VC/Impact Investment outlook, and approach to mental health, wellness, and mindfulness

Why should I bother to write about this? 

Today, 1 in 5 people have a diagnosable mental illness, and 1 in 20 people have difficulty leading their everyday life due to mental illness.

What are the themes emerging in this space? 

  • Computerized Cognitive Behavioral Therapy (CCBT)
    Leveraging mobile interfaces to create self-care behavioral change programmes instead of pills to cure mental illnesses. While most of these startups go directly to consumers, some use enterprises as a channel for employees or focus on empowering therapists with better treatment.
    E.g. of companies: Headspace, Calm, Akili, Cureapp, Happify
    Percentage of companies: 33%
    Average funding amount/startup: $5.8m
    Key business models: Freemium or SaaS

  • Telepsychiatry:
    Startups providing therapists with a communication interface to connect with patients digitally, or creating an independent digital practice from scratch.
    E.g. of companies: Lyra, Ableto, Talkspace, Ginger, IESO
    Percentage of companies: 16%
    Average funding amount/startup: $6.7m
    Key business models: SaaS

  • Provider Tools:
    Building a new generation of software to help in the operational efficiency of therapists, or empowering interoperability between practitioners and other key stakeholders of the medical ecosystem.
    E.g. Quartet Health, Valant, Mindstrong, CMHC Systems, Inflexxion
    Percentage of companies: 15%
    Average funding amount/startup: $5.7m
    Key business models: Enterprise sales

  • Consumer Tools:
    Building non-therapeutic mobile products to either enable patients to set daily personal goals, facilitate communication between patients and other peers through vertical networks, or create educational content on the space.
    E.g. Thrive Global, Huddle, WeConnect, Webpsychology, Circles
    Percentage of companies: 13%
    Average funding amount/startup: $1.8m
    Key business models: Freemium

  • Hardware:
    Using connected hardware — whether it is a VR headset, an intelligent wristband, or any kind sensor-enabled device — to capture biometric data and help patients or therapists with monitoring, or build more immersive therapeutic content. E.g. YBrain, Pivot, Rendever, Find Me, Neuroflow
    Percentage of companies: 12%
    Average funding amount/startup: $1.1m
    Key business models: SaaS

  • Applied AI:
    Using techniques such as conversational intelligence, predictive analytics, or machine learning at the core of the product to provide a more personalized and efficient approach to prevention, treatment or diagnosis.
    Neurotrack, Mequilibrium, Cognoa, Woebot, Shine
    Percentage of companies: 11%
    Average funding amount/startup: $3.8m
    Key business models: SaaS

Where is the money is going in mental health, wellness, and mindfulness? 

Over $918.9 million was invested in 84 Cognitive Learning companies in 2017. Over half (50) of the companies were consumer companies, yet 29 corporate facing Cognitive Learning suppliers garnered investments. Five PreK-12 Cognitive Learning companies were also funded. E.g.

  • Happify (raised 9 million USD in 2017), Thrive global (raised 30 million USD, their mission is to end the stress and burnout epidemic by offering companies sustainable, science-based solutions to enhance well-being, performance, and purpose),
  • Catalia Health (raised 6.6 million USD, they sell a small conversation robot called Mabu designed to provide decision support and emotional support to the elderly,
  • MyBrainsolutions (raised 20 million USD), has four brain health products to corporations: Mindfulness Meditation, Happy Seeker, Thought Tamer (Cognitive Behavior Therapy), and Memory Maze (working memory). They license brain health products to clinics for ADHD, addiction, and depression.
  • Kinedu in Mexico raised $1.1 million, sell a product that delivers early childhood learning content based on the cognitive abilities of the child. Parents enter information in the app about the child’s development stage and the app adapts to the individual child.
  • Gong.io raised $20 million, a hybrid AI-based and Cognitive Learning product, sells an AI platform that trolls through massive amounts of audio content in customer relationship management systems in real time and has the ability to identify emotional states.
  • Calm (has raised 27 million USD)
  • Shine (has raised 5 million USD)
  • Headspace (has raised 75 million USD to date and has 18 million downloads)

Screen Shot 2019-03-29 at 7.07.28 PM.png

  • 70% of equity deals with mental health & wellness startups have gone to companies in the United States. The UK comes in 2nd with 6%, followed by India at 5% of all deals.
  • Seed/Series A rounds represent the large majority of global dealflow, taking 65% in 2016 and 73% in 2017
  • Sparse Exits: Exits in the mental health & wellness technology space have been limited. 2015 saw a high of 7 M&A deals while 2017 has seen 1. 

Social Impact and Return Expectation

  • Impact – 4 out of 5  in terms of reaching out to the mass market (middle and low-middle income)
  • Returns – 3 out of 5 in terms of 25%+ IRR

References

  1. https://medium.com/venture-beyond/mapping-out-the-mental-health-startup-ecosystem-5cb4db031b54
  2. https://pitchbook.com/news/articles/a-look-at-the-boom-in-vc-funding-for-mental-health-startups
  3. https://medium.com/@ElenaMustatea/what-ive-learned-about-mental-and-emotional-wellbeing-in-3-months-at-zinc-30377787f4b5
  4. http://users.neo.registeredsite.com/9/8/1/17460189/assets/Metaari_s-Analysis-of-the-2017-Global-Learning-Technology-Investment-Pat27238.pdf
  5. https://www.linkedin.com/pulse/conscious-accelerator-bo-shao/
  6. https://www.dw.com/en/new-trend-mental-and-social-health-startups/a-42803908
  7. http://vator.tv/news/2018-06-26-why-healthtech-vcs-are-investing-in-mental-and-behavioral-health
  8. http://static.politico.com/3e/68/b29a1ff04e7d8bc7c8231352ffc5/ibis-study-on-corporate-wellness-programs.pdf
  9. https://www.fastcompany.com/40418593/this-is-the-future-of-corporate-wellness-programs
  10. https://www.franchiseindia.com/wellness/emerging-trends-in-corporate-wellness-sector.11230
  11. https://www.cbinsights.com/research/report/wellness-trends-2019/ 

 

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