Mental health is an impactful yet challenging field. Two years ago, I founded a startup in this field and below are some insights I gained along the way.
The competitors aren't other apps and services, but beer, binge eating, porn, etc.
People have a wide range of different "tools" that can give them cheap and fast relief of anxiety or other psychological conditions. Often these things take quite unhealthy forms and become habits. These behavior patterns are actually what you are competing with.
The biggest challenge is customer retention.
Historically, mental health apps have quite a low retention rate, as the graph below illustrates well. This is quite easy to explain because people's psyche has a mechanism of resistance. This mechanism apparently serves to keep one's psyche stable and usually slows changes, especially those connected with psychologically difficult topics for people.
You'd better work as B2B rather than B2C.
The combination of the two points above makes the B2C mental health field quite challenging, both in terms of customer acquisition and returning users. Working as B2B can help you move part of that burden to your employer client's shoulders. It is much easier to sell the necessity of mental wellbeing for companies (here are some stats as selling points), and companies have more tools to motivate users to use their benefits (actually, a lot of companies already have some attempts, but even for them, this is quite hard).
Paid acquisition costs have skyrocketed.
Covid really stimulated the mental health field, and it has been quite an overcrowded early-stage startup space since (139% funding increase). All of that has made the mental health topic in terms of ads quite competitive.
But with the current gaining momentum financial crisis, the situation should be better. Because there is no more cheap money in the field (see the graph below). The only thing is to keep your startup alive through these times, and you'll grow, getting market share of your fellow startups who don't survive these times.
Marketing over product.
The most fast-growing companies (especially those who are in customer digital health apps) are companies that really focus on marketing. So in that sense, better marketing is much more important for the short and mid-term than trying to show up some really innovative product features.
But there is a dark side of that approach as well (people don't talk a lot about it) that a lot of products (not only in mental health indeed) base their strategy more on subscription retention rather than customer retention. So as long as you can get a purchase, and even if a person doesn't use it, ideally, if they pay regularly because they forgot about the subscription, this is okay. How ethical it is, everybody chooses for themselves.
Small amount of exits, exits with quite low valuations.
It looks like the field is still forming, no really big exits. The vast majority of exits are therapeutic solutions rather than digital products, and a lot of digital products have quite low exit sums, so they often prefer not to disclose it (a bit outdated, but giving the main vibe article). So all this is worth taking into account if you are going to start something in the mental health field, especially in B2C.
There are only few big topics in mental health.
Traditionally, the biggest and oldest topic in mental health has been mindfulness (and meditation). Its growth was highly supported by the popularization of mindfulness approaches itself. This topic has reached its plateau, so even the biggest players in the field of mindfulness are actively expanding into other topics.
Another big topic is therapy. While therapy is still quite stigmatized in the minds of many people, due to mainly B2B adaptation, it is expanding quickly.
It looks like other topics are still far from these two, but there are some topics becoming more trendy. For instance, ADHD has the biggest subreddit (1.6M participants) among all the mental health topics, which is even 1.5 times bigger than the "Depression" subreddit. Mental health solutions for teens and youth are predicted to grow in 2023.
And more far from mass adaptation, but really perspective in mid and long term is a topic of psychedelics (if you are unaware of the field, here is a recent documentary series), and there are already specific VC funds focused on this topic.
Working in the mental health field is really impactful job.
I do believe that working on mental health solutions is a very impactful thing for humanity, especially when we are witnessing all that's happening around and in the world in recent years. And when as a founder, you get a lot of really grateful feedback from your customers.
Being in mental health field myself, both on the side of a customer and creator, I understand the huge potential of that in terms of changing the quality of life of entire humanity.
While starting a startup in mental health field isn't the most profitable thing you can imagine, if it aligns with your mission, it's a definitely worthy thing to do!