Photo by Jeremy Perkins on Unsplash

Our generation’s largest health issue

Mental health issues are becoming increasingly prevalent. At Northzone, we firmly believe tech will be transformational to how preventative advice and treatment plans are accessed, ultimately improving outcomes.

I think I fit the mould for an insecure overachiever pretty well. My youth was spent travelling between sailing competitions, and since then, I’ve had a mental “coach” in my head, regularly telling me: “Winning is everything, and as everyone else is clearly much smarter than I am, I’ll have to work harder”. This got further pronounced when starting my career at McKinsey — being a 20-something-year-old recent graduate, “advising” the most experienced top-management clients across industries on their most important questions was empowering, but also came with a boatload of impostor syndrome. Thus, work harder.

I’ve since realised the impact actively investing into your mental health can have on your wellbeing as well as your performance. For me, it started with guided meditation through Headspace, which after daily use for about a week started to show real results in terms of a more clear, more focused and less stressed mind. Since then, I’ve got more and more excited about the potential to address mental health issues using digital tools. The more I started digging into the topic, I realised the opportunity to have significant impact is huge. 300 million people suffer from depression in the world, and 1 out of 5 in the US have a mental health disorder. New York Times recently reported on 70% of teenagers in the US seeing depression and anxiety as major problems among their peers. Economically, the societal costs for mental health problems are vast: it’s costing the UK more than £94bn every year, counting treatment, social support costs and the losses to the economy from people who cannot work (Source). In the US, serious mental illness costs $193.2 billion in lost earnings per year (Source).

Now is the time to go after mental health prevention, diagnosis and treatment using tech

I believe we’re in the crucible of five key developments that are rapidly increasing the relevance and opportunity for entrepreneurs to address the challenges associated with mental health issues.

1. Consumer awareness and interest in mental health is increasing exponentially…

There is increasing awareness and interest in mental health in general, largely driven by a de-stigmatisation of the mental health topic. This is to a great extent fuelled by millennials and Gen X-Z, who are typically more informed than earlier generations through vast information spreading through social networks. This higher level of awareness is breaking down the stigma around mental health issues & treatments brick-by-brick.

Awareness of mental health is increasing exponentially. Source: Rock Health, 2018 Link

2. …but the current treatment structures and methods are simply not fit to serve

With growing awareness comes increasing patient volumes, and on top of it are increasing expectations on great patient experiences. Current treatment structures struggle with three key things:

• Access — In the UK, the estimate is that 75% of people who need some type of treatment actually don’t get it due to poor access
• Complex patient journeys — knowing where to go and what to do is often quoted as biggest challenge for people seeking some sort of mental health intervention
• Poor or poorly tracked outcomes — Due to the access problem, most psychopharmacology treatments (e.g. antidepressants) are prescribed by GPs (even 80% of the cases in the US). However, for clinical depression, only 30% get better from antidepressant medication, while 65% get side effects.

3. Increasing user adoption of digital services in general & remote care in particular

With the proliferation of personalised, digital products and services across industries, people expect the same level of quality across all their touch points in life. Mental health diagnosis and treatment — reactive or proactive — is not and will not be different. Remote care solutions like telemedicine in general healthcare are educating the masses that help in health-related topics should be at your fingertips.

4. Regulators (in particular in the EU) have realised need for change and are taking action

The EU is driving several initiatives to increase awareness, improve legislation and increase budget allocation to mental health treatment on national levels, resulting in actions across member states. In the UK, the NHS pledges substantial investment into mental health services, raising spending by at least £2.3 billion per year on mental health care.

5. Funding is increasing, and entrepreneur role models are showing the potential to build big businesses

Funding going into mental health tech has grown steadily since 2014, with a large growth bump in 2018, reaching $800m+. Potentially more important, entrepreneur role models are showcasing the ability to impact people’s mental health while building big businesses (ref e.g. Calm’s $1bn+ valuation since February, link). I believe this will further strengthen and fuel an already thriving tech ecosystem.

VC funding data from Edouard Gaussen, previously White Star Capital now entrepreneur. (Thx, Ed!)

Defining the mental health space

I’ve made an attempt to broadly summarise our view of the mental health market, dividing it into three levels of severity of illness. Below is a quick overview of how we think about some of the key characteristics across each segment, and examples of digital tools and tech companies addressing relevant challenges in each one, respectively.

Overview of the mental health market — by Northzone.

Investing into mental health care — bridging into three key investment theses

We believe technology can fundamentally impact mental health care for the better, and with that unlock huge value across the spectrum, from those who want to explore tools to improve mental wellness, to those who need effective treatment plans for diagnosed conditions. Moreover, healthcare providers, employers and society in general can benefit hugely from the promise of technology.

At Northzone, we look for investment opportunities which show fundamental and significant impact on the user/patient experience and journey. We see that opportunities are present across the mental health spectrum. However, we focus our work around three key investment theses, which are being constantly refined. The following posts in this series will dig deeper into those theses, but on a high level, they circulate around the following themes:

1. Consumer-facing care providers/marketplaces improving access & quality in medium-severity care
2. Employee mental wellness platforms w/ engaging and impactful prevention & care
3. Consumer-facing wellness apps w/ low barriers to access and significant gratification for the user

In the meantime, if we’ve missed something, if you have additional thoughts, or if you’re an entrepreneur who simply want to add your startup to the mapping above, don’t hesitate to reach out. I’m at henrik@northzone.com.

Thanks to Marta Sjögren and Michiel Kotting for their continuous feedback and discussion regarding this topic.