For psychological well being startups, happiness is in niches

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Final April, Alex and I reported CB Insights knowledge displaying that enterprise funding into psychological well being startups had dropped sharply in Q1 2022 in comparison with the previous quarter. However within the final couple of weeks, I’ve heard about a number of venture-backed offers into the subsector of well being tech. They bought me curious: By which areas of psychological well being are VC corporations nonetheless prepared to take a position? Let’s discover. — Anna

Temper swings

The extra the pandemic appeared to subside, the much less enterprise capital traders appeared prepared to decide to firms and sectors that had initially benefited from sturdy tailwinds when a lot of the world began staying at house. On public markets, the pandemic trade is over, with former darlings like Peloton and Zoom experiencing whiplash. Equally, we noticed a internet decline in non-public funding into telehealth and psychological well being startups.

Market corrections after a interval of hype are a part of the investing sport. However it will be laborious to argue that psychological well being wants have decreased. In accordance with the World Health Organization, incidents of tension and despair elevated by 25% within the first 12 months of COVID-19. Simply because we at the moment are hopefully leaving the worst of the pandemic behind us doesn’t imply everyone seems to be all of the sudden feeling higher — which is why just a few latest funding rounds within the psychological well being area raised my consideration.

In fact, just a few psychological well being–associated offers are anecdata. And since we’re speaking principally about early-stage offers, this doesn’t imply that the funding decline has been reversed. In mixture, we are going to solely have extra readability as soon as Q2 numbers can be found. However what’s attention-grabbing is that these startups trace at some novel approaches to psychological well being wherein VCs are nonetheless prepared to take a position. Or, dare I say, present us the place their thoughts is at.

Now not underserved?

VCs may need no headspace left for the subsequent Headspace. The broad-ranging psychological health-focused platform and its most direct competitor, Calm, appear to have captured a lot of the mainstream marketplace for bite-sized mindfulness. However there are nonetheless gaps within the psychological well being market to handle — not less than, some startups assume so.

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