019 and late 2023, and the queue of people waiting for care has not shortened. If Klarify's bet holds, the way to shorten it is not to build more therapists overnight but to give the ones already working their evenings back.
AI should handle the operational burden around therapy so therapists can spend more time actually helping people.
Whether Klarify becomes the operating system it wants to be will depend on the boring things: reliability, billing accuracy, and staying ahead of four privacy regimes at once. But the shape of the bet is clear. Keep the therapy human. Automate everything that stands between the therapist and the next person waiting for an appointment.