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The pandemic harms the mind, helps an industry

Isabella Escobedo
June 28, 2021

From Moodpath to Talkspace and Mindshine, the market for digital mental health apps has boomed since the pandemic began. But will the trend continue after the crisis?

Man under stress
A mental health crisis caused by the pandemic has opened up a market for digital mental health services in EuropeImage: Richard Brunel/PHOTOPQR/LA MONTAGNE/MAXPPP/picture alliance

Germany, fall 2020: First the restaurants close, then the retailers. The number of infections rise, and contact restrictions tighten. Jonas Schmidt feels isolated, like many other people. But for Schmidt, who has struggled with depression for years and already has trouble keeping in touch with his friends, it hits even harder. Once a week he sees a therapist, but this can't make up for seeing his friends. Looking for support, the 23-year-old stumbles across the therapy app Selfapy.

Selfapy is a digital therapy service that combines individual psychological support and online courses targeting common mental health struggles. The startup is thriving and is a leading provider in its field. But fueled by the pandemic, competition is growing steadily.

The pandemic increases psychological stress

Schmidt isn't the only one struggling. The pandemic has been an extra burden for both people who have dealt with mental health issues in the past as well as for those who hadn't. According to a study by NAKO, a research project that tracks the health of the German population, during the pandemic more people under the age of 60 reported symptoms of anxiety and depression. Young women were particularly affected. Among the 114,000 respondents, the share of people with moderate to severe symptoms of depression increased from 6.4% to 8.8%.

The app Selfapy shown on a smartphone
The German mental health app Selfapy saw a huge boom in business during the pandemicImage: Selfapy

Last year, many therapy services were discontinued or moved to the virtual world. Selfapy benefited from this development. Almost three times as many people as before the pandemic contacted the online therapy provider. Companies also became more interested in offering the service to their employees.

In 2020, Selfapy signed on as many corporate partnerships as it had in the previous four years combined, according to psychologist and Selfapy co-founder Nora Blum. Blum founded the company in 2016, together with Katrin Bermbach and Farina Schürzfeld.

Since then, more than 30,000 people have signed on for Selfapy's mental health services and courses. Today, the costs for the courses are covered by all health insurance companies in Germany. In January 2020, shortly before the pandemic began, the company received a final major grant of €6 million ($7.1 million).

Another week, another mental health startup

The founders' mission is to increase mental health awareness and make it easier for those who are struggling to access therapeutic support. The latter took a positive turn during the pandemic, Blum told DW.

"I feel like now it's more acceptable to say you're not doing well."

Selfapy co-founder Nora Blum
The psychologist Nora Blum co-founded Selfapy with two others in 2016Image: Annette Koroll/Selfapy

But the pandemic has done more than draw greater attention to the issue of mental health. It has also driven the digitization of health care. And this includes psychotherapy, a common type of talk therapy used to manage one's mental health. 

Christian Weiss is well aware of this trend. "Not a week goes by that we don't see an exciting new company active in the field of digital mental health in Europe."

Weiss is the managing partner of Heal Capital, a  €100 million-strong venture capital fund of the Association of Private Health Insurers (PKV). The Berlin-based investment firm specializes in funding startups that work at the intersection of health care and technology.

In the US, the market for digital mental health services has been booming for some time. In 2020, investors pumped a record $1.5 billion into the industry. One trailblazer in the field is the American startup Cerebral. The company offers psychiatric treatment and access to medication as well as online therapies. It reached a market value of over $1 billion in just a year and a half since its founding, making it the fastest-growing "unicorn" in the digital mental health scene. 

Even after the pandemic, mental illness will remain

Mental health startups in Europe might not be setting these kinds of records, but they can certainly keep up in terms of their innovation potential, says Weiss.

"The European market is a bit younger, but we see incredible momentum and many exciting companies with diverse teams." He hopes that the startup scene in Europe will play a bigger role in this area and remain competitive.

Heal Capital Managing Partner Christian Weiss
Heal Capital Managing Partner Christian Weiss says there is huge momentum in the realm of digital mental health services in EuropeImage: Jonas Friedrich

Both Blum and Weiss are optimistic that mental health awareness will increase even after the pandemic is over, meaning the market will continue to grow. "The challenges of this world will not go away even after the pandemic ends," said Weiss.

The Digital Health Care Act passed by the German government in November 2019 has set a good foundation for the industry's growth. It aims to further advance digitization in health care by allowing doctors to prescribe health apps like Selfapy. For Blum, this is an important step.

"Digitization is the zeitgeist. We use the internet to find a place to live or a relationship. We should also be able to take care of our health digitally, and Germany still has a lot of catching up to do there."

This article was adapted from the original German.