Intrepid investors started dabbling in mental healthcare over the past few years as part of a broader digital health funding boom, but many remained w

Venture Funding For Mental Health Startups Hits Record High As Anxiety, Depression Skyrocket

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2021-06-13 13:30:04

Intrepid investors started dabbling in mental healthcare over the past few years as part of a broader digital health funding boom, but many remained wary. Celebrity endorsements, like Olympic swimmer Michael Phelps’ campaign with virtual therapy startup Talkspace, started to chip away at the long standing stigma, while mindfulness apps like Calm offered meditation sessions at the click of a button. But it was the Covid-19 pandemic and collective psychological fallout that finally mainstreamed mental health.

In 2019, around 11% of U.S. adults reported experiencing symptoms of anxiety or depression, which skyrocketed to 42% by December 2020. By year-end, venture investors poured a record-setting $1.5 billion into mental health-related startups. “When the pandemic hit, there was a two-week pause,” says Lisa Suennen, a longtime healthcare investor who leads the venture fund at the law firm and consultancy Manatt, Phelps & Phillips. “And then everything went crazy.”

Crazy indeed. There are now seven mental health unicorns in the U.S., up from two a year ago, buoyed by the flurry of digital health IPOs, SPAC deals and M&A activity. In 2020, mental health startup funding was 5.5 times the $275 million investors ponied up four years earlier, according to data from CB Insights. There were 124 deals last year, compared to 69 deals in 2016.