Mental health tech is emerging — Part 1

It’s not easy to ask for help

When my brother said he wanted to see a therapist, people asked “why, what’s wrong?”

He said nothing, and never went.

Around 1 billion people worldwide suffer from mental illness¹, and approximately 75% receive no treatment at all.² Because there is low awareness, there’s fear, the costs are high, and there’s a shortage of therapists.

However, something is changing: mental health tech is emerging. And at Calm/Storm we’re excited about that — because we strongly believe the market represents a big untapped opportunity. For mainly three reasons:

  1. Mental health is still largely taboo. And stigmas attached to certain health conditions refrain people from seeking help and entrepreneurs from building solutions.
  2. It’s one of the challenges of today’s society in the form of emergency hospitalization, productivity loss and increased crime. The Lancet Commission estimated a loss of US$16 trillion to the global economy due to mental illness in the period 2010–2030.
  3. It has a huge prevalence. According to the CDC, more than 50% of people will be diagnosed with a mental illness or disorder at some point in their lifetime.

Why mental health tech is still nascent

The COVID-19 Pandemic accelerated a market shift in healthcare. In the years 2020–2021 the industry as a whole evolved at a rapid pace. And mental health experienced a double effect: supply digitization and demand increase. Not only has the way to deliver care changed, with providers moving away from in person interactions, but the amount of people needing care has grown. Indeed, the Pandemic has been a major driver in the adoption and interest for mental health solutions.

Firstly, by pushing a demand increase. From March 2020, there has been a considerable rise in the prevalence of anxiety and depression — with cases doubling in some countries.³ The increase coincides with an interest for digital solutions — for example, the world’s top ten English-language mental wellness apps generated two million more downloads in April compared to January.

And secondly, by leading investor interest on the matter. According to CB Insights, VC funding amounts in mental health increased by +72.6% in Q1 2021 compared to 2020.

However, mental health tech solutions have yet to emerge. It seems we are still going through a first wave of innovation: horizontal solutions — namely well-being apps and full stack telemedicine solutions. A recent boom in valuations for late-stage mental health companies, like Lyra Health ($2.3b), and the Headspace and Ginger merger ($3b), are part of this trend.

This first group of companies, like BetterHelp or Calm, provide an extension of the therapy support for the end-user, either via on-demand care or self-help tools. By targeting the supply shortage of experts, these startups are solving a big pain point in accessing mental health treatment: availability and space/time limitations. But, there is definitely room to completely disrupt the current care pathway. For example, these models are struggling to address:

  • More acute pathologies. Moving access to care online or “DIY” (do it yourself) works best for less severe conditions, targeting more mental well-being rather than mental illness.
  • Cost. In telemedicine cost remains a barrier, a therapy session can range between $60-$250, which out of pocket is inaccessible for a lot of people⁴.
  • Stigma. Generally, these horizontal solutions have not captured the user segment that has a lack of knowledge around mental health. The average gap between first symptoms and intervention is around 11 years, attributable mainly to low awareness and motivation.
  • Audience specificity. These models have started by targeting a wider market in an attempt to lower the barrier to access support. And by doing so, they are funneling users in similar care journeys and treatment pathways.

These mega-rounds of Series C+ companies and IPOs are opening the market for more mental health solutions — in fact, a number of early stage startups are popping up. And we at C/S believe this will lead the way to a next wave in mental health tech. Generalist companies are meeting the needs of the broader population — and consequently fighting for a large TAM. However, there is an opportunity in moving vertically in the industry by tackling issues of certain demographics or care routes. For one, overlooked and niche markets in mental health have unaddressed needs and less competition.

In a second post I’ll go over some ideas of highly specialized mental health solutions that we’re excited about.

At Calm/Storm we believe in supporting founders that want to break down the walls surrounding taboo topics. Stigmas attached to certain health conditions lead to people suffering in silence, creating a large and underserved population. Digital products may become the much needed solution.

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Michela Grimaldi

Michela Grimaldi

Early-stage Investor at Calm/Storm, previously worked in 3 startups. In love with digital health, especially women’s health and mental health.

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