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Last April, Alex and me report CB Insights data shows that venture capital investment in mental health startups plummeted in Q1 2022 compared with the previous quarter. But in the last few weeks, I’ve heard of a number of venture-backed deals in the health tech sub-sector. They got me curious: What areas of mental health are VCs still willing to invest in? Let’s explore together. – Anna
Mood swings
The more the pandemic appears to have subsided, the less committed venture capitalists seem to commit to the companies and sectors that initially benefited from strong headwinds as most of the world began to stay at home. In the open market, The trade pandemic is overwith old lovers like Peloton and Zoom undergo the beating. Similarly, we have seen a net decline in private investment in telemedicine and mental health startups.
The market correcting after a period of hype is part of the investing game. But it’s hard to argue that the need for mental health has declined. Follow World Health Organization, incidents of anxiety and depression increased by 25% in the first year of COVID-19. Just because we’re currently hoping to leave out the worst of the pandemic doesn’t mean everyone suddenly feels better – which is why a few recent funding rounds in the mental health arena attracted my attention.
Of course, some mental health deals are anecdotal. And since we are mainly talking about early-stage transactions, this does not mean that the decline in investment has been reversed. All in all, we’ll only get more clarity when we have Q2 numbers. But what’s interesting is that these startups hint at some of the new approaches to mental health that venture capitalists. is still willing to invest. Or, dare I say, show us where their minds are.
No longer in service?
The VCs may not have space for the next Headspace. The platform focuses on wide-ranging mental health and its most direct competitor, Calm, seems to have captured most of the mainstream market for sobriety. But there are still gaps in the mental health market that need to be addressed – at least, some startups think so.
