Mapping Out 110+ Mental Health Tech Startups

As a Gen-Z mental health advocate, I hypothesized that people will start to monitor their mental health similarly to their physical health. In 2018, 10% of the global population was diagnosed with mental illness.[1] As we get vaccinated and begin life in the “new normal” post-Covid-19 world, no one knows the long-term side effects of living in isolation for the past year. Studies increasingly demonstrate that the global mental health crisis continues to intensify as the pandemic resolves. Several mental health challenges will need to be addressed as mental health needs were amplified during the past 18 months. According to a recent study, Covid-19 has accelerated the de-stigmatization of mental health discussions and resulted in more people searching for mental health resources.[2]

I spent the last few months mapping out the future of mental health tech with my friend Kesar Varma. You can find the link to our thesis deck here. We wanted to identify the most venture investable areas within mental health innovation and identify startups that will create positive change and solve mental health challenges for the next generation as we face long term mental health challenges coming out of Covid-19.

Here is a link to our list of 100+ mental health tech startups: https://airtable.com/invite/l?inviteId=invy2HdaSAHXhtmeM&inviteToken=6173740d5120a74ff3a7bd4189aefc3b084ad13474051b1b3557914097a555fa

The Mental Health Pandemic

Although 100% of people are impacted by mental health, everyone does not have access to necessary care. Prior to Covid-19, according to one study, 1 in 6 British adults experienced a common mental health problem every week.[3] 60% of youth with major depression did not receive treatment in 2017–2018. In the U.S., over 38% of youth haven’t received the mental health services they need.[4] For those seeking prescription drugs, 80% of psychotropic drugs are prescribed by primary care physicians rather than psychiatrist.[5] The number of people worldwide suffering from depression and/or anxiety increased by 50% between 1990 and 2013, a figure which has surely increased over the past year living in isolation.[6]

People are demanding more personalized and affordable solutions for mental health. This is driving innovation in the market. Mental health professionals are high in demand as Americans and others struggle with rapidly increasing rates of insomnia, anxiety, and depression. Therapists are experiencing waitlists in the hundreds. Consequently, those seeking mental health solutions are resorting to tech apps and other resources to improve their mental health.[7] Similar to digital health and telemedicine, consumer interest in virtual mental health solutions saw a dramatic increase during 2020. The graph below shows the increase in google searches for “virtual mental health” in 2020, while searches for “mental health services near me” decreased.[8]

Covid-19 has detrimentally impacted mental health and will likely be the root of long-term behavioral shifts.

In 2021, the CDC reported that nearly 50% of adults experienced recent symptoms of an anxiety or depression disorder, a 40% increase since 2019.[9] Approximately 33% of patients infected by Covid-19 were diagnosed with brain or psychiatric disorders within six months of receiving treatment for the virus.[10] Emergency doctor visits increased because of both the Covid-19 and mental illness. In 2020, emergency visits resulting from mental health increased 24% for children ages 5–11 and spiked 31% among adolescents 12–17 in age.[11]

Mental health conversations became less stigmatized during Covid-19 and the number of news articles skyrocketed. For example, the number of earnings calls mentioning “Mental Health” increased by more than 800% during 2020.[12]

Beyond access to psychologist and psychiatrists, how can technology improve mental wellbeing? Technology can help with the following:

1. Increase patient engagement with a therapist or mental health solution.

2. Improve and enhance access to care.

3. Offer meaningful workplace support, especially in future hybrid work settings.

4. Deliver personalization and more specific solutions.

Mental health tech solutions are moving from reactive to proactive.

Due to stigma, many people view mental health as extreme situations such as death or addiction in rehab. Reactive solutions for mental illness include Acadia and Mindstrong. Today, more mental health tech solutions are moving people towards treating less severe mental health conditions and tracking progress. For example, Calm, Headspace, and Real all provide performance-based solutions.

Global healthcare Funding Hit a New Quarterly Record in Q1’21…

More than 90% of investors expect mental health startup returns to be in line or better than returns on startup investments in other sectors. The mental health market is predicted to be $245B by 2027.[13] Mental health funding increased by 54% QoQ to $852M. Deal count grew by 14% to 64 deals. More broadly, deal count grew by 9% to 1.5K deals and $32B in equity funding for global healthcare funding. Healthcare investing particularly increased in the early-stage ecosystem while mid-stage deals stayed consistent with the previous quarter, and late-stage deals declined by 1%. Oscar Health, Alignment Health, and Talkspace went public in Q1’21. Several digital health companies announced plans to go public with a SPAC. These demonstrate that exit opportunities exist for mental health tech companies.[14]

Deals in 2021:

The number of early-stage deals increased in mental health tech investing. Key leaders benefited from later-stage funding. For example, Lyra, which enables companies to provide access to effective mental health care for their employees through therapy, coaching, and medication support, raised a total of $475M including their latest Series E round in January, bringing the valuation to $2.3B. Modern Health, a mental well-being platform for companies offering therapy, coaching, and self-guided courses in one app, raised a Series D bringing the valuation to $1.17B with $165M in funding. In February, Modern Health acquired Kip, which matches users with therapists. Pre-series C deals in 2021 emphasized the importance of access and personalized mental health solutions.[15]

Market Map:

The following is based on our research of 100+ startups from interviews, articles, and conversations with entrepreneurs. Many startups fall into multiple categories. The startups chosen to align with our thesis have a unique angle on mental health solutions and are category leaders.

Self-care, Meditation, and Sleep:

Definition: Tech solutions focused on daily routines and well-being. Many of these solutions are apps that teach meditation and routines to help manage stress and sleep health. Current solutions are not intended for treating severe mental illness. Solutions offered included mediation, story time, journaling, and coaching.

Challenges: The primary challenge for self-care apps such as Calm, Aura, and Jour is user engagement. These companies need to be creative with developing new tools and resources to generate consumer use and continual engagement. Headspace offers daily meditations that build on a day-to-day basis, encouraging users to use the app daily. To improve user engagement many of these apps offer daily tasks, tracking opportunities, and a sense of community among users.

Questions:

· How many or what percentage of users log onto these apps daily?

· Which techniques keep users engaged to come back?

· Is it counter intuitive that these tools are on a phone since many of the best mental health solutions involve turning off your cellphone?

· How much progress do users make towards improving their mental health?

· How is progress measured?

· What kind of mental health outcomes are achieved?

· How can these apps differentiate from other solutions since the space is so crowded?

· What is the value of their content?

· Most app solutions are free and need to convert users to paying customers. How many customers convert to paying subscriptions?

Consumer Telehealth:

Definition: Digital solutions that enable remote treatment over the phone. Solutions offer 24/7 treatment options online through video, messaging, and phones. Some options such as Octave offer both in-person and remote solutions.

Many solutions offer higher quality and more customized care with tools to measure and track treatment built into the service. Platforms offer additional services and educational materials for the period between visits. These solutions remove administrative, billing, and paperwork tasks for therapists so they can focus on providing care.

Challenges: In-person therapy options all converted to telehealth solutions during the pandemic; this model is now saturated.

Questions:

· How can platforms offer additional features between visits and tracking tools to keep patients accountable without meeting in person?

· How can progress be tracked without an in-person relationship?

· As more solutions become remote, distribution has become important to attract users. What go-to-market strategies can help companies’ standout?

· Can telehealth reduce costs and increase access for individuals?

· Are outcomes more successful partnering with insurance providers of employer with a B2B model?

Provider Tools (B2B), SaaS, Access:

Definition: B2B tools targeting therapists or companies. We have seen two key models here:

1) Tools for therapist to remove administrative work and help to provide care to individuals using insurance.

2) Tools sold to companies and offered to employees. Most solutions ultimately increase access and reduce costs for patients while empowering therapists.

Questions:

· In terms of the business model, can public and private players participate?

· How does this improve the experience for therapists that are providing care?

· How is data integrity ensured to keep patients and therapists safe?

Diagnostics and Testing:

Definition: This software is broken down into two groups:

1) Software that enables individuals or therapists to track patient progress.

2) Software that enables therapists to properly diagnose patients.

We see this as one of the largest opportunities in mental health tech. Tracking and proper diagnostics will save providers, therapists, and patients time by preventing mental health illness and providing solutions more rapidly.

Questions:

· How can software be used to properly diagnose patients and ensure they are matched to the relevant therapist or solution?

· Can software in phones be used to easily track progress?

· How are users protected and insured that their data is confidential?

· In terms of go-to-market, how can companies and therapists integrate tools for patients?

· Can users be provided more personalized care with increased data available?

Digital Therapeutics:

Definition: Evidence-based therapeutic interventions driven by software to digitally prevent, manage, or treat mental health disorders. Many of these tools are gamified to cater to adolescents and combined with telehealth solutions. Digital programs start with surveys and tracking techniques with weekly tools for users. Gamified solutions are backed by extreme testing, so they are enjoyable to users and proven to improve mental clarity.

Questions:

· How do tools keep users engaged?

· Do these tools lose part of the benefit without human interaction?

· What does patient engagement look like?

· How many patients finish programs and demonstrate results?

· Is the product clinically efficient?

· Is the software the primary moat? Are there other moats?

Hardware:

Definition: Hard tech solutions or any software connected to hardware. Solutions include robotics, VR headsets, wearable devices, and interactive toys for children.

Question:

· How can iPhones, Apple watches, or Fitbit be used to provide mental health solutions instead of developing new wearable tech products?

· Can iPhones track behavioral shifts based on daily movement and location?

· Could existing consumer hardware such as Apple acquire hard tech solutions such as feel?

· How are the software and hardware connected and what is the primary moat?

· How often does the hardware need to be updated?

· Could the hardware become outdated quickly?

· How are outcomes measured with wearable solutions?

Peer 2 peer:

Definition: Solutions centered around human connection and group-based support. There are two key P2P models:

1) Group discussions with peers facing similar mental challenges; these are normally facilitated by a therapist.

2) One-on-one peer discissions with individuals matched based on specific goals and interests. Discussions are often virtual and anonymous.

Questions:

· How can P2P solutions lower costs and increase access for individuals?

· Can P2P be combined with traditional therapy methods?

· User protection: How are individuals trained to ensure they are most effective for their peers?

· How are safety and user trust insured?

Applied AI:

Definition: AI is being used for: 1) tracking and preventions; and 2) chatbots. LiveNao, for example, combines AI with smartphone sensor data to provide behavioral nudges and tracking to improve mental wellbeing. AI is also used to simulate human conversation and create less expensive mental health care solutions.

AI benefits:

· Increased access, scalability, and lower costs for users.

· Lack of bias for users and a sense of privacy.

Questions:

· Do conversations feel human-like? Do they feel natural?

· How developed is the technology to remember previous conversations and customize answers and solutions to personalized needs?

· How engaged are users and how quickly are outcomes achieved?

· If solutions are free, how can users be charged to produce a revenue?

Employer Telehealth:

Definition: B2B mental health solutions sold to employers to provide for employees. Most of these tools are traditional mental health care offered to employees for free. Care solutions range from meditation and workouts to telehealth appointments with therapists.

We are excited to see technology which enables employers to anonymously measure productivity, mental clarity, and mental health needs of employees and thereby protect their privacy. As companies determine hybrid work environments, mental health tracking tools can provide data to inform productive work environments.

Questions:

· How can employers make mental health solutions more accessible and destigmatize mental health discussions?

· Can employers lead the way in mental health destigmatization by encouraging mental health to be considered the same as sick days?

· Can tracking tools provide data to inform work environments and productivity solutions?

· How will user data be kept anonymous for employers?

· How can B2B care enable mental health tech startups reach more people and acquire users?

· Can companies also partner with pharmaceutical companies?

The shift in mental health tech driven by Covid-19 & Investment Theses:

Prior to Covid-19, mental health tech innovation was focused on generalist care and self-care. Unicorns include Calm and Talkspace which offer meditation and more general selfcare solutions. After Covid-19, mental health tech innovation will focus on:

Thesis 1: Tracking and prevention: patients will not be simply diagnosed with extreme mental health conditions. Instead, their mental health condition will be tracked and monitored over time.

· Tracking solutions will enable early prevention of anxiety and depression versus current reactionary offerings.

· Diagnosis and tracking of specific contusions will be enabled with existing technology like the iPhone, times of day individuals use their phone, and voice recognition technology.

· Therapists will encourage daily tools that will enable them to track and better measure patient progress and well-being. Tracking during recovery will better measure outcomes for providers.

Thesis 2: Segmentation and personalization: Early-stage mental health tech companies will be focused on serving a specific demographic or cohort, providing them with access to personalized care. Specific solutions will be developed for children, engaged couples, LQBTQ+ individuals, and other identified groups.

· Technology will be used to identify and treat mental health conditions in pediatrics, which will differ from adults.

· Applications will be used specifically for substance abuse and eating disorders.

· Mental health solutions will be designed to specifically solve mental health challenges related to physical conditions such as pain and IBS.

· Mental health tech will target specific trauma related to sexual assault.

· Senior-focused solutions will address loneliness.

Thesis 3: Access across communities: Access will be increased for more people in previously underserved communities.

· Solutions will support culturally diverse populations.

· Providers will offer better products and access to services.

· Access will connect to education by enabling opportunities for individuals to better understand their mental health.

· Increased access means offering care options to currently unaddressed patients such as people on medications or experiencing homelessness.

Thesis 4: Future of work and mental health: Mental health solutions will be integrated in corporate return to work strategies and companies will integrate mental health solutions for employees as they see Zoom fatigue increase and the number of employees taking mental health sick days increase.

· Employers will offer mental health solutions and better tools to understand the impact and outcomes of work productivity correlated with mental wellbeing.

· Technology will be used to track and improve productivity in the workplace.

· Over time, there will be a larger focus on diverse offerings for employees to allow for increased personalization and transparency when choosing care paths.

Key startups that align with the four theses are shown in the graphic below:

Consumer Mental Health Tech Thesis:

With the success of consumer mental health tech, such as Headspace and Calm, the primary opportunity in consumer mental health tech is in customization, accessibility, and community.

Daybreaker Health is an example of a personalized mental health solution. Daybreaker is a clinically validated online counseling service to address adolescent emotional well-being. The company’s mission is to ensure every teenager has access to high-quality mental health care. The service matches individual adolescents with expert counselors through a teen-friendly mobile app. The company bridges the gap of parent involvement though educational workshops and teen progress touchpoints along every step of the journey. Daybreaker is a leader in personalized mental health solutions specifically for adolescents. By integrating the education portal for patients, Daybreaker differentiates from other teen mental health solutions.

Many consumers struggle to access mental health care. Two of the top priorities in the mental health space are accessibility and personalization. Shimmer addresses this problem with a community-driven approach. Shimmer creates a supportive community of young adults dedicated to promoting intersectionality and improving their well-being and mental health. People can join groups of people addressing similar mental health goals. Based on interest, participants are matched with a Shimmer Guide and others who share similar values based on self-identity, personality, current struggles, goals, or interest. Social science studies demonstrate that wellness groups enable people to live healthier and happier lives. Through personalized group therapy, patients can reach their mental health goals for as low as $14.99 per month.

B2B Mental Health Tech Thesis:

We hope to see further innovation in B2B mental health tech that empowers therapists and enables employers to provide better care for employees. Ellipsis is an example of a technology that has partnered specifically with insurance providers to offer technologies to therapists for improved measuring and tracking.

BrainCheck is another example of a tracking solution to empower therapists. The company is a mobile interactive test for cognitive health, allowing users to track their brain health to share results with clinicians. Improved tracking and measurement tools for psychiatrists and therapists will lead to improved treatment and prevention.

The future of work includes more open conversations regarding mental health and care options for employees. Zenovate is a B2B mental health solution that provides on-demand counseling, yoga, meditation, and more for employees in a wellbeing app. Moving forward, we expect to see technology that enables employers to offer personalized mental health care to employees.

Bullish on Ellipsis Health:

Ellipsis heath has pioneered a voice-based vital sign for depression and mental health symptoms. The human voice is the original measure of well-being. Through words, a voice conveys the internal state of a person — not only through words and ideas but also through tone and emotion. Ellipsis health was founded in San Francisco in 2017. The company has raised $14M and has a team of 33 people. One of the top priorities in the mental health space is investing in measuring and testing solutions. In terms of traction, the company has been validated to work with 15,000 people ages 15–80.

The company is differentiated because it provides AI-based measurement solutions and analytics to providers and care teams. Unlike past AI approaches, Ellipsis’s development and test results are highly stable; their models generalize well over different data sets and over patient demographics such as age, gender, and ethnicity. The company has a patent that enables them to detect the state of a speaker. They already have commercial traction with two of the largest insurance providers in the US.

Conclusion:

Mental health will continue to be a large conversation as we see long-term mental health reactions from the Covid-19 pandemic. Mental health care will become part of an increasing number of people’s daily routines, and we hope solutions become more accessible and personalized. In terms of white space, there is opportunity at the intersection of personalization, tracking, measuring, and access. Mental health tech startups will win by communicating their differentiated approach and solution to specific customer cohorts.

If you are a founder building in the mental health space, or if you have any questions, we would love to connect! Feel free to reach out to myself on LinkedIn or Kesar Varma.

Notes

[1] Hannah Ritchie and Max Roser, “Mental Health,” Our World in Data, April 2018, accessed 25 May 2021, https://ourworldindata.org/mental-health

[2] HealthPartners, “Sigma of mental illnesses decreasing, survey shows,” HealthPartners, 24 Feb. 2020, accessed 25 May 2021, https://www.healthpartners.com/hp/about/press-releases/stigma-of-mental-illnesses-decreasing.html

[3] Mental Health Foundation, Fundamental Facts About Mental Health (London: Mental Health Foundation, 2016), pp. 5, 14, accessed 25 May 2021, https://www.mentalhealth.org.uk/sites/default/files/fundamental-facts-about-mental-health-2016.pdf

[4] Mental Health America, The State of Mental Health In America 2021, accessed 25 May 2021, https://mhanational.org/issues/state-mental-health-america

[5] Sarra L. Hedden, Joel Kennet, Rachel Lipari, Grace Medley, Peter Tice (Center for Behavioral Health Statistics and Quality), Behavioral Health Trends in the United States: Results from the 2014 National Survey on Drug Use and Health (HHS Publication No. SMA 15–4927, NSDUH, Series H-50, 2015), accessed 25 May 2021, https://www.samhsa.gov/data/sites/default/files/NSDUH-FRR1-2014/NSDUH-FRR1-2014.htm

[6] World Health Organization, “Investing in treatment for depression and anxiety leads to fourfold return,” World Health Organization, 13 April 2016, accessed 25 May 2021, https://www.who.int/news/item/13-04-2016-investing-in-treatment-for-depression-and-anxiety-leads-to-fourfold-return

[7] Kate Rogers and Betsy spring, “Mental health professionals are in high demand as the pandemic enters a second year, CNBC, 2 April 2021, accessed 25 May 2021, https://www.cnbc.com/2021/04/02/mental-health-professionals-are-in-high-demand-as-the-pandemic-enters-a-second-year.html

[8] Nina Chiu, Alex Kramer, Aditya Shah, “2020 Midyear Digital Health Market Update: Unprecedented funding in an unprecedented time,” Rock Health, 2021, accessed 25 May 2021, https://rockhealth.com/reports/2020-midyear-digital-health-market-update-unprecedented-funding-in-an-unprecedented-time/

[9] Anjel Vahratian, Stephen J. Blumberg, Emily P. Terlizzi, Jeannine S. Schiller, “Symptoms of Anxiety or Depressive Disorder and Use of Mental Health Care Among Adults During the COVID-19 Pandemic — United States, August 2020-February 2021, Morbidity and Mortality Weekly Report, 70(13), 2 April 2021, p. 490–494, accessed 25 May 2021, https://www.cdc.gov/mmwr/volumes/70/wr/mm7013e2.htm

[10] The Daily Briefing, “Study: 33% of Covid-19 patients get neuropsychiatric diagnosis within 6 months,” Advisory Board, 13 April 2021, accessed 25 May 2021, https://www.advisory.com/daily-briefing/2021/04/13/neuropsychiatric-diagnosis.

[11] The Daily Briefing, “Study: 33% of Covid-19 patients get neuropsychiatric diagnosis within 6 months,” Advisory Board, 13 April 2021, accessed 25 May 2021, https://www.advisory.com/daily-briefing/2021/04/13/neuropsychiatric-diagnosis.

[12] CB Insights, “State of Healthcare Q1’21 Report: Investment & Sector Trends To Watch,” CB Insights, 20 April 2021, accessed 25 May 2021, https://www.cbinsights.com/reports/CB-Insights_Healthcare-Report-Q1-2021.pdf.

[13] Market Watch, “Behavioral Health Market: Global Industry Analysis, Size, Share, Growth, Trends, Company Analysis and Forecast 2020 to 2027,” Market Watch, 10 May 2021, https://www.marketwatch.com/press-release/behavioral-health-market-global-industry-analysis-size-share-growth-trends-company-analysis-and-forecast-2020-to-2027-2021-05-10?siteid=bigcharts&dist=bigcharts&tesla=y

[14] CB Insights, “State of Healthcare Q1’21 Report: Investment & Sector Trends To Watch,” CB Insights, 20 April 2021, accessed 25 May 2021, https://www.cbinsights.com/reports/CB-Insights_Healthcare-Report-Q1-2021.pdf.

[15] Christine Hall, “Access To Mental Health: Startups Tackle Sector’s Complexities As Investors Go All-in,” Crunchbase Daily, 22 Feb. 2021, accessed 25 May 2021, https://news.crunchbase.com/news/access-to-mental-health-startups-tackle-sectors-complexities-as-investors-go-all-in/#