Digital mental health companies experienced a slight resurgence in the third quarter of 2022, following a challenging first half of the year. According to new data from CB Insights, Q3 recorded a total of 72 deals in the mental health technology space, collectively worth $700 million. This represents a modest increase from Q2, which saw 70 deals totaling $600 million. While the uptick is subtle, it indicates that investor interest in digital behavioral health remains steady despite a broader pullback across the digital health industry. The rebound in Q3 is notable given the overall decline in digital health funding. Across the wider health tech sector, funding in Q3 fell by 36% quarter over quarter, reaching its lowest level since the first quarter of 2019. Yet, even amid this downturn, mental health tech investment continues to attract attention from investors looking for stable opportunities with long-term growth potential.
How 2022 Compares to Previous Years
Digital mental health deals slowed considerably in the first half of 2022 when compared to 2021, which analysts widely regard as an outlier year for digital behavioral health funding. In 2021, the sector experienced record-breaking levels of mental health tech investment as investors rushed to support platforms addressing the surge in mental health needs during the pandemic.
Despite a slower pace this year, experts note that 2022 deals are still expected to surpass those in 2020 and 2019, suggesting that the sector is maintaining long-term growth momentum. Larry Kocot, principal at KPMG, told Behavioral Health Business in August, “When you put it in perspective of the economic headwinds that are out there for the entire industry and the pullback in deals of the entire industry, we’re looking at the deal flow to be still pretty healthy for behavioral.”
However, one significant trend in 2022 has been the shrinking size of deals. The average digital mental health deal has dropped from $19 million in 2021 to $11 million year-to-date. This decline reflects a more cautious investment climate, with investors prioritizing sustainable growth, revenue generation, and proven business models over speculative high-value deals.
Major Deals and Funding Highlights
Alma Health emerged as the largest recipient of funding in Q3 2022, securing a $130 million Series D round. Alma’s platform helps behavioral health providers navigate the complex intersection of insurance and care delivery, making it a critical tool for providers looking to scale efficiently. This nine-figure deal was the only one of its size in the digital mental health space for Q3, highlighting Alma’s unique position in the market.
Several other companies raised substantial eight-figure rounds, demonstrating that there is still significant investor appetite for promising digital mental health startups. Grow Therapy, Rippl, and Oui Therapeutics each raised more than $20 million, reflecting continued demand for mental health tech investment that supports therapy access, treatment coordination, and patient engagement.
Despite these investments, there has yet to be a new digital behavioral health unicorn in 2022. Mergers and acquisitions have also remained limited, with only six deals reported in Q3. Similarly, SPAC and IPO exits continue to be rare in the sector, with only one of each occurring in the same quarter. These trends suggest that while funding remains available, the market is becoming more selective and focused on strategic growth rather than rapid exits, keeping mental health tech investment focused on sustainable opportunities.
Regional Insights: U.S. and Asia
The United States continues to dominate the digital mental health market. In Q3, 36 deals were completed in the U.S., totaling $500 million in funding. However, interest in the sector is growing in Asia, which saw 13 deals worth $200 million during the same period. This international expansion reflects the global need for mental health solutions and the increasing recognition of digital platforms as effective tools, attracting more mental health tech investment outside the U.S.
Looking Ahead: Early Q4 Activity
Momentum in the digital mental health sector appears to be carrying into Q4 2022. Mindful Care, a startup focused on virtual urgent mental health services, recently raised $7 million in Series B funding. The company plans to use this capital to expand its offerings to new markets and launch innovative individual therapy and addiction treatment programs.
NeuroFlow, which provides coordinated behavioral health services designed to improve patient engagement and outcomes, also landed $25 million in funding earlier this month. These developments demonstrate that mental health tech investment continues to flow toward startups offering scalable, targeted solutions that enhance care delivery and patient outcomes.
Trends Shaping Digital Behavioral Health
Several key trends are emerging in digital mental health funding and mental health tech investment:
- Focus on Sustainability: Investors are increasingly prioritizing startups with proven revenue models and scalable technology solutions rather than speculative high-growth plays.
- Integration with Traditional Care: Platforms like Alma Health and NeuroFlow show the value of combining digital tools with existing behavioral health providers to improve care coordination.
- Global Expansion: Asia is emerging as a key market, providing new opportunities for mental health tech investment to address unmet needs worldwide.
- Targeted Solutions: Startups addressing specific gaps—virtual urgent care, addiction treatment, or coordinated care platforms—remain highly attractive to investors.
Conclusion
While 2022 has been a challenging year for digital health investment overall, the digital mental health sector has demonstrated resilience. Q3’s modest increase in deals and funding shows that investor confidence in the field remains intact. With continued innovation, global expansion, and strategic growth, mental health tech investment is expected to continue driving meaningful change in the delivery of behavioral health care.
Early Q4 activity suggests that startups with targeted, scalable solutions will continue to attract capital, positioning digital mental health as one of the most promising and stable sectors within health tech. As the year progresses, mental health tech investment is likely to remain a key driver of innovation and access to mental health services worldwide.
