While the COVID-19 pandemic exposed (and expanded) the demand for mental and behavioral health services, it also prompted people to become more receptive to seeking treatment online for conditions such as stress, anxiety and depression. This shaped new opportunities for virtual mental health startups and ushered in a wave of venture capitalist funding to the segment.
According to PitchBook data, VCs poured a whopping $6.9 billion into U.S.-based mental and behavioral health companies in 2021, nearly triple the amount raised by the category in 2019.
Crunching the numbers
• So far in 2022, VCs have invested $1 billion in U.S. mental and behavioral health startups.
• At the end of March, investors funded two companies in the sector. Palo Alto, California-based startup Brightline, which provides virtual behavioral health for kids and their families, raised $105 million in a Series C round. Brightside Health, a Bay Area-based telemedicine platform that offers mental health treatment, secured $50 million in a Series B funding round.
Understanding the key drivers
The primary factors propelling investors’ enthusiasm for mental health companies, according to PitchBook, include:
• Virtual health visits and consultations work well, often better than in-person ones. Not only children but also adults tend to feel more comfortable communicating about their issues from the convenience and privacy of their homes versus an office setting.
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• Companies and payors are recognizing that supporting employee well-being in the workplace and covering behavioral health services increases productivity. It also helps reduce total health care costs as poor mental health often leads to poor physical health.
• Virtual health care presents a viable solution to a severe shortage of mental health professionals in many states. Startups like Brightline and Brightside can help any patient who has access to Wi-Fi to receive care, regardless of their geographic location or proximity.
The trend is here to stay
This isn’t a fleeting trend, according to PitchBook. Even though the pandemic seems to be winding down, there’s no sign that patients or health care providers are rushing to see each other in person. In other words, telemedicine for mental health is here to stay, and so is investor interest in the businesses that make it possible.
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