Until recently, mental health was a relative blip on the radar of venture capitalists. But over the past few years, and particularly since the onset of the COVID-19 pandemic, private investors have made a dramatic run for this space, pouring $3.1 billion into mental health ventures by the third quarter of 2021 alone, according to Rock Healthopens in new window, a seed fund that supports startups working in digital health. That represents a third of all digital health funding for 2021, more than 7 times the amount of funding placed in such ventures in 2015.
The reasons for this boom are clear. The pandemic unleashed enormous new mental health needs, with anxiety and depression rates among U.S. adults skyrocketing from 11% in 2019 to 42% in December 2020, according to the U.S. Centers for Disease Control and Preventionopens in new window. COVID also brought more people to telehealth and other tech options for treatment, and celebrities’ public admissions of their own struggles helped destigmatize mental health in the public eye (see page 60). Combined, these forces have met head-on with the ongoing shortage of mental health providers, creating a perfect storm of funding opportunity, said Stephen Hays, a venture capitalist whose syndicate, What If Venturesopens in new window, has provided $33 million to mental health startups since 2020.
“The supply of mental health services and treatments and care is way too low for the amount of demand that’s out there,” Hays said. “From an Econ 101 perspective, if demand is far greater than supply and you put an accessible, effective, and affordable supply into the market, you’re going to see growth.”
The new investments support a wide array of technologies—everything from larger companies such as Lyra Health, a mental telehealth platform that recently received $200 million from three private investors (see “The Seven Mental Health ‘Unicorns,’” private companies valued at more than $1 billion), to small companies that focus on developing a single app. (APA estimates that between 10,000 and 20,000 mental health apps are currently circulating in the market.) Most of these enterprises offer their wares digitally—through apps, telehealth, or a combination of the two—although Hays’s syndicate has made significant investments in brick-and-mortar behavioral health companies and in psychiatric medications as well. The new interventions target a wide range of conditions, including anxiety, depression, insomnia, trauma, and substance use, and a number aim to reduce stress and improve well-being through mindfulness, meditation, and weight loss apps.
Because these products are largely unregulated, they vary significantly in quality and type, said psychologist Stephen M. Schueller, PhD, an associate professor at the University of California, Irvine, and executive director of One Mind PsyberGuideopens in new window, a nonprofit project that provides rigorous evaluation of digital mental health tools in various settings. Therefore, “there is a huge number of ways that people are thinking about creating business models, paying for these things, and rolling these products out,” he said.
Given how rapidly this development is unfolding and the lack of oversight surrounding it, what does it mean for the future of mental health care and for psychologists?
Expanding access and choice
Outside of profit motivation, a central reason for this increased investment is the desire to improve access for the millions who need it, according to psychologists involved in the area. Even before the COVID-19 pandemic, less than half of U.S. adults and children with mental health conditionsopens in new window were receiving treatment because of stigma, cost, lack of providers, or long waiting times, according to the National Institute of Mental Health.
“We really see technology as a way to scale the capacity of the system in order to get individuals the care that they need,” said Allyson Plosko, director at Telosity, a venture capital entity that funds early-stage companies aimed at improving young people’s mental health and well-being. In that demographic, “getting someone help at age 14 can have an incredible impact on that individual’s life,” she said.
More products also mean more consumer choice, said psychologist Trina Histon, PhD, senior principal consultant in prevention, wellness, and digital health at Kaiser Permanente’s Care Management Institute in Oakland, California. Kaiser Permanente, for example, uses six well-vetted commercial cognitive behavioral therapy (CBT) and mindfulness apps that tap different member preferences. “We recognize that members have different learning styles and diverse ways they want to consume content,” Histon said. Meanwhile, other mental health care companies are developing digital interventions in other languages and for specialized populations, for example.
More venture capital also means that promising products—many developed by or in collaboration with psychologists—stand a better chance at coming to fruition, said psychologist Shannon Wiltsey Stirman, PhD, an associate professor at the Stanford University School of Medicine and co-chair of the Stanford Mental Health and Technology Innovation Hub.
“There is a history of people testing web-based interventions or apps and finding that they work but then lacking the funds or ability to sustain them,” Wiltsey Stirman said. Working in a company with adequate funding can provide the extra ingredients—technological expertise, design, marketing, evaluation, and continual product improvement, for example—to make these online interventions and apps a reality.
Lurking questions
But significant issues, questions, and problems remain. Is the rise in funding a fad that will disappear once the pandemic is better controlled or when people tire of using these products? Given the current lack of regulation, how can people choose interventions that are effective? And what about uptake? In one study of 93 of the most frequently installed unguided mental health apps—apps whose implementation relies solely on the user’s motivation—just 3.9% of initial users continued using them after 14 days (Journal of Medical Internet Research, Vol. 21, No. 9, 2019). That’s an issue that dogs these products in general.
In addition, mental health tech companies are still considering how to address issues of diversity, equity, and inclusion best and most cost-effectively. The people you hope will benefit most from expanded access are often the least likely to purchase and use these technologies. It’s also difficult to predict the extent to which funders will be willing to support customized interventions for specific client groups, for example male teens with eating disorders or Latinx women with substance use problems, Schueller noted.
Last but not least, it’s unclear what effect this new influx of money will have on traditional practice. Though the development is a big concern among some psychology practitioners, it is unlikely to upend face-to-face practice, those involved in the area believe. At their best, these products can provide the treatment necessary to support practitioners who are in high demand, to intervene with people who are awaiting care or require between-office support, or to enhance existing care modalities, said psychologist Frances Thorndike, PhD, senior global lead for insomnia at Pear Therapeutics, one of the few companies to receive U.S. Food and Drug Administration (FDA) approval for some of their digital products, including Somryst, a digital CBT intervention for insomnia.
“I always think clinicians are guiding the journey, but digital therapeutics can extend what we do and provide support, guidance, and feedback between visits,” Thorndike said. “And when they’ve been rigorously reviewed, we can be confident that they work.”
Reasons for optimism
There are other reasons to be hopeful about this trend. One is that venture capital companies are maturing in their vision of why they’re funding these entities, said Histon.
“I’ve seen a shift from [the Silicon Valley mantra] ‘Move fast and break things’ to ‘Move fast with intention,’” she said. At a recent panel she attended on venture capital, speakers “still said that making money was fun,” she said, but “they’re now much more plugged into the intention of doing good work and putting good products out there.”
Notably, psychologists are becoming key players in some of the recently funded companies, bringing the expertise needed to ensure clinical integrity from the beginning of a product to its eventual uptake. For example, before joining Pear Therapeutics, Thorndike worked for years on multidisciplinary teams when she was on the faculty at the University of Virginia, creating digital health products designed to improve access to care for high-need conditions like insomnia. Meanwhile, Andreas Michaelides, PhD, chief of psychology at the digital health platform Noom, has used his psychological expertise to help inform the way the company’s products are conceived and developed.
Other positive developments include greater venture capital funding in companies run by women and people of color and the incorporation of these newer technologies into standard health care. In a paper in NEJM Catalyst (Vol. 2, No. 1, 2021), for example, Don Mordecai, MD, Histon, and colleagues describe how Kaiser Permanente has developed a “digital ecosystem” that provides thorough training to clinicians in the technology, tailors the modalities to meet patient needs and styles, monitors and evaluates use and success rates, and continuously makes improvements. When patients use tools in a system like this, their rates of engagement jump 4 to 5 times higher than if they didn’t have these aids. “These technologies are really a way to amplify the healing journey that members are on,” Histon said.
Helping with regulation
APA is keeping abreast of these developments and creating programs and products to help practitioners, technologists, and consumers understand and navigate this rapidly evolving space. The association is also working with stakeholders to address the fact that, at present, FDA-approved products—even those with a psychology basis—need to be prescribed but that most psychologists lack this authority.
To help fix this problem, APA and others “are working to develop a more innovative regulatory model that fits these softwares better and doesn’t use the word ‘prescription,’” said Vaile Wright, PhD, APA’s senior director of health care innovation. To aid in this effort, in September 2021, the FDA designated APA an “expert partner organization,” which will allow the association to provide expertise on behavioral change technology and methodology.
Like it or not, venture funding is pushing these technologies to a central spot in the mental health landscape. Instead of shying away, psychologists can seize the opportunity to ensure that these interventions are ethical, inclusive, live up to their claims, and help people get better, Wiltsey Stirman said.
“There’s a lot of promise in this area,” she said, “but we’ve got to be really thoughtful and careful in how we go about it.”
