In this mental health market update episode, we are covering valuation trends, investor sentiment, and our 9 key takeaways from the mental health startup market heading into 2021.
We cover public and private market valuation trends impacting mental health startups, and we dig into results from a 150-investor survey we recently conducted on valuation expectations and market sentiment. We also share our 9 key takeaways on the mental health startup market going into 2021 based on our 2020 experience investing $5.4mm dollars into 9 startups in the space at What If Ventures.
Blog: Mental Health Investor Sentiment Survey: Extreme Optimism Going Into 2021
What If Fellowship: https://whatif.vc/fellowship
At What If Ventures we get asked this question all the time: “What is a fair VALUATION for my mental health Startup?”
I’ve summarized my thoughts on this topic based on 3 key efforts:
1) A recent investor survey of 150 mental health startup investors
2) Summary of public comps relevant to our space
3) Our insights into recent private market valuations / transactions
Investor Sentiment Survey
During the last week of December 2020, I surveyed 150 mental health startup investors. I asked for their opinions on various issues, such as the latest investment trends in the industry as well as valuation expectations.
I’ve summarized the results in a detailed 4,000 word blog post, but below are the key takeaways. You can read the full analysis of the survey results here.
My goal here is to share insights that founders and investors can leverage as they move into a new year of building, investing in and supporting entrepreneurs who are solving one of the greatest problems of our time around mental health and emotional wellbeing.
Although this is not a scientific survey, I believe that the results can help us understand the challenges and opportunities in the mental health startup space. I’m sharing my thoughts along with the data in the hopes that we can learn together as we all work to support entrepreneurs in this space.
Key Survey Takeaways
- I was surprised at the valuation expectation results. I expected investors to want to see multiples below 10x annual recurring revenue (ARR), but the bulk of investors seem to expect valuations north of there.
- I found it interesting that 43% of investors surveyed are investing in the mental health space list “for profit” as their primary objective.
- Nearly 75% of the investors who participated in this survey said they or a loved one sought help with their mental health in the last 12 months.
- 41 of the investors surveyed said they did not invest in a mental health startup in 2020, but only one investor said she intends to invest $0 in this space over the next three years.
- More than 90% of investors expect mental health startup returns to be in line with or better than returns on startup investments in other sectors.
- I was surprised at which sectors within the space are most desirable and least desirable when it comes to investor appetite. See below for a comparison, by vertical.