VC Interest in Digital Behavioral Health Companies Remains Hot

Venture capitalists continued to take a special interest in digital behavioral health companies in the third quarter of 2019, keeping alive a three-year steak of hot deal activity in the space.

That’s according to a Q3 report from Rock Health, a venture fund that invests only in digital health companies.

Across all sectors, digital health companies raised a total of $1.3 billion in venture capital in Q3 2019 and a total of $5.5 billion year-to-date. While mega deals and IPOs accounted for a large portion of that funding, digital behavioral health companies held their own, with 16 companies bringing in 8% — or $416 million — of overall Q3 funding.


Rock Health defines behavioral health companies as those that “address a spectrum of needs from basic mental wellness through treatment of disease … , as well as platforms offering access to behavioral health care,” according to analysts.

Some examples include apps that specialize in relaxation and meditation such as Calm, digital therapeutics companies such as Pear Therapeutics, telebehavioral health platforms such as Talkspace and collaborative treatment and support platforms such as Quartet.

All four companies have raised funding rounds of $50 million or more in 2019.


Increased interest in the sector from investors is especially noteworthy when you look into the recent past. There was only one VC deal in the digital behavioral health space in 2012. Then 2016, that number jumped to 16, according to Rock Health, with deal activity remaining at or above that level ever since then.

Plus, digital behavioral health deal size is increasing. It’s up 73% from 2018, according to the report, while overall digital health deal size is down 4%.

A rise in mental health conditions is likely to credit for the spike in funding. For example, between 2013 and 2018, clinical depression diagnoses increased 33%, according to one report from Blue Cross Blue Shield.

As that trend continues, the digital behavioral health funding boom isn’t expected to stop anytime soon. In fact, only 60% of behavioral health companies in their early stages, creating ample opportunities for investors down the line, according to Rock Health.

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