Investment in youth mental health companies nearly octupled (yes that’s a word) in the first half of 2021 compared to the whole of 2020.
That’s according to a new report released by an investment initiative led by San Francisco-based Vinaj Ventures, incorporated as Vinaj LLC.
In specific terms, Telosity by Vinaj Ventures found that investment in youth mental health companies increased by 671% in the first half of 2021 compared to the entirety of 2020, growing from $51 million to about $400 million.
The number of deals done in the same period increased by 79%, up to 25 in the first half of 2021 compared to 14 in 2020.
Vinaj Ventures, founded in 2015, provides innovation consulting, largely to Fortune 1000 companies, and investment services. Vinaj launched the investment fund Telosity — in collaboration with Pivotal Ventures and Hopelab — in 2019. Telosity invests in early-stage, pre-Series A companies that improve the mental health and well-being of people between the ages of 10 and 24 years old.
Allyson Plosko, a director at Telosity, said in an interview that investment generally was backed up in 2020: A lot of deals were announced in the second half of the year and likely spilled into 2021. While she wouldn’t be comfortable annualizing $800 million for a full 2021, she maintains that the second half of the year will likely see as much investment as the first. She points out that Elemy, who offers a digital teletherapy platform called Sprout Therapy — announced it closed a $219 million Series B funding round, which gives the company a $1.2 billion valuation.
“Startups and investors are recognizing the need and the opportunity for more effective tech-based mental health solutions,” the report reads. “In 2020, investment into youth mental health companies highlighted this burgeoning market, but 2021 is raising the bar and confidence that there is still a lot of upside to capture.”
The COVID pandemic revealed and exacerbated the desperate need for more services that address youth mental health.
In the U.S., the Telosity report states that mental health-related emergency room visits for youth ages 12 to 17 increased 31% from April through October 2022 compared to 2019. Similarly, the number of youth ages 11 to 17 who accessed mental health screenings increased to 38%, 9 percentage points higher than in 2019.
The National Council for Mental Wellbeing found via polling that 73% of parents believe that COVID-19 impacted the mental wellbeing of their K-12 aged students.
“The state of young people’s mental health has been declining for over a decade now, but it really took COVID to push it to the forefront. And that was driven by [school] lockdowns,” Plosko said. “If you think about where a lot of young people get their mental health at schools, you had a large swath of young people who weren’t able to access their mental health care”
She also notes that another key investment driver in youth mental health companies is the fact that the target demographic is children or other young people, a fundamentally different patient from the generic adult.
The Telosity report points to the fact that telehealth moved beyond wide acceptance and into a necessity. This made telehealth a viable option for all of health care, especially the behavioral health space. The report also points to limited access to psychiatrists and mental health providers and the need for such services to be personalized to people’s circumstances and backgrounds as other key drivers.
“We’re starting to see companies think more holistically about a patient’s journey through the mental health care system,” Plosko said. “So, it’s not enough now to offer just one point solution that’s going to deliver a digital CBT tool, for instance, which we saw a lot of two years ago.”