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September 16, 2020

The Rise of Venture Capital Investing in Mental Health

Author Affiliations
  • 1Department of Psychiatry, Columbia University Irving Medical Center, New York, New York
  • 2Department of Child and Adolescent Psychiatry, NYU Langone Health, New York, New York
  • 3Office of Behavioral Health, NYC Health + Hospitals, New York, New York
JAMA Psychiatry. 2021;78(4):351-352. doi:10.1001/jamapsychiatry.2020.2847

Mental health care is ripe for innovation. Less than a third of people with mental health disorders receive treatment, and even a smaller proportion receive adequate care.1 The private sector has taken notice of this economic mismatch (high demand with inadequate supply) and is aggressively pursuing mental health and wellness as an investment opportunity. In 2019 alone, venture capital (VC) companies invested a record-breaking $637 million in more than 60 different mental health–oriented companies, which is more than 22.8 times the investment in 2013.2 Calm, a smartphone application focused on audio-guided meditation, reached a milestone valuation of more than $1 billion, making it the first “unicorn” mental health–oriented start-up. This rapid rise in investment in the mental health and wellness space brings new challenges related to defining, quantifying, and assessing products and services that had previously resided within traditional health care. In this Viewpoint, we review the largest VC-backed mental health companies and propose potential concerns and benefits associated with the rise of for-profit start-ups.

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    1 Comment for this article
    Richard Chipkin, PhD in Psychopharmacology | Retired Biotech CEO
    Dr. Shah is right when he says that using software to address mental health care needs to be carefully considered. However, let's be clear....these are not mental health treatments. They are essentially band-aids being slapped onto a festering wound. Psychiatric illnesses are biological diseases, and they need medical treatments. Unfortunately, VC money is NOT flowing into new drugs. It's easy to make a fast buck on software. It takes a steely-nerved investor to bet on a new drug with so many places to fail (no efficacy, side effects, etc.), which takes years to develop, and needs millions of dollars to realize. In my experience, VC's have little interest in putting their money into mental health treatments since it's so risky. And, many big pharmaceutical companies have deserted the field entirely and purged their R&D staffs. There's more tolerance for investing in neurology drugs (e.g., Parkinson's), but depression, schizophrenia, bipolar are very hard sells. I believe bleeding off VC money into software band-aids ultimately damages the field since this money is no longer available for companies working on new treatments. And beware, with advances in artificial intelligence, the basic human element of psychiatriy will soon be in danger of being turned over to software as well.
    CONFLICT OF INTEREST: Compensation from intellectual property