4 market trends for behavioral health startups

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Digital behavioral health startups secured a record $2.4 billion in venture funding in 2020, according to a recent report released by Rock Health.

Below are four key trends in the digital behavioral health market, according to the report:

  1. Investors are providing an increasing amount of capital into later-stage deals, as opposed to early-stage funding rounds, to help mature companies scale to meet urgent demands. The average later-stage deal has increased from $23.7 million in 2016 to $64.2 million in 2020.

  2. Behavioral health startups with both generalist and specialist models are gaining funding  to meet the pandemic's strong and varied behavioral health services demand. Generalist startups, companies that offer behavioral health and non-behavioral health services, accounted for $1.6 billion in funding in 2020, and specialist startups, those that only treat behavioral health conditions, raised $804.3 million.

  3. Consolidation for clinical and digital capabilities is becoming more common. Behavioral health startups are more likely to exit via acquisition rather than an initial public offering.

  4. There is a relatively low amount of capital going to startups that focus on substance use disorder and developmental disorders compared to those that focus on mental health, signaling an opportunity for investors and innovation.

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