Digital mental health: Challenges and opportunities
Every year, October 10 is World Mental Health Day, an event that seeks to raise awareness of mental health problems and the importance of emotional wellbeing. To commemorate it, we are going to analyze this market, which really took off during the pandemic in terms of number of companies and amount of investment. Yet despite the optimistic forecasts of growth for the forthcoming years it still has many challenges to address.
Mental health means “a state of mental wellbeing that enables people to cope with the stresses of life, realize their abilities, learn well and work well and contribute to their community.” That is, it means not suffering from mental disorders or psychosocial disabilities, as well as other mental states associated with high levels of anxiety, functional disability or the risk of self-harming behaviors. As shown in the graph below, these disorders are more or less frequent at different ages, and children and adolescents are the most likely to suffer from them.
The situation isn't very different in Catalonia: one quarter of the population suffers from emotional distress, as women (30%) are 18% more likely than men to suffer. Plus, the likelihood of having depression is higher among women and those at risk of social exclusion. The increase in situations related to young people’s mental health is also concerning: one in seven young people in Catalonia experiences some kind of mental health disorder, while suicide has become the leading cause of unnatural death among youths.
COVID-19: Catalyst of digital mental health
Until the arrival of the pandemic, mental health had been a taboo topic. It wasn’t until the lockdown that society began to open up and speak about emotional wellbeing. This simple fact, associated with social distancing and technological advances, led to a surge in digital mental health companies, startups and scaleups which offered tech-based mental health solutions, therapy, self-help and monitoring materials, primarily through mobile apps, digital platforms, virtual reality, AI and portable technologies.
At that time, companies like Headspace, Calm, and Meditopia quickly scaled up all around Europe because people were in need of some kind of relief due to the restrictions. Downloads of mental health and fitness apps spiked from 565 million to 811 million in a single quarter in 20205. Investors quickly took note of the new demand and invested €7.7 billion in wellbeing and mindfulness startups in 2021, more than twice the nearly €4 billion invested in 2020.
The digital mental health market was valued at $19.5 billion in 2022 and is predicted to go from $23.5 billion in 2023 to $72.3 billion by 2032, showing a compound annual growth rate (CAGR) of 20.6% during the forecast period (2023-2032).
And all signs are for this trend to continue, if we bear in mind that mental health has been the clinical indication with the most funding so far in 2023, with $0.9 billion invested from Q1-Q3, and has remained steady as the leading indication since 2019. “We are in the midst of an awakening of behavioral health in which a decline in the stigma combined with the rising awareness of its benefits, all driven by the pandemic, have led to an explosion in demand,” says Asabys, who invested in Koa Health and Amelia Virtual Care, two mental health scaleups in the BioRegion of Catalonia.
Digital mental health: 5 challenges and 5 opportunitie
Despite the increasing interest in this business segment, trusting in the startups and scaleups in this sector poses a series of challenges. We asked some of the digital mental health companies in the BioRegion of Catalonia and specialized investment funds headquartered in Catalonia that have invested in this segment about the main challenges and opportunities prompted by these technologies. And here they are:
5 challenges of digital mental health:
Privacy and security: Handling sensitive mental health information requires solid privacy measures to protect users’ confidentiality and avoid data violations. To tackle this challenge, Edgar Jorba, CEO and co-founder of Aimentia, suggests “implementing robust encryption and authentication technologies and establishing clear, transparent privacy policies.” He also recommends that companies follow the best practices in information security and meet the data protection regulations in force, like the European Union’s General Data Protection Regulation (GDPR).
- Difficulty accessing the market: This is primarily true for solutions that want regulation. In the opinion of Carla Zaldua, CEO of AcceXible, “regulation encourages the market entry of many digital mental health products.” Xenia Riasol, COO of nen, concurs on this point and identifies the main reasons: “First, there is no common European framework—and oftentimes there isn’t even a common framework in the country—that harmonizes or standardizes the rules and requirements, and secondly, investors and organizations that award funding stipulate that results be obtained following the same standards as traditional medicine, even though the product is entirely different.” Aline Noizet, digital health connector, takes it a step further and talks about reimbursement. “Some countries like Germany, France, and Belgium already have a program that allows for prescriptions and reimbursements of validated solutions. Having users pay directly is not always easy, especially in European countries, where we’re used to having access to free healthcare.”
- Digital divide: Despite the improved accessibility that digital mental health offers, not everyone has the same access to technology, which could leave some people without the opportunity to benefit from digital solutions, like people with limited resources or rural communities. “Mental health should cut across all groups and social statuses, as well as all stages in a person's lifetime,” says Edgar Jorba.
- Specific underserved populations: According to Nina Capital, the population groups that need innovation in mental health the most are athletes, students and patients with chronic diseases. In an article published recently, the investment fund expressed an interest not only in solutions with scientific evidence but also in those focused on severe mental illnesses (SMIs), such as psychotic disorders, major depression with psychotic symptoms, treatment-resistant depression and bipolar disorder.and women are other populations that are not heard from often in this field of mental health. Solutions like nen and LactApp agree that this population continues to be stigmatized. “For example, if we look at the DTx’s on the market, we find that there is a lack of solutions aimed at children,” says Xenia Riasol.
- Quality, efficacy and risk management: The market is inundated with mental health apps and solutions, but not all are evidence-based or effective. Furthermore, initiatives replacing the figure of the expert have begun to appear. On this point, Xenia Riasol disapproves of the sheer number of digital solutions that exist without clinical validation, which “are saturating the market and devaluing the others.” To deal with this situation, Edgar Jorba proposes that governments, regulatory bodies and companies work together to establish clear standards and rules. “This could include evaluating the efficacy of the treatments, overseeing the ethics of data compilation and use and ensuring that the professionals operating on the digital platforms comply with the laws and codes of ethics,” he suggests.
5 opportunities of digital mental health:
- Improved access and adherence to treatment: Geographic barriers are removed, making mental health services more accessible for people living in remote areas, those with reduced mobility, and those who prefer not to meet face-to-face thanks to the elimination of time, location, and transport obstacles. “Many apps are used remotely and extend access to people who previously had no way of accessing these services,” says Carla Zaldua. This is also an advantage after birth, as it keeps women with newborns from having to travel.
- A lower gap between supply and demand: The demand for mental health services exceeds the available supply, and technology can help overcome this gap by offering scalable solutions that reach more individuals simultaneously at a lower cost. “Our company offers software at scale to treat many more children than traditional face-to-face psychotherapy,” says Xenia Riasol.
- Personalization and real-time monitoring: New technologies like artificial intelligence can offer personalized treatments that improve therapeutic diagnosis and efficacy, lighten experts’ load and offer professionals more information for decision-making. Regarding virtual reality, according to Xavier Palomer, CEO of Amelia Virtual Care, technology allows us to simulate a given situation that causes fear in a person—like flying—, so we can expose them to it and work through their phobia.
Early treatment and prevention: Digital tools can allow mental health problems to be detected early by tracking behavior patterns, symptoms and moods through the collection of user data. Carla Zaldua asserts that this would enable us to go from our current reactive healthcare model to a more preventive one.
- Anonymity and privacy: Many people feel more comfortable sharing their problems and concerns in confidential environments without having to resort to traditional systems. “There are studies showing that 75% of people who see a psychologist drop out of treatment,” says Xavier Palomer, who personally believes that it is hard for people to share private aspects of our lives with strangers. “For women, this privacy is valued even more if you think about the taboo associated with certain issues and the difficulty finding specialized care,” says Maria Berruezo, co-founder of LactApp.
Digital mental health companies in the BioRegion of Catalonia
The Catalan system currently has 33 digital mental health startups and scaleups, which account for 6% of the total (52512), a figure that has risen steadily in recent years, with 2020 seeing the most companies created (10). This explosive growth reveals the newness of this business sector. In fact, the typical company is less than five years old and has a variety of areas, such as clinical telemedicine tools, digital therapies (DTx) and health and wellbeing apps, as well as a variety of technologies, such as artificial intelligence, virtual reality and augmented reality. They are primarily geared at conditions like depression, postpartum depression, anxiety and (hospital) stress.
Investments in mental health startups and scaleups have also risen in Catalonia. In the past five years (2018-2022), digital mental health companies have raised €57.67 million. In 2021, this figure surpassed €21 million—9% of the total funding raised that year—when investment almost tripled compared to 2019. The engine driving this growth is primarily venture capital. Koa Health (€30 million, the largest digital health investment round in the history of the BioRegion and the rest of Spain), Amelia Virtual Care (€16.5 million), and Oliva Therapy (€12.62 million) are the three scaleups that have raised the most funding in this sector to date. In fact, these three companies have raised almost all the investment in this segment. For Robert Fabregat, Biocat CEO, “the creation of bodies like the National Mental Health Pact and its Master Plan show that mental health is seen as a priority in Catalonia and that research and investment are required to meet the needs of everyone suffering from these conditions.”
And for Asabys this is a priority sector: “We seek to invest in integrated solutions that enable the patient to be diagnosed, treated, and monitored at all times by combining the use of digital tools with personalized care. This tool makes patient management and administration easier for professionals, boosting efficiency and lowering the cost for the health system.”
Regarding research in digital mental health in Catalonia, the Innovation Network of New Technologies in Mental Health (TECSAM Network) has mapped around 130 potentially transferable digital mental health projects or solutions that have been developed by some of the 49 research groups at its 23 Catalan member institutions. These projects primarily focus on promoting wellbeing and on common mental health disorders like anxiety, depression, and eating disorders. The most frequently used technologies are digital platforms, mobile apps, artificial intelligence, virtual reality, and augmented reality.
Even though the organization was founded during the pandemic, they noticed an increase in interest in this topic in mid-2020. “When we started, we had a total of 29 member groups from 18 institutions, whereas now, three years later, we now have 49 groups from 23 institutions,” says Dr. Judit López Luque, promoter and head of Innovation at TECSAM and coordinator of Innovation at the Parc Sanitari Sant Joan de Déu. Likewise, new avenues of research and new projects focused on studying COVID-19 and mental health have also been launched.