Funding into Mental HealthTech startups takes a hit in 2023 due to the ongoing economic slowdown and other macroeconomic factors affecting the cash flow globally, Tracxn said Wednesday.
The global startup data platform said in a statement that the Mental HealthTech space globally witnessed funding worth $713 million year to date, a 52.5 percent decline from $1.5 billion raised in the same period in 2022.
It is also a 79 percent decline from $3.43 billion in 2021.
It is noted that the global Mental HealthTech space witnessed a peak in funding of $4.7 billion in 2021.
Similar to other healthcare businesses, Mental health startups saw a significant rise in demand in 2021 owing to the Mental health issues brought on by the pandemic.
According to the statement, most of the funding this year so far in this sector has come through late-stage investments, which stood at $340 million.
This was, however a 35 percent reduction compared to $527 million raised in same period in 2022 and a decline of 85.8 percent compared to $2.4 billion raised in same period in 2021.
Early-stage rounds year to date saw funding of $287 million, a drop of 60 percent compared with $723 million raised in same period in 2022, and also a drop of 67.6 percent compared to $887 million raised in same period in 2021.
Seed-stage rounds year to date saw funding of $85.9 million, a 66 percent drop compared with $253 million raised in same period in 2022 and also a 38.6 percent drop from $140 million raised in same period in 2021.
Further, a total of 17 acquisitions have been observed in 2023 so far, compared with 17 in the same period in 2022.
This year, some of the top-performing segments globally in this space are teleconsultation, employee mental health solutions, and digital therapeutics.
Teleconsultation, in particular, has played a crucial role in countries like India where there are only 0.75 psychiatrists per 100,000 population, significantly lower than European countries like Germany, which has 27 psychiatrists per 100,000 inhabitants.
Startups like Noom, Presence Learning, Cerebral have raised over $300 million in this space.
Headway, a provider of a mental health therapist consultation platform, is the only unicorn to be observed year to date.
In terms of country-wise funding, the United States has taken the lead, accounting for 82.6 percent of the total funding of $13.6 billion till date.
Mental HealthTech companies based in the United States have raised $11.2 billion till date, followed by those headquartered in the United Kingdom ($749 million) and Canada ($238 million).
The United States has the maximum number of companies in this space (2,360) followed by the United Kingdom (662) and India (429).
Y Combinator, Gaingels and Flare Capital Partners emerged as the top seed stage investors in the last two years.
Expon Capital, F-Prime Capital and Healthcap were the top early-stage investors in the last two years.
Activant Capital, Cigna Ventures and Health Velocity Capital were the top late-stage investors in the last two years.
“Innovations by startups in the mental health space will go a long way in improving the quality and accessibility of mental healthcare,
“However, expect this sector to grow in the future, once the economic conditions stabilize,” said Tracxn.
According to Tracxn, the quality of mental health, both at the individual and community level, has become a matter of global concern.
Cited the World Health Organization (WHO), it said 15 percent of working-age adults were estimated to have a mental disorder in 2019.
It is also estimated that $1 trillion is lost every year due to depression and anxiety among workers.
In this scenario, it said individuals and corporations across the globe are becoming increasingly aware of the role of mental health in ensuring all-round wellbeing and steady development of society.
“The pandemic, in particular, has also highlighted the need to provide proper mental health care,” it added.