Why create a venture fund to invest in mental health related startups?

Part of the answer to this question certainly includes some data on mental health, supply/demand observations in space, and stories of recent founders’ success underpinned by a reduction in stigma. However, the primary component of this thesis is driven by personal experience.

Personal Motivation

Stephen Hays is building What If Ventures — focused on Mental Health startups

After nearly 2 decades of struggling with addiction and type 1 bi-polar disorder, I finally sought help. Often people respond to that statement with congratulations for taking the step to get help. That response makes me feel self conscious because that realization could have been made many years prior, and without having to hurt so many people along the way. I’ve detailed that story a bit more in a personal blog post here.

While I live one day at a time in recovery, I still think long term about problem sets, just as I did in the past. I wonder what it would have taken for me to get help earlier. I wonder what my path would have looked like if I was aware of resources that existed to help me. I ponder one question more than any other though, which is “why didn’t I listen to anyone who told me I needed help?”

Was it because I didn’t think there was a problem? Was it my ego? Was it stigma? Fear? Pride? I don’t know. I can’t help but suspect that my lack of openness was a combination of many things that leads a large swath of the population to also not get help every year.

How Big is the Problem?

It doesn’t take a lot of work to convince anyone that Mental Health is a large problem for society. The numbers are staggering and have been well documented by the National Association for Mental Illness here. Here is a taste of the scale for those learning of this today:

Approximately 1 in 5 adults in the U.S. (46.6 million) experiences mental illness in a given year.
Approximately 1 in 25 adults in the U.S. (11.2 million) experiences a serious mental illness in a given year that substantially interferes with or limits one or more major life activities.
Approximately 1 in 5 youth aged 13–18 (21.4%) experiences a severe mental disorder at some point during their life. For children aged 8–15, the estimate is 13%
Among the 20.2 million adults in the U.S. who experienced a substance use disorder, 50.5% — 10.2 million adults — had a co-occurring mental illness.
Serious mental illness costs America $193.2 billion in lost earnings per year.

Let’s take that last point and think about it for a moment. $193 billion in lost earnings each year due to serious mental illness. This leaves out mental illness impacts that are not considered “serious.” This statistic comes from the report linked here. This report was written in 2008. The specific data is from a 2002 estimate which is a revision of a number from an original 1992 study.

This is a huge number, and it is pre-social media (which many view as a primary driver for increased loneliness and unhappiness). How big is this number today? I can’t prove it, but I can’t imagine anyone arguing that it is smaller today.

Dislocated Market: Supply and Demand Imbalance

The demand for help with respect to mental health and addiction recovery is easy to prove. At the same time, the supply of “help” is minuscule at best. There are about 2.5 million people a year who are able to receive in-patient addiction treatment. This is just a fraction of the number who need help. At the same time there are just 28,000 psychiatrists in the U.S. and that number is declining every year.

Above in the stats I listed, we said 46.6 million people experience mental illness annually. This doesn’t include the people who go unreported for a number of reasons.

The supply of “help” in the form of psychiatrists, and treatment centers, can’t even scratch the surface or make a dent in the demand for help.

What Will the Solutions Look Like?

1) The solution is NOT building more treatment centers or minting new psychiatrists at universities. You could never create enough of either, fast enough.

2) There will be many solutions. One size does not fit all in recovery. Many of those solutions will be technology solutions that help us leverage the resources we already have, or help us learn to treat ourselves as well as learn to treat one another without expensive inpatient treatment that is only available to a few people.

How do Startups Fit in to the Landscape of Solutions?

Startups will play a big role in helping society tackle this mental health problem. The first signs of this are meditation apps, virtual therapy apps, and resources to help you find acute care help when you are in need. Businesses such as Calm, Headspace, Talkspace, and many others that have gained broad awareness and raised significant venture capital are pioneering the way in our industry.

I believe that there are many areas for innovation in the space. Let’s take the idea of measurement for example. For thousands of years humans have found ways to measure their physical health. We use scales, tape measures, blood pressure devices, heart rate monitors, and so on. When you consider how important mental health is, then why do we have so few tools to measure our mental wellness or mood? What are the road blocks to building these tools? There is a great deal of opportunity around this one idea, that will lead to platforms that transform mental wellness for generations to come.

That’s just one vertical within a huge market place. There are so many ideas and solutions that could improve availability of care, that could reduce the burden on insurance and government, that could help us become more focused on our wellness that seem like low hanging fruit when you dig in just a little bit.

What if….

So I was thinking about it. I wondered, what if we put money to work backing entrepreneurs who are just now coming forward due to reduction in stigma, to build these solutions? What if we were honest about our shortcomings, and in the process of seeking self improvement, identified solutions that could help many others? What if we ended up backing one startup, that transformed the statistics mentioned above?

The goal of What If Ventures is to invest in startups that are tackling these problems and have the greatest social impact on as many people as possible with the solutions our founders are building.

Stephen Hays is a Dallas based venture capitalist focused on the mental health and addiction recovery industry. Feel free to reach out on LinkedIN, Twitter or via whatif.vc

Previously, Stephen Hays founded and managed Deep Space Ventures, venture capital firm based in Dallas, TX.