Issue No. 139: Mental Healthcare Goes Digital

Courtney Powell

Mental health is getting a makeover.

A wave of digital behavioral health startups, collectively dubbed “Uber for therapy,” promise to revolutionize a broken industry.

Yet across the globe, anxiety and depression numbers continue to climb — this year, to an all-time high.

Is digital therapy hurting more than helping? Let’s take a look.

Barriers to Health

Patients seeking help must first navigate the labyrinth of American healthcare.

Shrink shortage. There’s a critical shortage of therapists and psychiatrists in the US, with just 30 psychologists per 100,000 people. A staggering 55% of US counties have no psychiatrists at all, and a psychiatric study warns of worsening deficits through 2025.

Matchmaking. Finding an available therapist is just the start. No easy feat, a good fit involves trust and understanding from both parties. For some, it can take several tries to find the right person. Others, who might prefer someone with similar cultural experiences or specialized expertise, must wade through a pool of limited options.

Insurance issues. Cost of care is the largest obstacle of all. An individual receiving treatment for major depression accrues, on average, an annual bill of $10,836. Those who don’t have insurance or who can’t afford the steep out-of-pocket costs simply forgo therapy altogether.

In January 2021, 41% of US adults reported symptoms of anxiety and/or a depressive disorder, but nearly 60% of those did not get treatment.

And in a healthcare Catch-22, the people who need mental health treatment most often can’t afford it. Lower-income individuals, people of color, and younger adults are disproportionately affected by mental health issues yet more likely to lack comprehensive health insurance.

The pandemic further exacerbated such disparities. Beyond the individual impact, experts project that untreated mental illnesses could cost the global economy an estimated $16T by 2030.

Ther-app-y for All

As mental health providers struggle to expand access and meet demand, digital startups hope to bridge the gap:

  • Last year, businesses in the digital behavioral health space raised a record $2.4B in funding, up from $915M in 2019.
  • Text therapy provider Talkspace went public this June in a $1.4B SPAC deal and recently partnered with the city of Reno to offer residents free mental healthcare.
  • Blended care therapy provider Lyra Health is now valued at $4.6B after its latest funding round.

Early-stage upstarts are leveraging tech to cut costs, scale psychiatric expertise, and lure patients away from the archetypal therapist couch.

Text therapy. A low-stakes way for newer patients to test out the waters, text therapy offers tiered access to licensed therapists. Subscription-based platforms like Talkspace and BetterHelp allow patients to send texts, leave voice memos, or schedule video sessions with licensed therapists for an extra fee.

AI thera-bots. Dystopian as it may sound, proponents emphasize that AI is meant to bolster, not replace, human connection. Bot therapists, programmed with psychology fundamentals, provide 24/7 support. The automation certainly helps with pricing — Woebot is free, while a Youper subscription is $7.50/month.

Blended therapy. Perhaps the most promising development in digital mental health, blended therapy combines traditional therapy with text support, self-paced video lessons, and group support sessions. Investors are paying particular attention to the likes of Lyra Health, Two Chairs, and Real.

The Turing Test

General “wellness” products, another category of mental health apps, include mood trackers like MoodKit, stress relief platforms like Sanvello, and guided meditation giants Headspace and Calm.

Here, the line between professional mental health services and woo-woo wellness offerings starts to blur — especially when the apps sit side by side on your home screen.

But psychologists are increasingly wary of digital offerings that claim to address mental issues yet don’t come close to providing the professional treatment mental health patients need.

Hannah Zeavin, author of The Distance Cure: A History of Teletherapythinks automated therapy is a “fantasy” that emphasizes accessibility and fun instead of actually helping patients get better.

For some, even video calls or text therapy with licensed psychologists don’t cut it. Linda Michaels, therapist and co-chair of the Psychotherapy Action Network, believes such methods to be impersonal and counterproductive:

“These apps really shortchange the essential ingredient that — mounds of evidence show — is what helps in therapy, which is the therapeutic relationship.”

From slight nuances in speech to subtle changes in body language, nonverbal cues speak volumes that a therapist simply can’t detect over video — much less over a text message.

As a result, many therapists dismiss digital apps altogether, asserting that human-to-human connection is essential to treating the complex, ever-evolving puzzle of an individual’s mental health.


Across time, the mentally ill have endured treatments, from the inhumane to the ineffectual, substantiated by nothing more than pseudoscience.

Before the 18th century, mental health disorders were attributed to demonic possession or divine punishment, and those afflicted were tortured or sent to insane asylums.

In the years following, treatment improved, albeit marginally. Doctors performed lobotomies, bloodletting, and purges to “cleanse” the body of its evils. Others sold miracle “cures” — largely useless tonics and pills pushed by predatory salesmen.

Today, many are drawing worrying parallels between these past treatments and the new therapy remedies on your phone. Studies have shown that the majority of companies in the space are making outsized—and even harmful—claims, without the research to back them up.

Worse, the actions of several text therapy providers have raised concerns that tech founders are prioritizing growth and profits over patient/therapist well-being:

  • Therapists on platforms like AbleTo and BetterHelp have called meager compensation structures and heavy client loads “abusive.”
  • In an open letter to the American Psychological Association (APA), therapists expressed concern about Talkspace’s unethical business practices, questionable marketing claims, and low-quality services.
  • On the consumer side, an overwhelming number of patients report poor experiences — like therapists sending impersonal responses or “ghosting” them all together.

Takeaway: The digital mental health industry is still in its infancy,  and even experts aren’t sure if new entrants are doing more harm than good.

What’s certain — the mental health crisis is worse than ever, and the systems in place to address it are deeply broken. Psychedelic treatments hold promise, but it’ll be a while before anything meaningful materializes on that front.

For now, tech companies taking up the mental health torch must be held accountable for the well-being of their users. Even so, can a patchwork of text, AI, and blended care therapy really step in for a human therapist?

Many remain skeptical. But others, like Hillary Schieve, mayor of Reno and arbiter of the city’s Talkspace initiative, take a better-than-nothing approach:

“If we stop one person from committing suicide because we did this initiative, it was well worth it.” 

💡 Investor Insights

As sports and fitness collide with media and culture, investors are searching for founders building the next generation of consumer brands.

On the Fitt Insider podcast. Chloe Steinberg, a partner at Sapphire Sport, joined us to discuss the firm’s unique approach to venture capital and the future of wellness.

On today’s show. We talk about Chloe’s journey to Sapphire Sport, including her time at Equinox Ventures. Chloe shares her framework for separating fads from sustainable health and fitness businesses. Plus, we discuss Gen Z’s approach to wellness and the broader shift toward living a healthier lifestyle.

Listen to the episode here

💪 iFIT Bulks Up

iFIT Health and Fitness will acquire Sweat for $300M.

What it is: Sweat is a workout platform founded by popular fitness influencer Kayla Itsines and CEO Tobi Pearce.

Why it matters: In an effort to keep pace with Peloton, iFIT has been busy.

First, the company recently changed its name from ICON Health & Fitness to iFIT. The speculation? They’re gearing up for an IPO that could value the company north of $7B.

  • The parent company of NordicTrack and other fitness brands, iFIT saw sales increase 600% last year — the company was profitable on more than $1.5B in revenue and 1M paid subscribers.

Sweat describes itself as one of the “world’s largest digital fitness platforms for women.”

  • Across its app and social channels, Sweat’s community includes 50M women.
  • Estimates put the company’s revenue near $100M for 2020.

On the podcast. Last year, Sweat CEO Tobi Pearce joined us on the Fitt Insider podcast to discuss the company’s growing user base and tactics for customer acquisition, retention, and community-building.

  • Listen to the episode here.

Looking ahead: As competition in digital/connected fitness continues to heat up, expect to see more acquisitions as leading players bulk up their offerings and user base.

As we’ve previously detailed, as users and attention shift to fitness creators and celebrity fitness instructors, the brands they’ve built will become acquisition targets for larger companies in the space.

With the battle for instructor talent and high-profile partnerships heating up, iFIT x Sweat is just the beginning.

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🍭 Healthyish Candy

Better-for-you candy companies want to satisfy your sweet tooth without the post-snack regret:

  • Sugar-free chocolate confectioner Lily’s Sweets saw a 51.3% increase in sales last year.
  • Vegan gummy bear maker Yumy Bear is going public in Canada this month at $50M.

But Big Candy isn’t giving up their $188.5B market without a fight:

  • Earlier this year, Mondelēz International (multinational snack company) snapped up Hu Kitchen, maker of paleo, dairy-free, and gluten-free chocolates.
  • Low-sugar candy company SmartSweets was acquired last year for $360M.
  • In May, Hershey announced it had entered the process of acquiring Lily’s Sweets.

Health hazards. Despite connections to the deadly “Diabesity” epidemic and a laundry list of corresponding health issues, sugary candy has flown under the radar, safe under the protective wing of childhood nostalgia.

But last year, the pandemic sharpened public awareness of health concerns — consumers across the globe are breaking up with ultra-processed, high-sugar foods. A 2019 study found “reducing sugar” as Americans’ top health consideration.

Paging Willy Wonka. To meet these demands, candy chefs are engineering healthier alternatives, crafting low- or no-sugar treats to accommodate diverse diets:

  • Surf Sweets’ gummy bears are gluten-free, non-GMO, and vegan.
  • Go Better offers a keto alternative to the likes of Reese’s peanut butter cups.
  • And for those who still crave sugar’s taste and texture, scientists at DouxMatok have engineered a healthier alternative: Incredo Sugar.

Sugar crash. Upon closer look, candy’s better-for-you story diverges from its soda and snack counterparts. Traditional candy leaders like Nestlé have fled the industry, selling off its US candy business to Ferrero for $2.8B in recent years.

Others wonder if the industry can ever truly claim a “healthy” label, noting that candy with low or no sugar might be somewhat better for you. But not by much.

Looking ahead: Healthy candy is up and coming but, for now, remains niche. Consumer adoption and ingredient innovation trails other segments of the food and beverage industry. While there’s room to innovate, skeptics believe the future of candy might be just… less candy.

Keep an eye out for other sweets, from healthy ice cream to healthy donuts, who may try to win over your taste buds instead.

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📰 News & Notes

💰 Money Moves

  • iFIT Health & Fitness (formerly ICON) acquired Sweat, the women-focused workout app founded by Kayla Itsines, for $300M.
  • Echelon Fitness is exploring strategic options, including raising new capital or going public.
    More from Fitt Insider: Echelon, Pitbull, and the Exertainment Wars
  • Wahoo Fitness, makers of indoor cycling and endurance training products, received a “significant” investment from private equity firm Rhône 
  • Cadoo, an app for betting on and competing in fitness challenges, raised $1.5M in seed funding.
    More from Fitt Insider: 
    Fitness is a Game
  • Thrive Global, a behavioral change technology company, raised $80M in Series C funding.
    More from Fitt Insider: Peak Burnout 
  • UpsideHōM, a fully managed, tech-enabled living space for older adults, landed $2.25M in seed funding.
    More from Fitt Insider: The Senior Care Crisis
  • Osmind, digital infrastructure for neuropsychiatry, closed a $15M Series A round.  
  • Aleph Farms, an Israel-based cultivated meat company, secured $105M in Series B funding led by L Catterton.
    More from Fitt Insider: The Future of “Meat”
  • Non-carbonated energy drink maker X2 Performance raised $16M in funding led by L Catterton. New York Giants running back Saquon Barkley also invested in the round.
    More from Fitt Insider: 
    Rise of the Athlete Investor
  • L-Nutra, a nutrition technology focused on longevity and healthy aging, received an investment from private equity firm Brentwood Associates.
    More from Fitt Insider: Personalizing Nutrition 
  • Bookee, a business management platform for fitness entrepreneurs, raised pre-seed funding from Antler India.
    More from Fitt Insider: 
    Arming the Rebels
  • Empire Portfolio Group acquired four Orangetheory Fitness studios in Connecticut. The franchisee now owns more than 40 studios.

Today’s report is from Fitt Insider contributor Melody Song with Joe Vennare and Ryan Deer. Artwork by Courtney Powell.

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