Mind Over Matter: Assessing Our Mental Health…Startups
In the light of World Mental Health day I assess some of the technologies and business models behind the solutions trying to help us manage our mental health.
Mental health is an issue I am deeply interested in as I believe we all have our own difficulties and challenges. It’s important that we recognise this but also know that help is out there in many different forms.
Of course, the pandemic has effected us all in different ways. As new measures are introduced and the economic slump is felt — one thing is for certain: stress and anxiety levels have risen. Meanwhile even in developed countries mental health continues to be a taboo albeit less so and access to mental health services remains difficult.
Having lived in Germany for over a year I was surprised to learn that it takes about 20 weeks, on average, to begin treatment from a licensed therapist through the German healthcare system.
The increased sophistication of smart phone technology accompanied by the development of new digital forms of mental healthcare has lowered costs, increased accessibility and provided anonymity — encouraging millions to work on their mental health.
Global funding in mental health technology has increased almost five-fold since 2014 to reach close to £600 million in 2019.
While technology can not substitute real human interaction and care, it can be a driver to help millions of people alleviate their struggles. The key areas where technology has been applied are in the following:
- Self Help — apps that provide exercises and tools to maintain and improve mental well being including chat bots, meditation tools & games
- Consumer tools — non-therapuetic tools that allow users to track or connect with support groups. E.g P2P & mood journals
- Therapy — platforms for on- and off-line therapy and coaching
- Data & analytics — Platforms helping therapists follow patient’s state and progress. This way they can track moods, reactions & physical activity
Artificial intelligence and hardware solutions also play a role in this space.
Mental health business models can get complicated.
Balancing a product or service that has real benefits with long term profitability whilst navigating the insurer and employer landscape can be difficult.
A seemingly straightforward business model is direct-to-consumer (D2C). In this model startups sell their services as a monthly subscription fee. There are broadly two categories: consumer tools such as meditation apps and tele-therapy. The former has seen strong success because they are non-medical and as such consumers are willing to pay with the attitude similar to that of getting a gym membership.
The market led by Headspace and Calm, who between them hold 70% market share, has become increasingly saturated. A huge challenge for new entrants in this space is the incredibly high marketing costs.
Even more problematic is that in the long run consumers expect the costs of these services to be covered by their insurance or employer. As such, the majority of mental health companies that start with a D2C business model end up pivoting to some variant of B2B. Headspace and Calm have recognised this and have aggressively partnered with employers. The same can be said for tele-therapy startups. TalkSpace and BetterHelp both pursue B2B revenue through employer benefits to supplement their consumer businesses.
Today we see more startups entering via the B2B route.
Olaf and Evermood — both founded last year are exciting new prospects. The former is a B2B SaaS health marketplace that connects businesses with wellbeing service providers and the latter unites services in one platform that employees can access.
Despite this hurdle consumer tools and tele-therapy continue to enter the D2C arena likely in search of short term rewards. Startups must however offer exciting new innovations or target specific demographics to compete with the established players. Berlin-based Moodpath provides interactive screening for mental health. Meanwhile, London-based and NHS-approved eQuoo has developed a mental health game combined with cognitive behavioral therapy targeting young adults.
Ultimately D2C provides early revenue opportunities, product traction and engagement data which in turn makes it easier to transition into B2B opportunities. In mature mental health tech companies, however, D2C generally makes up a small portion of total revenues.
