Imagine being a therapist working at one of the prominent mental health startups getting ready for your first consultation with a new patient. you might be excited, curious about the situation, and perhaps even a little nervous.
Imagine what it would be like if you turn on Zoom and it’s Batman sitting there complaining about his mental health because he’s out saving the city at night…
Besides that it might sound more like Deadpool than Batman, the real surprise is how hard it would be for him to get a seat there in the first place — he might not even be able to see a professional.
As I was researching for this article I was shocked to discover the ridiculously long wait times in the US market even for patients that have chosen to overcome the stigma of seeing a mental health professional.
I’m sure many of us imagined that the stigma was holding back growth among mental health startups and while that is probably also true, it turns out that demand is higher than ever and that supply in fact can’t keep up. What is going on? Is this the century where we all realize the importance of mindset and finally fix the world?
Let’s dig in by first looking at examples of interesting-but-not-that-often-mentioned mental health startups followed by looking at the challenges in the mental health space along with a comparison with more traditional venture-backed healthcare tech startups.
4 mental health startups that don’t get enough attention
First I wanted to highlight some interesting startups and what they do.
The first one is Meru Health, founded by a Finnish team to fight depression and anxiety via remote and digital services like coaches and therapy after one of the co-founder’s brother allegedly committed suicide
The team works with healthcare payers like Cigna to provide the services to employers and estimate that the cost savings is about $6,000 per enrolled participant in saved healthcare costs and reduced productivity.
Another is Instahelp founded by Mercedes principal Toto Wolff after many years of success in the racing series Formula 1 world championship. He realized that there’s still a stigma around using mental health coaches even though most successful athletes used them on a weekly or daily basis and they are a proven benefit in sports and work.
At the moment they only cater to customers in the UK, France, Germany, and Austria and offer digital therapy with qualified experts.
Cerebral recently landed a cool $300 million Series C lead by SoftBank to continue their work delivering therapy, counseling, and medication delivery. They’ve only existed for a couple of years by now and their growth has been fueled by the pandemic.
To my surprise, I found that one of the key challenges they have been helping patients with is getting access to quality care as reports show that there is significantly more demand than supply.
Meditopia is a different take on mental health with a focus on a meditation app that is more in the self-help space than working with an experienced professional. It landed a $15 million Series A round to compete with Calm and Headspace in non-English speaking markets where it has become the most downloaded app in the category with 14 million users.
The challenges bringing mental health startups to the world
Nico Rosberg and Toto Wolff shared their experience with mental health coaching as top of the food chain in their respective work publicly.
The same does Noah Kagan and other well-known business names. It’s a well-known idea in the business world. Some even point out that while friends are great their purpose isn’t to listen to our BS and complaints — that’s what a professional is there for.
With many successful people spending their energy highlighting the benefits of productive mental health and showing great examples of its benefits, how is it still a stigma? And how do we break free of it for everyone’s benefit?
The internet has helped experts share how mental health and mindset have been their secret to success while securing them a potentially more lucrative second career. That fuels the skepticism around the benefits and to some extend works against the same people’s attempt to share the benefits as they come across the popular argument that they are just trying to get (more) rich.
Ironically, if there were no benefits for them at all there would also be no point in putting so much energy and resources into building something that can help others and the rest of us wouldn’t have that benefit.
It feels absurd for those of us who have experienced the benefits but many of us are looking for any excuse to bail and keep the status quo the same.
Another major challenge that I found bringing mental health to market is that many of us don’t know what the benefits truly are, and so the price feels steep as it’s hard to buy into someone we don’t truly understand and feel the benefit from yet — even if we will in the future.
The interesting argument is that we tend to think that “sick” people go to a professional but if most of us have had experiences that ought to lead us to a professional, then most of us would be “sick” meaning that it would be “normal” since we’re the majority.
I’d argue that in general, the biggest problem the mental health startups have is not being able to clearly explain the benefits for potential patients. The stigma might have come from movies where the word “patient” in relation to the mind and head leads us to think of loonies in a mental institution like something out of Arkham Asylum.
As someone who’s been looking into mental health startups like BetterHelp’s out of interest in what it could help my career with, it’s surprisingly hard to understand what I’m swinging about $320 over for every month — it’s not a small sum.
From a business perspective, the natural response is to segment down and start with smaller groups of people that are well-aware of the necessity, like athletes, and then scale to adjacent customer segments over time.
It can work well until we reach the chasm and have to move into the mass market since one of the keys to unlocking success in the self-help industry is targeting based on psychographics like willingness to work on uncomfortable experiences to achieve something important in life in the long-term.
At some point, we reach the large mass of people that like the status quo more than change and that’s what makes things interesting for mental health startups. The industry is made up in part of self-help customers and other segments around clinical prescriptions, or alternative methods.
How do mental health startups compare to traditional healthcare startups?
There are a couple of different ways to compare mental health startups and more “traditional” healthcare tech startups. I put that in quotes because the industry is still so new and modern that I’d argue it isn’t traditional yet but instead, I refer to medical examinations and consultations on the physical body.
One way to compare is by the type of patient and the use-case or reason they need the care. Another is the way they think about buying it such as seeing going to an exam when our arm is broken as a necessity compared to a luxury for mind therapy.
Yet another is the buying behavior with retention and buying frequency. The challenge clinics often have with traditional care is that the frequency of visits (and thus re-purchase of the services) is fairly unpredictable and follows a cyclical pattern that can somewhat be predicted but not entirely. That means it’s necessary to reach a certain minimum baseline of productivity in order for the business to make sense. Kinda like economics at scale.
One example is that there need to be enough physicians available that a patient can either see one quickly after something happens or that they have enough available slots that they can fit one that works for them if it isn’t urgent (e.g. to fit their work schedule).
In comparison, I’d expect it to be easier to sell a subscription to a therapist that we pay for and take advantage of every week, month in and month out since when we pay for it for a while, we often stick with it even if we use the service (like gym memberships). But it might be harder to convince us to try it in the first place.
As if that wasn’t enough, there are also third-party insurance companies that can play a part and at least indirectly, help boost confidence and awareness in the clinics we use for both traditional healthcare and mental healthcare startups.
If we look at the care margins, I could see them go either way. The cost of professionals could be less for mental health services but it might be more challenging to charge a higher price (especially with a remote-digital offer) since the benefits are less obvious than with a traditional physician we use when our bones are broken.
Perhaps physicians prescribing a mental professional will be key to creating a synergy but it’s far out – it appears like we don’t have many traditional studies proving the value of mental health compared to traditional physical health.
Has the mental health space been accelerated by the pandemic?
Probably. Both from the perspective that it has made more people realize that they felt crazy staying at home for so long but also the acceleration of digital and remote solutions like telemedicine. I’d expect it to be a benefit we’ll see more in the future.
Where does AI fit into mental health?
Plenty of startups sell AI as a benefit in their mental health service offering and in this space, I believe it’s a downside.
Mental health is already stigmatized and if people are hesitant to talk with a professional, why would they embrace a robot?
AI is often an internal business benefit to save cost or reach scale. For example, in healthcare, we might use AI to give basic suggestions on what a patient’s x-ray shows to physicians before the physician looks into it and gives the final diagnosis – not as the only thing to judge the symptom.
Takeaways
- There are some exciting new mental health startups out there that are not getting the visibility they deserve
- Some of the biggest challenges is the stigma around mental health and for potential customers to truly understand what the benefits are if they’ve never tried it before as it can feel like a big investment every month if we don’t understand what we get for it.
- Many startups choose to use famous and well-respected people as Chief Impact Officers to promote the idea of mental health
- Compared to traditional healthcare, mental health has the benefit of a clear recurring revenue stream but may lack the obvious benefit whereas traditional healthcare is an obvious necessity but demand and timing can be unpredictable