Deal to Watch: Building an Online Community for Mental Health

Key Stats:

Summary

The MentalHappy team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

The MentalHappy founder is part of traditionally underrepresented groups in startup investing. 

Problem

Mental health conditions impose a massive burden on public health and human welfare.

In the US, 1 in 5 adults suffer from mental illness each year. Globally, mental health disorders are rising in every country.  They are projected to cost the world $6 trillion annually, if more effective responses aren’t implemented. This creates a drag on worldwide GDP that exceeds the combined cost of cancer, diabetes, and chronic lung disease. 

Tragically, there is intense stigma associated with seeking treatment and even with having a mental health condition in the first place. That stigma hinders many people from getting the help that they need. And even when patients do seek treatment, it can be difficult to find treatment options that are personalized enough to be effective.

Solution

MentalHappy has created a destination where people can get the support they need to promote their own mental well-being. 

The centerpiece of the MentalHappy offering is an online community that’s always available, free of judgment or stigma. The platform enables users to access various kinds of mental health resources. There are peer groups where users can seek encouragement and support. Self-guided tutorials provide healthy coping and stress management techniques. Daily motivational messages provide regular positivity. And users can connect with licensed healthcare professionals for online coaching. MentalHappy intends to partner with employers who then provide their employees with access to the platform. These partnerships are meant to address issues of burnout and imposter syndrome. They are also partnering with health insurance providers as another way to enable access. MentalHappy is creating a comprehensive online platform and community focused on fostering happiness and connection.

The Team

The core team members at MentalHappy have each demonstrated a career-long commitment to fostering healthy environments in which people can flourish. 

The company’s founder and CEO, Tamar Lucien Blue, is a serial entrepreneur with a broad background in operations and human capital. 

Meanwhile, the company’s Chief Psychologist, Amy Leo, brings to bear her years of experience as a counselor and therapist. She has also created a trove of content on the topics of mental wellness and positive reinforcement. 

Growth Plan

By making its mental wellness community available via subscriptions sold to end-users, employers, and insurance companies, MentalHappy is poised to capitalize on the red-hot growth underway in remote healthcare and telemedicine. That market is forecast to reach $25B in annual revenues in the US alone by 2025, thanks to the accelerating effects of the COVID-19 pandemic.

However, there’s also an increasing number of ventures attempting to deliver mental health resources remotely. MentalHappy’s founders aim to differentiate their offering by ensuring that theirs is the most people-centric offering in the market — one where users can actually connect with other human beings for support. 

Why We Like it

A Massively Underserved Market: Mental health is an enormously consequential public health issue — and so it’s not surprising that the existing market size is huge (an estimated $240B globally by 2026).

However, even that staggering figure understates the true need – because the mental health sector is plagued by the problem of unmet demand. Recent surveys indicate that every year more than 11 million Americans who have a need for mental health services fail to get the full measure of services that they require. Nearly half of that number do not receive any mental health care at all. 

Against this backdrop of unmet need, a model like MentalHappy’s should be well-positioned for exceptional growth.

Clear Pricing Model that Makes Mental Wellness Financially Accessible: MentalHappy’s business model is a simple subscription priced at $15  per user each month. 

Crucially, this pricing applies whether the monthly subscription cost is covered directly by the end-user or indirectly by employers who make the MentalHappy resources available to their workforce. Employees with untreated mental illness are thought to cost their organizations an estimated $1600 annually in lost productivity. An employer’s investment to make MentalHappy’s resources available to its workers could well very deliver strong ROI to the organization.

Attractive Terms – Especially for a Y Combinator Deal: The current terms of the MentalHappy investment opportunity (equity investment at $6M pre-money valuation) are quite favorable, given that MentalHappy is a graduate of Y Combinator, widely regarded as one of the best accelerators in the US. 

The terms are especially favorable in light of the fact that MentalHappy is not at the very beginning of its company-building journey. Rather, the team has generated significant market traction since graduating from YC. MentalHappy’s founders have initiated LOIs, partnerships or customer relationships with several healthcare organizations. They have also sustained existing ties with 30+ employers. Perhaps most importantly, their broader community has grown to over 100,000 people. 

Rating

MentalHappy’s tagline evokes the idea that the company will equip its members with “life skills for emotional well-being”.

If the company’s resource-rich mental wellness hub proves capable of delivering those skills and enhancing users’ wellbeing to a material degree, then there is every reason to believe that MentalHappy should succeed as a business. The size of the mental health market is not nearly substantial enough to fill the vast pools of unmet global demand for mental wellness services. There’s plenty of room for a company like MentalHappy to carve out a nice niche.

MentalHappy’s model – featuring employer and insurance partnerships; an established community of thousands of members; and a pricing model that puts mental wellness resources within affordable reach of just about anyone who needs them – seems ideally constructed to fill this unaddressed need.