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Masawa Market Watch: Venture Investments in mental wellness surge in the COVID-19 era

Investor focus on impact remains key

Investments in mental health and wellness tech have increased more than tenfold since 2015

Note: These data solely encompasses startups whose primary focus is mental health.Source: CB Insights, Q3 2021

Rising awareness

Mental wellness as an investment theme has been relatively dormant and nascent in the last decade. Even as the levels of anxiety and depression were on the rise globally, the social stigma and taboo around this topic prevented it from ever entering mainstream conversations.

However, the Covid-19 pandemic has triggered a serious public conversation around mental wellness. The constant isolation, lack of social activities, and restrictions on travel have taken a toll on people’s wellbeing, which is reflected in recent data. As of December 2021, over 30% of Americans showed signs of depression and/or anxiety, which was only about 11% in 2019. According to CB Insights, state of healthcare report Q2’21, the mention of mental wellness in news articles increased 4x since 2019.

Investors Taking Note

The increased awareness of mental health is also reflected in the investment trends in this space. Until Q3 2021, $3.3B of VC funds went into mental wellness, compared to $1.2B in 2019. The number of deals also increased from 198 in 2019 to 211. While most of these deals were in the early-stage startups, it wasn’t the only area that saw growth. Covid-19 has catapulted 8 startups into the unicorn status, up from 2 in 2019. As American startups started maturing, there were several mega funding rounds such as Lyra Health ($387M), Talkspace ($300M), and several others.

While most of the big success stories and investments in this space are American, the EU is also slowly gaining pace. According to a study by Newfund, European investments in mental wellness tech increased from $135M in 2019 to $524M in Q3 2021 alone. European companies are taking big steps in developing the technology and the know-how to address different attributes of mental health. One area that stands out and shows a lot of promise is biopharmaceuticals. Compass Pathways, a UK-based company, is conducting breakthrough research in developing psilocybin therapies for treatment-resistant depression. Compass went public in Sep 2020 and hit a $1B market cap soon after. Similarly, Germany’s ATA Life Sciences is investing in the development of psychedelic and non-psychedelic compounds for mental health treatment. ATAI went public in June 2021 and currently has a market cap of ~$1B.

Noticeable increase in liquidity events

In addition to surging investment, the American market has started seeing exits, IPOs, PE-activity, and other liquidity events as companies begin to make huge returns for their investors. Blackstone Growth invested $100M in Ginger, an on-demand mental health company. Ginger later went on to merge with Headspace, a meditation app, to create one of the largest platforms to provide virtual support for improved mental wellness, ranging from meditation, behavioral health, therapy, and psychiatry. The valuation of the combined entity Headspace Health was upwards of $3B at the time of the deal.

There were also several large IPOs in the mental wellness space as well. Talkspace — a mobile therapy company that went public at a valuation of $1.4B through a SPAC deal, and the aforementioned ATAI Life Sciences and Compass Pathways, going public with valuations in the range of $1B.

A systematic and sustainable approach towards impact investments in mental health

With the increased attention on mental wellness, this sector is set to grow fast in the coming years, especially in Europe. Following the success of mental health startups in the US, the EU is set to follow suit, and the signs are already there. There is a clear vacuum of solutions right now that has been exposed by Covid-19, and there is plenty of innovation happening to fill it.

Surging investment in mental health startups alone isn’t enough. Much like the rest of the healthcare sector, it is important that the innovations in this space are as effective as they are commercial. Most mental health consumer technologies on the market today are not supported by scientific evidence. The investment considerations for companies in the mental health sector should not be limited to financial returns, and they need to be held accountable for the actual improvements in the psychological wellbeing of their target customers. This needs a systematic evolution in the outlook of investors putting in their capital in this sector, focusing on the impact their investments can generate.

It is indeed paramount to build investment theses around a mix of financial returns and positive, tangible, and ideally quantifiable impact. It is only through such an investment approach that we can realize the true potential of solutions and innovations in this space and affect a positive move towards creating a mentally healthy society.

Dhruv Khandelwal

Dhruv is a budding financial analyst with a keen interest in mental wellness. Having graduated with a Master in Finance from ESSEC Business School, he is on a journey to explore impact investing. He is a keen gamer, an avid reader and a big time foodie



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We are the mental wellness impact fund. We invest in companies innovating mental wellness and help them succeed through impact & organizational health support.