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last April, Alex and me reported CB Insights data showing venture investment in mental health startups dropped sharply in the first quarter of 2022 compared to the previous quarter. But in the past few weeks, I’ve heard of several deals backed by companies in the healthtech subsector. I was curious: what areas of mental health are venture capital firms still willing to invest in? We are going to explore. — Ana
Humor changes
The more the pandemic seemed to abate, the less willing venture capital investors were to commit to companies and sectors that had initially benefited from strong tailwinds as most of the world began to stay home. in public markets, pandemic trade is overwith old loved ones like Platoon and Zoom experiencing whiplash. Similarly, we saw a net decline in private investment in telehealth and mental health startups.
Market corrections after a period of hype are part of the investment game. But it would be hard to argue that mental health needs have decreased. According to the World Health Organization, incidents of anxiety and depression increased 25% in the first year of COVID-19. Just because we are now putting the worst of the pandemic behind us doesn’t mean everyone is suddenly feeling better, which is why some recent funding rounds in the mental health space caught my attention.
Of course, some deals related to mental health are anecdotal. And since we are mainly talking about early-stage deals, this does not mean that the decline in investment has been reversed. Overall, we will only have more clarity once the second quarter figures are available. But what’s interesting is that these startups hint at some novel approaches to mental health that venture capitalists are still willing to invest in. Or, dare I say, show us where his mind is.
Is it no longer neglected?
Venture capitalists may not have any headspace left for the next headspace. The wide-ranging mental health-focused platform and its most direct competitor, Calm, seem to have captured most of the core bite-sized mindfulness market. But there are still gaps in the mental health market to address, at least some startups think so.
