After a record-setting 2021, funding for mental health technology companies dropped sharply in 2022, reflecting broader mental health tech trends across the digital health sector. According to CB Insights, total funding for mental health tech fell 53% year-over-year, totaling approximately $2.6 billion across 286 deals. In 2021, the sector saw $5.5 billion invested in 354 deals, making the previous year unusually active due to pandemic-driven demand for digital health solutions.
Despite the steep decline, 2022 funding levels still exceeded those seen in 2018, 2019, and 2020, highlighting ongoing mental health tech trends that demonstrate long-term growth and investor interest.
The Bigger Picture: Digital Health Funding
The mental health sector mirrored broader digital health trends. CB Insights reported that global digital health funding dropped 57% in 2022, falling to $25.9 billion. Economic factors, including inflation and rising interest rates, played a significant role in slowing investment. These financial pressures have influenced mental health tech trends, causing both investors and companies to reassess valuations, spending, and growth expectations after several years of aggressive funding.
Quarterly data highlights the slowdown more clearly. The fourth quarter of 2022 saw only 57 deals—a 23% decrease from the prior quarter and the lowest quarterly deal count in 12 quarters. Funding for the same period totaled $485 million, marking the lowest quarterly funding level since Q2 of 2020.
U.S. Continues to Lead
The United States remained the epicenter of mental health tech investment. U.S.-based companies accounted for 63% of deals in Q4 2022 and about 54% for the full year. The sector also saw the only U.S. digital health SPAC in 2022, with Akili, Inc. completing a merger in August.
Large funding rounds continued to draw attention. Maven Clinic led the pack with a $90 million Series E round, valuing the company at $1.4 billion and reinforcing its unicorn status from prior years. Other notable investments included Valera Health’s Series B ($44.5 million on a $177 million valuation), Brave Health’s Series C ($40 million), and InStride Health’s Series A ($26 million). These deals illustrate key mental health tech trends in which investors are prioritizing proven companies and growth-stage startups.
Shift Toward Later-Stage and Smaller Deals
The overall profile of mental health tech investments shifted in 2022. Early-stage companies received a smaller share of funding—69% compared to 82% in 2019. Meanwhile, average investment amounts decreased 44% year-over-year to $10.4 million, down from $18.6 million in 2021. Interestingly, the median investment remained around $3 million, consistent with the previous two years. This trend is another signal of evolving mental health tech trends, with investors focusing on smaller, more deliberate rounds instead of large-scale speculative funding.
No New Unicorns, But Growth Continues
Unlike previous years, CB Insights tracked no new mental health tech unicorns in 2022, leaving the sector with a total of 10 unicorns. While this may appear as a slowdown in high-profile valuations, it aligns with mental health tech trends showing a more cautious, sustainable approach to investment.
Factors Behind the Slowdown
Several external factors contributed to the 2022 slowdown:
- Inflation and Rising Interest Rates: Higher borrowing costs and market uncertainty led investors to scale back on high-risk investments, including early-stage startups.
- Operational and Reimbursement Pressures: Behavioral health companies face rising costs and challenges in securing consistent reimbursement, which can impact growth projections.
- Investor Strategy Shifts: Many investors are prioritizing companies with proven business models, clear revenue streams, and paths to profitability.
Implications for the Mental Health Tech Sector
Despite the funding decline, the sector remains stronger than pre-pandemic levels. The ongoing demand for digital mental health solutions is shaping mental health tech trends, driven by workforce shortages, rising awareness, and the need for accessible care.
The slowdown may push companies to focus on operational efficiency, strategic partnerships, and more targeted offerings. Smaller, deliberate investment rounds could foster stronger, more resilient startups capable of sustaining long-term growth in line with mental health tech trends.
Looking Ahead
While 2022 marked a cooling period for mental health tech investment, the sector’s long-term outlook remains promising. Investors are recalibrating expectations, but opportunities continue to exist for innovative solutions addressing behavioral health, patient engagement, and therapy access. Monitoring mental health tech trends will be key for both investors and startups as the market adapts to economic realities and prepares for future growth.
