Global Mental HealthTech Funding Sees Sharp Decline In 2023 Amid Economic Challenges
The state of mental health, both at an individual and community level, has become a worldwide concern, especially post the COVID-19 pandemic. According to the World Health Organization (WHO), in 2019, 15 per cent of working-age adults were estimated to have a mental disorder, with depression and anxiety affecting productivity, causing an annual loss of USD 1 trillion among workers. In response to these challenges, the global mental healthtech sector experienced a peak in funding, reaching USD 4.7 billion in 2021.
Similar to other healthcare sectors, mental health startups saw a surge in demand in 2021 as people grappled with pandemic-induced mental health issues. However, recent trends suggest a shift in the funding landscape for these startups.
Data from the intelligence platform Tracxn reveals that the global mental healthtech sector witnessed funding worth USD 713 million in the year-to-date (YTD) 2023, representing a sharp decline of 52.5 per cent from the USD 1.5 billion raised during the same period in 2022, and a substantial 79 per cent drop from the USD 3.43 billion in 2021. This decline in funding can be attributed primarily to the ongoing global economic slowdown and various macroeconomic factors, according to the data platform.
In 2023, most of the funding in this sector has come from late-stage investments, totalling USD 340 million. The Tracxn report also identifies 17 acquisitions in the sector in 2023 so far, a number matching the same period in 2022.
Despite the funding challenges, certain segments within the mental healthtech industry have continued to perform well on a global scale. These include teleconsultation, employee mental health solutions, and digital therapeutics. Teleconsultation, in particular, has played a vital role in countries like India, where the ratio of psychiatrists to the population is significantly lower than in European countries like Germany. India has only 0.75 psychiatrists per 100,000 inhabitants, compared to Germany's 27 psychiatrists per 100,000 people.
When it comes to country-wise funding, the United States leads the way, accounting for a substantial 82.6 per cent of the total funding, amounting to USD 13.6 billion to date. Mental HealthTech companies based in the US have raised USD 11.2 billion so far, followed by those headquartered in the UK (USD 749 million) and Canada (USD 238 million). The US also boasts the highest number of companies in this sector, with 2,360, followed by the UK (662) and India (429).
In a challenging economic climate, the mental healthtech sector faces funding obstacles, but late-stage investments and innovative solutions like teleconsultation continue to drive the industry forward.
