Moody Abdul kept hearing the same complaint. Therapists, it turned out, were spending about a third of their professional lives doing paperwork instead of, well, therapy.
So Abdul, a serial founder who'd previously built Circleback.ai and done time in enterprise sales at LinkedIn, decided to fix it. His solution: Klarify, a Toronto-based startup fresh out of Y Combinator that deploys an AI agent to handle the administrative slog therapists universally despise—clinical notes, insurance claims, treatment plans, the whole bureaucratic apparatus that devours billable hours.
The pitch sounds simple enough. Klarify's AI listens to therapy sessions and generates notes in more than 20 formats: SOAP, DAP, BIRP, plus templates tailored to specific therapeutic approaches like cognitive behavioral therapy, EMDR, and couples counseling. It battles insurance denials. It even maintains visual "mindmaps" tracking client progress across sessions. Abdul's framing is characteristically blunt: "AI should handle the busywork, not the therapy."
But in a market already thick with AI scribes for clinicians, Klarify is making a different kind of bet.
Data Sovereignty as Competitive Edge
All session data stays on Canadian servers in Montreal, powered largely by Hydro-Québec. The company promises compliance with a thicket of regulations—HIPAA, PIPEDA, PHIPA, Quebec's Law 25—and commits in writing that it will never train AI models on therapy sessions or commercialize de-identified data.
Perhaps more than Abdul initially expected, that's becoming a meaningful differentiator. As AI mental health tools face mounting scrutiny (a recent KFF Health News investigation highlighted the regulatory gaps around AI therapy chatbots), Klarify is positioning itself as the privacy-first option for clinicians wary of handing patient data to U.S. tech giants.
The technical architecture reflects this wariness. Audio recordings auto-delete after 14 days. Backups purge after seven. Klarify uses AWS Canada for storage, with temporary cross-border processing for transcription—AssemblyAI in the U.S. or EU—and AI inference through AWS Bedrock in Canada, the U.S., or EU, depending on therapist preference. Therapists can opt for European processing to keep temporary data flows within the EU. The company has signed business associate agreements with its sub-processors and contractually bars them from training on session data.
Whether all of this actually insulates therapists from future liability remains an open question. But the messaging is clear.
The Founding Team
Abdul built Klarify with Alexander "Bergie" Bergholm, the CTO, who previously worked on large language model infrastructure at Workday and holds a patent in computer vision from his research at the University of British Columbia. The company's team page lists at least seven people, though Y Combinator's profile shows a team size of four—a difference in counting methods or timing.
According to industry analysis by Founderland, the company launched publicly in mid-May. Klarify received seed round funding, reported as $125,000 on Dealroom, though this amount may not be fully verified as standard YC funding is typically higher. In June, Klarify announced it had hired PhillComm Global for PR.
Fuzzy User Metrics
The user numbers, frankly, don't add up cleanly.
Klarify's website displayed a counter showing 2,154 therapists on June 21, alongside 309,121 notes written and 31,696 hours saved. But company claims in media interviews tell a different story. The Launch YC post in May cited "nearly 6,000 therapists." By mid-June, Abdul told TechTimes the platform had "more than 8,000 therapists," with roughly 88% retention after a year. Y Combinator's company page, accessed around the same time, claimed "nearly 8,300 therapists."
It's unclear whether the on-site counter reflects active users, registered accounts, trial sign-ups, or something else entirely. The discrepancy suggests either explosive growth, divergent definitions of what counts as a "user," or reporting delays. Either way, the company is signing up clinicians at a pace that indicates real demand—or at least real curiosity.
Pricing and Features
Klarify offers three tiers. Sprout costs $16 per month when billed yearly, or $19 monthly, covering 70 sessions. Bloom runs $32 or $39 for 130 sessions. Forest, the unlimited plan, costs $71 yearly or $89 monthly. All pricing is per therapist. Groups and clinics negotiate custom rates.
Beyond notes, the platform generates treatment plans, clinical letters, between-session resources, and session prep summaries. The mindmap feature—published as a help article in late March—visualizes client context across sessions, tracking narratives, beliefs, strategies, needs, and values. Klarify also runs a "Find a Therapist" directory where clinicians can list public profiles, effectively bundling client acquisition with workflow automation.
The Canadian Counselling and Psychotherapy Association offers members a 20% discount with code CCPA20, reinforcing Klarify's positioning as the privacy-conscious choice for Canadian therapists.
A Crowded Field
Klarify isn't alone, and the competition is intensifying.
SimplePractice, a major EHR provider, rolled out its own AI Note Taker in April. Jane App, another Canadian EHR, offers an AI Scribe add-on for $15 per practitioner per month. Upheal focuses on notes and treatment plans, with insurance billing features reportedly in development. Mentalyc targets similar workflows. Eleos Health sells enterprise behavioral health AI to organizations rather than individual clinicians.
The difference, as Abdul frames it? Most competitors are either EHR add-ons or pure note-takers. Klarify is positioning itself as an end-to-end agent that handles insurance denials, client acquisition, and multi-format clinical documentation. Abdul's pitch in a recent TechTimes interview was pointed: with roughly one in five insurance claims denied, according to CMS transparency data analyzed by KFF, therapists need AI to fight an "arms race" with insurers using their own algorithms to reject claims.
Whether that pitch resonates depends on how well Klarify executes on the unglamorous work of revenue cycle management. Notes are becoming table stakes. Fighting denials? That's harder. And potentially more valuable.
The Harder Question
Klarify is betting that privacy, Canadian data residency, and end-to-end workflow automation will differentiate it in a market flooded with AI scribes. The question is whether therapists will pay $71 to $89 per month for unlimited sessions when EHRs are bundling similar features for $15.
The answer may hinge on whether Klarify can deliver on the harder promises: actually recovering denied claims, surfacing useful insights from mindmaps, and driving new client referrals through its directory. If it can, the company has a shot at owning the therapist workflow stack—a niche that's small but defensible.
If it can't?
It's just another expensive note-taker with good intentions about data privacy. And in healthcare, intentions don't pay the bills.
