The surge in mental health issues among teenagers and young adults reflects long-term, structural changes in families, the economy and the tech-centric pop culture in which young people grow up.
In many cases, the individuals most in need of support are the least able, or willing, to get it.
That means startups rushing to serve the burgeoning market are looking beyond clinical interventions to find effective, and cost-effective, ways to rebuild the social connections that undergird emotional resilience and positive attitudes – and even enable people to seek help. Yes, AI has a role to play, but so do humans.
“We need to get young people what they’re asking for,” says Chris Appleton, who launched Art Pharmacy three years ago to “prescribe” non-clinical interventions, like going to a dance class or taking a walk with a friend, that can significantly improve the mental health of patients who struggle with clinical care.
“If young people are asking for social connection, art, culture and creativity, let’s get those support to young people earlier before they are in crisis.”
Atlanta-based Art Pharmacy is among the most recent additions to the investment portfolio of Hopelab, a nonprofit research organization that has invested in more than two dozen youth mental health tech startups with funding from Omidyar Group. Another recent addition to Hopelab’s portfolio is Reema Health, a Minneapolis-based company that deploys “care guides” — people who live in the same communities as its target members — to engage hard-to-reach health plan members, improve health outcomes and reduce costs.
“We’re investing in companies that help young people with eating disorders, with moderate to severe anxiety, with a whole range of things that are really clinical in nature,” Hopelab’s Margaret Laws said on ImpactAlpha’s Agents of Impact podcast this year (disclosure: Hopelab supports ImpactAlpha’s coverage of Healthy Youth).
Hopelab targets “upstream” social interventions as well, she says, “that help young people find purpose, that help young people feel like they’re contributing, that help them build connections and support and relationships.”
Co-investment network
If big challenges represent big opportunities, youth mental health unfortunately qualifies.
As many as one in three youths aged 12 to 17 had a mental, emotional, developmental or behavioral problem in 2022–2023, according to the latest National Survey of Children’s Health. Two in every five high schoolers report persistent feelings of sadness or hopelessness, up from 30% in 2013. Rates are higher for girls and LGBTQ+ youth.
“The market is massive,” says Anna Wang of San Francisco-based GreyMatter Capital, one of the few VC firms specializing in mental health. Of GreyMatter’s 30 portfolio companies, seven are specifically focused on youth mental health. “There’s definitely room for a dozen funds to come in and make returns.”
GreyMatter and Hopelab, along with Gratitude Railroad and others, this year co-invested in Flourish Health, based in Durham, NC, which combines in-person support with virtual psychiatric care for serious conditions such as bipolar and major depressive disorders. “They have a great program with amazing outcomes for treating youth patients with those conditions,” Wang said.
Grey Matter has also backed Hopelab portfolio companies including Manatee, a behavioral health provider with a focus on kids and adolescents with anxiety, depression and ADHD; and Valera Health, which provides personalized virtual mental health services to Aetna, EmblemHealth, Humana and other health plan members.
Park City, Utah-based Gratitude Railroad has also focused on youth mental health, with a growing portfolio that includes startups like Little Otter. The San Francisco-based startup partners with Kaiser Permanente in California to provide mental health care to families, with a focus on young children. Hazel Health, a Hopelab portfolio company that provides mental and physical health care services through K-12 schools, acquired Little Otter in October this year.
Venture capital investors, including Pivotal Ventures, Torch Capital, J4 Ventures and Nina Capital, have gravitated toward startups that pair AI with real-time clinical oversight to expand access to youth mental health care (see, “AI-driven solutions to streamline mental health services for struggling youths”).
But actual human interaction still improves outcomes. Wave, another Hopelab portfolio company based in Menlo Park, Calif., in a recent study found that participants who got eight weeks of live coaching, reduced symptoms and responded faster than those who were supported only by app messaging and personalized content, without live sessions.
The combination of science, technology and human connection is better than either AI or traditional therapy alone, Wave reported. Coaching, says Wave’s Sarah Adler, “can deliver effective, scalable mental health care that drives real ROI for anyone.”
Reaching users
The insurance giant United Healthcare, which has built out a network of mental health providers is also an investor in Hazel Health, underscoring the role of strategic investors. Cigna Foundation committed $9 million in October toward investments in youth mental health (age five to 18) over three years.
“The health plans are like, ‘Man, we’re doling out all of this money to pay for inpatient hospitalizations and ED visits, mostly around physical health costs,’” says Reema founder Justin Ley. “But those costs are driven by unaddressed, untreated, behavioral health conditions in lots of different forms.’”
A veteran healthcare product developers, Ley says he launched Reema after a six-year stint at UnitedHealth Group “to find, engage and build trust with people who have been written off the healthcare system.” That means people who are housing insecure and living with often undiagnosed behavioral health conditions that are exacerbating their overall health and wellbeing.
“These are people that health plans have tried and tried and could not get them engaged,” he says. After growing up with a single mom who received government services, he says he wanted to build solutions for the healthcare underserved. “Over the years I grew a little disillusioned at the things I was building and the people that ended up using them.”
Reema combines elements of peer support specialists and community health workers with software that helps members schedule appointments, refill prescriptions, secure referrals and gain access to social services like food, housing and utilities. Reema’s care team includes a therapist and then a psychiatric mental health nurse practitioner that functions as a prescriber.
“Our job is to build trust with members and get them engaged, treat those behavioral health conditions, help them navigate their physical health conditions and set them up with ongoing support so that they don’t continue to use the ER as primary care.”
Health plan members that use Reema’s services typically get embedded into the healthcare system within six months on average. A Reema study has proven to reduce total cost of care for a national care plan by 23% over a two-year period. During that timespan, outpatient visits increased and hospitalization and emergency department visits decreased.
To Medicaid-managed care organizations, that makes Reema’s cost-efficiency model attractive. “They get the savings of not having to pay for more hospitalizations,” Ley says.
‘Social prescribing’
Art Pharmacy’s Appleton also drew on his personal experience as a 19-year-old in substance-abuse recovery to design a service to reach young people where they are.
A recent study from the Wallace Foundation found that community-based youth arts programs that provide young people with opportunities for belonging, identify affirmation and skill development, boost their mental wellbeing as well. The study focused on young performers of color in music, dance, theater and other arts programs in cities like Detroit, Chicago, Atlanta, the Oakland Bay Area.
“The arts, specifically music and creative writing, played a really important role in my early recovery, [and] the arts still play an important role in my recovery and overall wellbeing,” Appleton told ImpactAlpha.
Art Pharmacy’s care delivery model, like many of Hopelab’s portfolio companies, runs through partnerships with healthcare providers like Wellstar Health System and colleges and universities, including Stanford University and the University of Arizona. Loneliness is a rising challenge in higher education, with first-time students living away from home especially at risk.
Art Pharmacy sells the health plans and universities access to a network of museums, dance studios, community arts and other arts and culture providers. The schools then refer their students and members to Art Pharmacy. More than half of members that have received Art Pharmacy’s standard care plan, which includes a dozen doses of arts and culture over a 12-month period, have reported a decrease in loneliness and an improvement in their mental health and wellbeing. Members also reported a reduction in avoidable emergency room visits.
“Our technology matches the unique member profile based on their clinical needs, social needs, access barriers, health goals and cultural identity,” says Appleton. The recommendation might be something like, ‘Hey Chris, your health goal is stress reduction, and to boost social connection based on your profile, these are five suggested activities for your first dose of arts and culture.”
“This is a more accessible, affordable intervention. Despite federal headwinds that exist for the Medicaid industry at large,” he says, “we’re finding a really strong appetite among managed-care plans for new, innovative solutions.”
Another Hopelab portfolio company, Healthy Young Minds, also includes art and music therapy, along with counseling, speech and occupational therapy through an online telehealth model, primarily in Colorado.
