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Driven by pandemic demand, mental health startups surpass 2019 funding

·2 min read

Totaling $1.37 billion through the third quarter, venture capital funding of US mental health startups this year has already outpaced the $1.06 billion invested in 2019, according to PitchBook data.

Moreover, investments in the space have more than quadrupled since 2015.

In what could be the second-largest mental health VC deal of the year, Calm is reportedly in talks for a $150 million funding round that could value the meditation app maker at $2.2 billion. 

Early investors in the San Francisco-based company reportedly may be allowed to sell shares in the deal, Bloomberg reported. Calm's existing backers include TPG, Insight Partners and Lightspeed. It was valued at $1 billion last year after raising an $88 million Series B.

"Mental health cases, obviously, are on the rise in large part due to this pandemic," said Katherine Andersen, head of life science and healthcare relationship banking at Silicon Valley Bank. In a survey conducted by the Centers for Disease Control in June, around four in 10 Americans reported struggling with a mental or behavioral health condition.

"I do think we're going to see a lot of investment and activity generally across mental and behavioral health going forward," Andersen added.

Amwell, which provides behavioral health services and other telehealth offerings, raised $194 million from investors including Allianz X and Takeda in May. Four months later, it pulled off a $742 million IPO.

Mental health app makers Mindstrong and Lyra Health also raised mega-rounds of $100 million or more this year. Other notable financings include Omada, Maven Clinic and Ginger.

Mental health services began to see demand spike during the early days of the pandemic, and several responded by making their platforms temporarily free. Lyra Health, which closed a $110 million Series D in August, said at the time that membership had more than doubled in 2020 to 1.5 million.

Featured image via katleho Seisa/Getty Images