Part 4: The Antidote

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Venture to Say

11 min readNov 11, 2020

If mental health is the secret pandemic, we need a vaccine. The last piece of this series will talk about the founders we’ve seen building inspiring companies designed to help resolve the mental health pandemic. Part 1 highlighted the problem, Part 2 discussed the drivers and affected groups, and Part 3 addressed about how we feel attitudes need to shift in order to most effectively address the problem. Part 4 will explore the companies trying to make a difference and the relative attractiveness of the market for venture capital.

First, how big is this market really? Off the cuff, the obvious answer is: pretty big and growing daily. But let’s quantify it a bit to understand how many “winners” this segment will be able to support once it matures. As a gut check, we know that 1 in 5 Americans struggles in some form or fashion with mental health. 20% of the nation — looks sizable so far. How many of these individuals actually get treatment? Around 40%, with 25% of severe cases reporting an unment need. Among younger patients, the gap is even worse, with 60% of youth not receiving necessary mental wellness care. Key hurdles are largely due to cost, insurance coverage, stigma or lack of information on where to get the right type of care (sounds like an opportunity here).

One encouraging development that attacks both cost and stigma (which we will discuss in greater detail below) is the uptick in telehealth for mental wellness. Because these solutions are digitally-native, they inherently feel more anonymous and can often be priced more attractively than offline. To corroborate this, Danny Freed, CEO of Blueprint Health, stated

“The availability of telehealth is making it less frightening to reach out and get care. That means there’s more demand for mental healthcare, but the important part is that people seeking care via traditional channels are also receiving efficient, effective, data-driven care.”

Now how much does the average American spend per year on mental health services?

We know that finding effective solutions for the mental health pandemic is going to be immensely impactful at a human level in the lives of the individuals needing treatment. That said: how big would the impact of an effective solution be for the broader market in dollar terms (i.e. can this be a double-bottom-line investment, or is it impact-only)? How much value can be derived from a solution? How much value can the public markets assign to something like this, or how big of an acquisition could this turn into? For starters, the American Journal of Psychology estimates that “the total economic burden of serious mental illness to be $317 billion despite limitations that excluded indirect costs associated with comorbid conditions, incarceration, homelessness, and early mortality from the calculation.” Furthermore, the WHO found that “every $1 invested in expanded treatment for depression and anxiety leads to a return of $4 in better health and enhanced labor participation and productivity.” It seems like a no-brainer: a double-bottom-line opportunity.

Next, let’s talk about how we would think about breaking down this segment based on interesting opportunities and startups we’ve seen in the space, with a specific focus on startups that are addressing the key issues and drivers we brought up in our early installments. Before jumping in, it would be helpful to introduce a framework that has helped us tie together the issues and drivers we mentioned and analyze how well-equipped different startups are to address those issues.

Basically, the core competing interests keeping people from regularly seeking mental health the way we described in Part 3 are: stigma, cost and access. It’s a tough dynamic: if stigma decreases, that unlocks demand for resources; but supply remains the same, so price increases, reinforcing another big barrier to entry. The cost barrier goes up as the stigma barrier goes down, so we have to build more solutions, and we have to give more access, in order to solve both stigma and cost at the same time. That’s the macro trend. So, anything we can invest in that facilitates the way those factors interact, that’s where we want to be: fighting stigma, providing more access, reducing cost, improving treatment efficiency through results-based care.

Those are the macro trends that drive the entire space. Now let’s get into the specific segments we admire and interesting startups building compelling solutions:

Affordable, direct-to-consumer care:

As we’ve discussed, one of the biggest obstacles to seeking care is the prohibitive cost of obtaining adequate care. This implies that lower-income individuals will be disproportionately affected by the mental health pandemic long-term. Companies that are democratizing and destigmatizing mental healthcare by selling to employers as a means to reach a broader base of users include Boon Health, Skylyte, and Coa. Coa in particular is interesting because of their thesis that mental fitness should be treated similarly to physical fitness, a similar sentiment to our view that mental health should be treated like dental health. As a reminder, mental health has serious economic implications and each dollar invested in treatment yields a 4x return in productivity and improved health.

By pushing to have employers recognize wellness as care that goes beyond employees’ well-being, these companies are expanding the number of individuals that now have access to affordable care. Now, for those that can’t count on employment from the kind of company that would prioritize holistic wellness, telehealth has emerged as a great model to connect patients with caregivers instantly, and companies have popped up to help match individuals with caregivers that fit their insurance plan or budget. Interesting solutions here include Headway and Ginger.

Verticalization of Care

We speculate that another emerging trend in the market that will continue to grow is vertical and condition-focused platforms. To draw parallel, VCs tend to use a vertical solution (e.g. Affinity) instead of a horizontal platform (e.g. Salesforce) to track deals, as vertical solutions provide tailored features. Similarly, we believe individuals will increasingly prioritize specific mental health care over more generalized care in order to maximize effectiveness. A narrow market focus is favorable to a broad market focus in this context for the patient. On the economic side it can create a more defensible business compared to a commoditized general care model where increased marketing spend creates an inevitable race to the bottom dynamic.

In order to ensure consistency, patients need to feel the care is right for them. Generational variation can drive differences in the type of care a patient needs. Similarly, couples have different needs than individuals. Daybreak Health and Brightline have tools that target kids and teens; Betterhelp and Actually have services that target couples; Mantra focuses specifically on student mental health; NoCD is another interesting company focused specifically on Obsessive Compulsive Disorder. Think of all of the other conditions that could benefit from platforms with a pinpointed solution focused on them. This trend can further be extended to offerings that address things like medication needs and hit on specific pain points within the treatment cycle.

Specific needs require specific care, and users will increasingly put a premium on that specialization. We believe this is a growing trend to keep an eye on, with the sector showing early indications that our speculation is already proving accurate.

Below is a segmentation of various models being applied that we think can be built to work toward a better state of mental health in our country and beyond:

Monitoring and data tracking solutions:

Blueprint Health, Valant, Osmind. One big issue around mental health progress and improvement is the lack of measurable data. We believe anything that can be tracked can be improved, and these companies are testing that hypothesis, with excellent early success.

One that we’re particularly excited to be involved with is Blueprint (a Lightbank portfolio company). They’re ensuring that people who do get to the point of seeking care, get the best care possible and optimize the experience for clinicians of varying types to be able to measure their patient’s experience and tailor treatment for them accordingly. This is game-changing as up until today, the only insights a clinician has had into their patient progression has been the few times a month they see them.

The key here is that the future of mental wellness will be data-driven. Progress in terms of mental wellness has always been something we’ve assumed cannot be measured, only felt, but this leaves a lot to be desired by the patients in terms of understanding the degree of improvement over time and by the practitioners in terms of measuring the efficacy of any specific treatment. Danny Freed, the founder and CEO of Blueprint, wants to resolve this by “unlocking measurement-driven care that will be the backbone for all other issues in the wellness space. Improved access to care is meaningless if you’re getting treatment as usual.”

Community support to address loneliness and stigma:

COVID has had such a significant negative impact on mental health in large part due to the loneliness and isolation inherent in quarantine. At the same time, one of the big reasons stigma is such a deterrent to patients seeking care is because individuals feel alone in their mental health struggle; they look around and don’t see anyone else struggling (especially on social media) and assume what’s going on is not normal and are shameful of addressing it. Companies working toward solving the loneliness and isolation issue in the space include Inquisithealth, WiderCircle, The Mighty and Wisdo. Growth in companies such as Discord, despite not being focused on mental wellness, demonstrate the latent demand for online interaction and companies focused on community-building.

GenZ emotional social Learning:

Emotional social learning is still a relatively nascent space, at only $1Bn in terms of total addressable market. However, educators and parents alike are realizing the importance of addressing issues early-on to preempt potential issues and help children grow into emotionally healthy adults. The result is a space that is more than doubling in size every year and is seeing a flood of exciting new entrants. We see a couple of distinct subsegments in this space:

School and education-focused platforms that are designed to help educators engage and understand their students’ emotional needs: Rhithm, Kickboard, 7 Mindsets, Character Strong.
Entertainment-based learning for children provide ESL games that are designed to provide productive entertainment that helps young children develop emotional intelligence via engaging entertainment media: GoNoodle, Mightier.

Self care and empowerment:

Care comes in many forms, not just the stereotypical version we all probably think of which includes sitting down with a therapist and unpacking childhood memories. Ed Wilson at Impulsum Venture Colab put it very well when he told us:

“I’ve always thought someone should create an app that approaches mental health in a more empowering manner. It seems like most of the apps focus on “are you depressed or anxious” vs “be your best self”. Most physical workout apps have a positive approach to working out and I think there should be a mental app that does the same thing. People don’t think twice about getting a trainer or downloading a workout app. [Approaching mental health the same way] might help some people who still feel there is a stigma around asking for help.”

In this vein, Meditation (e.g. Headspace), community connectedness (e.g. SoberGrid), yoga (e.g. Downdog), community gatherings, and others are all important forms of personal care that can be done preventatively, and that technology and innovation can enhance. Silk and Sonder provide “wellness planners” targeted at helping women practice self-care, positive psychology, and journaling. Coa, which we mentioned above, specifically discusses mental fitness as a parallel to physical fitness. Sanvello provides a clinically-supported self-care plan that is compatible with users’ existing health plans. Finally, digging in a bit further on what Ed mentioned, wellness doesn’t have to mean treatment, it can also mean empowerment and coaching: Human and Bunch.ai have interesting solutions for on-demand, tailored coaching. Seeking mental wellness does not imply we are broken, it implies we are getting stronger and seeking to improve.

Subscription-based digital therapeutics:

Digital therapeutics are a new class of healthcare products that use digital technology to treat medical conditions. The space can be divided into three distinct sub-categories, including:

Digital Services, which typically aim to modify patient behavior through digital programs such as Omada’s online weight loss programs;
Adjunctive digital therapeutics, which are used to supplement or support the use of traditional therapeutics in order to improve clinical outcomes, such as Proteus; and
Digital Drug Replacements, which seek to provide a clinical benefit only through the digital technology itself, such as Pear Therapeutics’ approach to solving substance abuse.

Therapist training and development:

We see an exciting opportunity here. As we mentioned previously, demand for mental health treatment is outstripping supply of care professionals, and this will only continue. We’d love to see someone build a Lambda school-like platform for therapists. COVID has forced people to rethink higher education and to what degree a liberal arts education makes sense for everyone. If you know your calling is supporting mental health as a therapist/psychologist/care professional, why do you need to spend 4 years completing a liberal arts curriculum instead of going right to the heart of the matter, studying what you love, and begin making an impact earlier? We would love to see someone hack the supply-side in this way (though we’re sure there will be other approaches that can also get us to the same end goal).

Speed-dating therapy matching platforms:

Online telehealth platforms such as those mentioned in our “tailored, affordable, online care” segment described above do a fantastic job of improving access to care that meet specific needs of different segments in the market. However, these platforms don’t answer the question: how do I know this therapist is truly the best match for me? This opens an opportunity for a speed-dating a therapy marketplace (think Hinge + Chatroulette without some of the…objectionable aspects of latter of course) wherein patients can quickly meet and assess multiple therapists in order to optimize personal connection in this highly vulnerable and personal relationship.

One last point before we end this series: this space has been attractive in terms of potential impact for a while, but except for a few outliers has received relatively little attention. We expect that to change. If we look at total venture investment in this space, it appears our expectations are headed toward be met: According to Pitchbook data (graph below), investments in the space have increased 5x in terms of volume since 2012, and capital raised jumped from $11Bn in 2019 to $16Bn in 2020 with ~1 month remaining in the year.