View on the 2024 mental health technology landscape
This article and the views expressed herein are solely my own and do not necessarily reflect the views of my employer. Proprietary analyses shared in this article were developed by myself. Company- and investment round-related datasets used in preparation of this article have been downloaded from Crunchbase on 04/21/2024.
While the past two years have seen a significant decrease in immediate COVID-19 concerns, the pandemic has left an enduring mental wellbeing impact, with mental health concerns being ranked the number one health concern today ([1], figure 1).
The significance of the mental health challenge has been well-documented in a variety of studies. For instance, a 2022 US-wide survey by KFF and CNN [2] identified that 90% of the public think there is a mental health crisis in the US today, while 51% of adults indicated that they or a family member have experienced a severe mental health crisis.
Despite this broad recognition, traditional care approaches are insufficient to ensure broad-based remediation of today’s mental health challenges. Specifically, a 2022 study by Mental Health America [3] found that ~55% of US adults with a mental illness received no treatment. Individuals requiring support commonly encounter several barriers to accessing mental health care, namely (1) high cost of care, (2) limited accessibility, (3) insufficient mental health literacy, and (4) lack of time to get treatment (figure 2). In addition, (5) stigma around mental illness is commonly referenced as a key reason why affected individuals do not seek dedicated support [4].
As part of its 2024 trend review, the American Psychological Association (APA) has identified technology offerings as a key enabler for reducing barriers to care [5]. For instance, the APA highlights the ability of technology to lower the time commitment required from individuals seeking treatment while increasing mental health care accessibility. The potential of technology to improve mental health care has been further exemplified by Kaiser Permanente, a care provider which leveraged an ecosystem of digital mental health and wellness solutions to sustain member and patient support during the pandemic [6].
Against this backdrop of rising mental health concerns and the potential of technology to address key challenges, this article provides a perspective on current developments in the mental health technology landscape. Besides (1) identifying a re-acceleration in mental health technology investments, the article (2) highlights the prominent role of digital therapy providers among technology startups and (3) provides a perspective on mental health technology investors.
Key insights on the 2024 mental health technology landscape
1) Mental health technology investments are re-accelerating
Driven by the COVID 19-induced worsening of mental health challenges and positive broad-based technology sector momentum, investment in mental health technology startups grew by more than 7x from 2019–21, reaching a total volume of ~$2.9B in 2021 (figure 3). In the subsequent years, funding declined significantly (-38% from 2021–22 and -64% from 2022–23), resulting in an investment volume of only ~$650M in 2023. Year-to-date, investment activity suggests a reversal in funding slowdown with >$380M venture investment in mental health startups to date.
In line with the funding volume development, the number of mental health startup deals also declined between 2021 and 2023, however, at a lower rate (-18% from 2021–22, -28% from 2022–23) (figure 4). Concurrently, average deal size has declined from >$11M volume per deal in 2021 to <$5M in 2023, driven by a reduction in late-stage funding rounds (from 26 Series A and Series B deals in 2021 to only four in 2023). 2024 figures to date not only suggest a reversing trend in the number of deals but also in the average deal size trajectory, driven by the large investment rounds in Grow Therapy [7], Brightside Health [8], and Two Chairs [9].
2) Among mental health technology providers, digital therapy players capture the largest share of investment
Broadly, mental health technology companies can be mapped into eight categories (building on insights from [10], [11]), although categorizations are not always clear-cut. For instance, as detailed below, there is an increasing number of employee mental health care providers offering self-care and wellbeing coaching in addition to digital therapy sessions.
- Digital therapy: Online platforms facilitating delivery of therapy (e.g., patient-provider matching or telehealth offerings) and digital practices
- Digital therapeutics: Software solutions delivering evidence-based therapies for mental health conditions, often with regulatory (e.g., FDA) approval
- Biotechnology and pharmaceuticals: Developers and providers of medication and biological treatments aimed at addressing mental health conditions
- AI-based chatbots: Conversational AI solutions providing wellbeing guidance and mental health monitoring
- Wearables and hardware: Device-enabled solutions for monitoring and improving mental health, including sensor-based biometric tracking and VR/AR experiences
- Provider support and enablement: Solutions helping mental health professionals to manage and facilitate practice operations and enhance patient care
- Self-care and wellbeing coaching: Applications and platforms guiding users in mediation, sleep improvement, and mental awareness approaches
- Peer-to-peer support: Platforms connecting peers with similar mental health challenges, enabling mutual support
Categorizing the top 100 (based on Crunchbase rank) mental health technology providers (figure 5) highlights digital therapy as the largest of the eight categories (50 out of top 100 companies), contributing ~$4.3B of the total cumulative capital invested in the top 100 companies. Digital therapy providers are followed by self-care and wellbeing coaching companies (18 out of top 100, ~$1.1B in funding) and provider support and enablement players (14 out of top 100, ~$0.5B in funding). Although offerings in other areas such as peer-to-peer support and digital therapeutics have been shown to be effective in alleviating mental health conditions [12, 13], these categories appear less prominent in the ecosystem today, providing potential whitespace.
The central role of digital therapy providers also becomes apparent when analyzing the largest funding rounds over the past months. Out of the 12 companies receiving $20M+ funding rounds in 2023 and 2024, 10 are digital therapy providers (e.g., Two Chairs, Headway, Cartwheel, and Octave).
Reviewing the top 100 players in further detail shows two additional trends. On the one hand, a rising number of companies is tailoring offerings specifically to adolescents and their families (e.g., Cartwheel, Uwill, Manatee, Backpack Healthcare, FamilyWell, Little Otter). Further, in line with a rising mental wellbeing focus among employers [14], a large number of players in the top 100 provide employee health offerings (e.g., Modern Health, EmployerDirect Health, LifeSpeak, nilo.health, Moka.care, Spring Health), combining wellness solutions with digital therapy offerings.
3) Accelerators are the most active early-stage investors with selected funds participating across investment stages
Accelerators are the most active players in early-stage mental health startup investing (figure 6). Specifically, from 2021 to 2024, Techstars participated in 15 pre-seed and seed funding rounds (11 of which were lead investments) followed by Y Combinator (11 funding rounds with five lead investments). In the same timeframe, individual investor venture firm Alumni Ventures invested in 10 rounds (two lead investments).
With four investment rounds each, BoxGroup (one lead investment), Sparrow Ventures (one lead investment), and Gaingels (no lead investment) were the most active investors in Series A funding rounds.
Among investors in Series B rounds and beyond, What if Ventures (six investments with no lead investment), Optum Ventures (five investments with no lead investment), Insight Partners (four investments with three lead rounds) and General Catalyst (four investments with two lead rounds) were the most active players between 2021 and 2024.
Looking across funding stages, Gaingels, What If Ventures, and City Light Capital are the only investors ranking among the top 10 investors in all stages, with each of them having made 10 or more mental health technolgy investments since 2021. For Series A and Series B and beyond rounds, a selected group of investors frequently go into the lead when making investments (e.g., Left Lane Capital, Lightspeed Ventures, and Insight Partners), while other players (e.g., Gaingels and What If Ventures) have not made lead investments over the past years.
Conclusion
In light of sustained mental health challenges and a rising urgency to act, identifying solutions broadening the access to care is crucial. Technology can play a key role in this context and many innovative companies are already helping to improve lives through digital mental health solutions.
Looking ahead, I am excited for upcoming innovation in the space and hope that some of the insights and key takeaways of this article prove useful for founders, operators, and investors taking steps towards improving broad-based mental health.
Appendix A: Methodology
Analyses underlying insights (1) to (3) are based on two Crunchbase datasets retrieved on April 21, 2024.
Crunchbase 2019–24 mental health funding round dataset
- Crunchbase query: Recent investment rounds in companies with industry categorization Health Care > Mental Health, sorted by date
- Filters used for analysis: Excluded funding rounds with Funding Type not equal to Pre-Seed, Seed, Series A, Series B, Series C, Series D, Series E, Series F, or Venture — Series Unknown
Crunchbase mental health technology company dataset
- Crunchbase query: Top 1,000 companies with industry categorization Health Care > Mental Health, sorted by Crunchbase rank (Crunchbase rank dynamically measures the prominence of a company at a given point in time, incorporating several signals including community engagement, funding events, press coverage, acquisitions etc.)
- Filters used for analysis: Excluded companies with Operating status equal to Closed and companies with limited mental health technology focus and selected top 100 startups by Crunchbase rank among remaining companies
Appendix B: Sources
[1] Ipsos Global Health Service Monitor 2023 (2023): https://www.ipsos.com/en/global-health-service-monitor-2023
[2] KFF/CNN Mental Health in America Survey (2022): https://www.kff.org/report-section/kff-cnn-mental-health-in-america-survey-findings/
[3] The State of Mental Health in America (2022): https://mhanational.org/sites/default/files/2023-State-of-Mental-Health-in-America-Report.pdf
[4] The Impact of Mental Illness Stigma on Seeking and Participating in Mental Health Care: https://journals.sagepub.com/doi/abs/10.1177/1529100614531398
[5] Mental health care is in high demand. Psychologists are leveraging tech and peers to meet the need:
https://www.apa.org/monitor/2024/01/trends-pathways-access-mental-health-care
[6] How Kaiser Permanente Created a Mental Health and Wellness Digital Ecosystem:
https://catalyst.nejm.org/doi/full/10.1056/CAT.20.0295
[7] Grow Therapy Announces $75m Series B Raise: https://growtherapy.com/blog/series-b/
[8] Brightside Health Raises Strategic Series C, Welcomes Trip Hofer to Board of Directors:
https://www.brightside.com/press-releases/brightside-health-raises-strategic-series-c-welcomes-trip-hofer-to-board-of-directors/
[9] Announcing Our Series C: https://www.twochairs.com/blog/announcing-our-series-c
[10] Mapping Out Mental Health Tech: 70+ Startups Changing Lives: https://sarah-du.medium.com/mapping-out-mental-health-tech-a7257bf2bcaf
[11] Mapping out the Mental Health startup ecosystem: https://medium.com/venture-beyond/mapping-out-the-mental-health-startup-ecosystem-5cb4db031b54
[12] How technology can enhance treatment: A scoping review of clinical interventions for anxiety and obsessive-compulsive spectrum disorders: https://bpspsychub.onlinelibrary.wiley.com/doi/epdf/10.1111/bjc.12279
[13] A review of the literature on peer support in mental health services: https://www.tandfonline.com/doi/abs/10.3109/09638237.2011.583947
[14] The business case for looking after staff mental health: https://www.ft.com/content/16750024-4c36-4afd-825a-181d34a9eb77
