Rock Health: mental health startups aimed at young people getting bigger piece of the pie

The company launched the Digital Youth Mental Health Initiative earlier this year

Roughly 1 in 6 children aged 6 to 17 in the U.S. experiences a mental health disorder each year, while worldwide 20% of children may have a mental health condition. The most common mental health disorders in children are anxiety disorders; behavior disorders, such as ADHD; and depression. Many of these already existing issues were exacerbated by the COVID-19 pandemic.

That's why Rock Health, a seed fund that supports startups working in digital health by providing access to medical, venture, legal and corporate partners, and office space to its portfolio companies, launched the Digital Youth Mental Health Initiative earlier this year along with a group of collaborators including Pivotal, Fiore Ventures, HopeLab, and the Arthur M. Blank Family Foundation, to explore the opportunity for digital health innovations to support and advance the mental health and well-being of youth and adolescents in the U.S.

On Monday, the company released a new report on the state of digital mental health for young people, in this case meaning those aged 2-24, including children, adolescents, teenagers, and young adults.

The report found that, while young people are using virtual care at similar rates to the general population, 76% versus 75%, they are more likely to use certain modalities, specifically text-based virtual care tools, which 45% of those aged 18 to 24 are likely to use, compared to 34% of those 25 and older, an 11 percentage point difference.

There's an opposite gap when it comes to the use of health apps and websites, with 49% of the older cohort using them, compared to 45% of the younger cohort. Meanwhile, other types of modalities, including live video and live phone, were only separated by two percentage points.
When it comes to investments into the space, mental and behavioral health has the top focus area since at least 2020; for example, these companies raised $700 million in Q2 of this year, more than double the $300 million raised by companies in the cardiology, oncology, and weight management and obesity spaces. 

Yet, despite the money going into the space, youth mental health has been underfunded relative to other behavioral health needs, the report notes, though that gap is narrowing, going from 15% of investment dollars in digital behavioral health in 2018, to 34% in 20212.

Funding to these startups peaked in 2021 during the height of the pandemic, more than doubling year-to-year from $691 million to $1.7 billion. Since then, funding has dropped, decreasing 47% in 2022, and then another 52% in 2023 to $423, but that's still more than double the amount pre-COVID. 
For the funding in 2023, the vast majority of that also came in the earlier stages, with seed and Series A accounting for 79% of deals in the category, indicating that there's a lot of new companies entering the youth mental health space.

As for where those dollars are going, Rock Health looked at companies that raised at least $2 million in venture funding between 2021 and 2023, finding that 63% address multiple mental health conditions, while 24% focused on single conditions such as ADHD, autism spectrum disorder, or serious mental illness.

In addition, 9% integrate mental and physical healthcare, meaning they enable collaboration between pediatricians, primary care doctors, and behavioral health specialists, while just 4% develop digital infrastructure for youth mental health data and care delivery, for example building health records and data management software, powering clinical platforms, and training large language models. 

Over 70% of digital health startups in the space offer virtual care and coaching programs, while 43% offer self-directed digital support tools, and 26% provide both. Of those startups with virtual care and coaching, 87% use therapists, counselors, or social workers to deliver teletherapy and 36% deliver behavioral support via certified coaches, sometimes in combination with clinical therapy.

In terms of access, 65% of startups contract with commercial health plans or employers, 50% sell direct-to-consumers ages 18+ or to parents of youth, while only 22% contract with state Medicaid programs or managed care organizations, even though more than half of young people in the U.S. are Medicaid beneficiaries.

(Image source: post.healthline.com)