The pandemic learning loss was worse for kids with special needs. Now, startups are helping students with autism, dyslexia, and ADHD get back on track.

• A new group of startups are helping children with conditions like autism and ADHD learn in schools.
• Data shows that children with disabilities had a sharper drop in 2022 reading and math test scores. 
• Venture capitalists have started to see this space as a market worth backing.

Vanessa Castañeda Gill wasn't always open about her autism diagnosis.

When she was 14, her doctor diagnosed her with both autism and ADHD. She struggled connecting her identity with the stereotypes associated with autistic teenagers, which she felt didn't fit the profile of a young woman of color.

Castañeda Gill ended up hiding her diagnosis from others until she was 21. "It led to a lot of difficulties with my own mental health and self-esteem," she said.

But her struggles as a teenager eventually became her calling as an adult. After college, Gill developed a video game called Social Cipher, that helps neurodivergent kids aged 10 to 15 with topics like making friends at school, dealing with emotions, and setting boundaries.

Castañeda Gill's Social Cipher is part of a growing group of startups that are addressing the learning needs of neurodivergent students, from how to navigate complex social environments at home and school, to providing resources for teachers on how to craft lessons that are inclusive for different learning styles.

This upcoming school year marks the second since the return to in-person learning. And neurodivergent students that require special education assistance and mental health support are behind the learning curve.

Guadalupe Lara, an intensive behavioral instruction aide for students with special needs at Pacific Elementary in Manhattan Beach, California, said helping her students recover from the learning losses during remote learning during the pandemic has been very tough. During the last school year, some students have been unable to recognize words that they were previously able to comprehend in reading lessons, she said.

"We had to take a step back to find a baseline of where they were, so that we could move forward," she said.

Nine-year-old students with registered learning differences saw a drop in reading and math scores in 2022 compared to their peers in 2020, Edweek reported, citing long-term trend data from the National Assessment of Educational Progress.

Staffing qualified special education teachers has also become a problem for schools. A spring report from the National Center for Education Studies found that 78% of K-12 public school principals found that it was somewhat or very difficult to fill an open position for a special education teacher at their school at the beginning of the 2022-2023 school year, ABC News reported.

"I think schools are really pressed right now, so it's a very good time for opportunities for more platform-based scalable solutions," said Rebecca Kaden, a managing partner at Union Square Ventures.

As more districts look for solutions that can help address these problems, startups can be the ones offering the tools. "In everything but official status, school districts are healthcare providers when it comes to these services," said Vijay Ravindran, who founded Floreo, a startup that uses virtual reality to help neurodivergent children learn behavioral and academic skills. "They take on a really important role of skill development for kids with autism."

For startup founders in this space, remote learning during the pandemic affected their children in drastic ways, which highlighted the scale of the problem and prompted them to develop solutions.

Suchi Deshpande watched her autistic son fall behind in school, so she started working on a way to match "education therapy" providers with students like him for emotional and academic support, which became the prototype for her startup Learnfully. As she asked around and heard that her friends' children were also experiencing difficulties, she quit her job in enterprise tech and became a full time founder. "During the pandemic, many parents realized when they were home that their kid learns differently," she said.

Ravindran came up with the idea for Floreo after seeing how well his autistic son paid attention to different lessons when they were taught through a virtual reality headset. Since its founding in 2016, Floreo has created a catalog of learning modules built around established therapy techniques, but saw interest from parents and schools grow much more quickly in the last two years. This customer growth helped Ravindran close a $10 million Series A round at the end of 2022. Meta recently took an interest in Floreo too, and the two launched a partnership program in March to provide discounted Floreo programming for schools across America.

Before the pandemic, startup founders in this space had a tough time finding the right VCs to work with since the problems they were trying to solve often didn't fall neatly within edtech or healthtech.

"There are very few investors who can grasp both the healthcare and edtech side of the issue," said Alex Alvarado, the founder of the student mental healthcare startup Daybreak Health, which matches kids with virtual therapy providers through their school systems.

Instead, organizations like the startup community Multiple, a network and accelerator for pre-seed founders building products for people with autism, helped to fill that void. They backed startups including Social Cipher.

In the last two years, though, more generalist investors have begun to invest in startups in this area. For Alvarado, Daybreak's most recent $13 million Series B round of funding was secured after meeting with the team at Union Square Ventures, who was able to understand both dimensions of Daybreak's customer base.

"I think investors are starting to think about these startups as healthcare businesses that happen to sell to this different channel," meaning school systems, said Diana Heldfond, founder of Parallel Learning, which provides virtual special education support staff for schools, and closed a $30 million Series A.

Dan Povitsky, the cofounder of Vine Ventures, which led Parallel Learning's seed round, concurred. "If you can show up at schools and say, 'we can untangle this backlog of students needing these types of evaluations and then also provide you with care providers,' that's important," he said.