Inside the business of mental health

We take a look at how the mental health industry has evolved over the pandemic, from a massive scale-up in investment and technology to a better understanding of wellbeing.
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What we said

In 2019, we reported on the growing mental health problems suffered by startup founders. We quoted a report by founder-led wellbeing community WeAre3Sixty that said four out of every five had suffered problems as a result of running a business, with 70% reporting feelings of depression and 55% saying they felt burnt out.  

What’s more, many said they felt pressure to hide their mental distress – the result of a work-hard, grow-fast culture and the pressures of venture capital. James Routledge, founder of UK-based coaching company Sanctus, told us that venture capital is ‘almost predatory at times’. 

We also reported on the economy that was bubbling up around mental health. There were signs that apps and services like Calm and Happify were on the rise, as well as new ‘calm funding’ approaches, such as San Francisco-based Indie.VC, set up to encourage steady growth rather than turbo-charged grow-and-exit strategies. 

Checking in 

If things were bad before, they look even worse now – with mental health issues made worse by a period of rapid change and enforced isolation. Consulting firm McKinsey reports that 35 million more Americans are likely to suffer behavioral health issues post pandemic. The problem is even more serious for founders, with the US’ National Institute for Mental Health saying 72% of entrepreneurs are affected by mental health issues, compared to less than half of non-entrepreneurs. 

Psychiatrist Michael Freeman, who works with around 20 founders a week, says that even founders of businesses that thrive have struggled. ‘It’s not quite the same as investing everything in a company that fails, and dealing with the shame and stigma of debt,’ he says. ‘The problems of rapid growth are very real, too.’ 

Rise in awareness

While mental health pressures have increased, Covid-19 has also helped shine a light on the problem, with many high-profile founders talking of their struggles. There’s also been a boom in direct support, including Aaron Houghton, who set up the Founder First System community after battling depression and anxiety while running 11 – yes, really – tech companies.  

‘We’ve all been forced to become aware of the issue,’ says Christina Richardson, founder of WeAre3Sixty, who dealt with heart palpitations and panic attacks after co-founding digital marketing platform Openr. ‘It feels like there’s less bravado now, and it’s become far less taboo to seek help. I think people running businesses are more aware of the mental health of their teams, too.’

Huge investment

From mindfulness apps to teletherapy platforms, the pandemic has seen a huge rise in tech-enabled, digital mental health services – both in terms of money being thrown at companies, as well as demand from customers. According to intelligence platform CB Insights, funding for mental health businesses is predicted to hit $2.93 billion this year, up from $1.97 billion last year and $482 million in 2017. In just the first quarter of this year, a record $852 million flooded into companies offering digital mental health solutions. 

Cerebral, a subscription-based online counseling and prescription service for anxiety and depression, only launched in 2020, but the ‘one-stop shop’ is already valued at $1.23 billion. The more established Lyra Health – which has access to 5,000 coaches, therapists and doctors in the US – saw its valuation rise to $4.6 billion on the back of $200 million of financing this year. Calm, the most high-profile of a glut of mindfulness apps without a medical component, has doubled its user base and valuation during Covid, with 4 million subscribers and a valuation of $2 billion. 

And the boom goes way beyond Silicon Valley. Yana, a Mexican mental health app whose founder Andrea Campos struggled with depression, now has close to 5 million users, having had just 80,000 last October when Apple highlighted the app for International Mental Health Day; ALLVP, one of Mexico’s biggest tech-focused VC firms, recently announced a $1.5 million investment in it. Berlin-based Flow Lab – which uses AI for a fitness-inspired approach to mental health – recently raised €1 million in funding, and partnered with German football team VfL Wolfsburg. Singapore-based Intellect – a mental health tool for employees – reached 1 million users just six months after launching last year. 

But do these apps actually work? 

Mental health apps have hugely grown in popularity at a time when psychological services have faced a surge in demand coupled with a cut in supply. But while the makers of therapy apps are moving fast to serve all these new customers and grow along the way, nearly all of them are for-profit. Health experts remain divided on the regulatory path ahead. 

Spend a few minutes searching app stores and you’ll come across dozens of unverified mental health apps covering mindfulness, CBT, mood tracking, peer support and more. While experts have repeatedly called for more transparency and oversight, there’s no consensus on what the path forward should be. 

This lack of regulation could lead to some positive innovations and more widely disseminate mental health resources; on the other hand, it leaves the space open to phonies and misinformation. For example, several apps claim they can treat mental distress simply by playing certain tones and harmonics. 

There are also concerns about privacy and data autonomy. Sharing data with third parties is ubiquitous across mental health apps, a concern when it comes to sensitive information about users’ mental health history. 

Five other opportunities 

Away from all the new apps, there are lots of smaller companies also looking to take advantage of the rise in demand, albeit with a different approach. They tend to fall into these five sectors. 

1. The demand for sleep technicians is growing following findings that therapy designed to treat insomnia also reduces paranoia and hallucinations, and improves depression and anxiety in patients. 

2. Mental-health focused supplements that claim to clear brain fog, sharpen your focus and safeguard mental health for the long run have seen a sharp increase over the past six months, many directly targeting areas such as ‘mental processing’. Expect to become a lot more familiar with the term ‘nootropics’ over the next year. 

3. Many people dedicate countless hours to business planning, leading to their work-life balance taking a back seat. But as anti-hustle culture becomes more mainstream, embracing the mindset of lifestyle planning has become more popular, with various companies catering to this demand. 

4. Since working from home has become commonplace, corporate wellness has increasingly become a priority, with companies taking on services that encourage staff to be more open about mental illness, offer proven stress-relief techniques and create mental health toolkits. 

5. Since mental health is closely connected with physical wellbeing, deep breathing classes are becoming more popular. Check out Come Breathe, a London-based studio teaching Pranayama breathing techniques. 

Funding issues

If the apps are calming, funding for them has been anything but – ironic given that we’ve reported venture capital ‘blitzscaling’ as one cause of mental health issues among founders. Indie.VC, which launched in 2015 to provide a more measured alternative to traditional VC funding models, ceased operating earlier this year, citing lack of support from its own institutional investors. 

But there are still those trying to change the traditional model. Take the Calm Company Fund, previously Earnest Capital, which invests through a shared earning agreement to encourage steady growth and profit rather than ‘1,000x outcomes’. It promises ‘mentorship and community’ – two things that founders need now more than ever.  

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