Global mental healthtech funding plummets 52.5% in 2023 after pandemic surge

The global mental healthtech sector saw a 52.5 per cent decline in funding in 2023 year-to-date (YTD) as the sector raised a total of $713 million compared to $1.5 billion raised in the same period in 2022. Furthermore, this figure represents a significant 79 per cent decline from the $3.43 billion raised in 2021, highlighting the pressing concern regarding mental health funding, reveals Tracxn’s ‘Mental HealthTech Startups Report’.

Funding in this sector peaked in 2021 at $4.7 billion, owing to issues brought on by the pandemic, after which investments in the segment started to fall. A comparable downturn is evident in the number of funding rounds, with just 99 deals completed in 2023 YTD. This figure reflects a 37 per cent decrease when compared to the corresponding period in 2022 and a substantial 45.6 per cent decline from the same period in 2021.

As per the report, this decline can be primarily attributed to the ongoing economic slowdown and other macroeconomic factors exerting an influence on global cash flow.

Late-stage rounds accounted for $340 million in 2023, a 35 per cent reduction compared to $527 million raised in same period in 2022 and a decline of 85.8 per cent compared to $2.4 billion raised in same period in 2021. Early-stage start-ups raised $287 million till date this year, which marks a drop of 60 per cent compared with $723 million raised in same period in 2022, and a drop of 67.6 per cent compared to $887 million raised in same period in 2021. In seed-stage, start-ups raised $85.9 million so far in 2023, marking a 66 per cent drop compared with $253 million raised in same period in 2022 and 38.6 per cent decrease from $140 million raised in same period in 2021.

Mental health teleconsultation, employee mental health solutions, and digital therapeutics for mental health are some of the top performing business models in 2023. MassChallenge, Techstars and Y Combinator are the top investors in this space.

“Teleconsultation has played a vital role in countries like India where there are 0.75 psychiatrists per 100,000 population which is significantly low compared to European countries like Germany with 27 per 100K inhabitants. Such innovations have greatly increased the accessibility to mental health professionals and this sector can potentially see more investments going ahead as awareness rises among the masses,” the report said.

In terms of the value of investments, the United States leads the way, closely followed by the United Kingdom and Canada. India has 429 funded companies in the segment, trailing behind the United States with 2,360 companies and the United Kingdom with 662 companies. 

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