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Empactful Capital is launching a Mental Health fund targeting early-stage innovators in mental and behavioral health.
We’ve invested in the mental health space opportunistically out of our first fund since 2017. The more we’ve learned the greater our sense of urgency to solve the challenges we’re facing and the more bullish we are on the prospect for breakthrough innovations. Large portions of our society were anxious, lonely, isolated, and depressed before the pandemic. Opioid addiction has ravaged entire communities and robbed countless lives. And now COVID-19 is making us more isolated, lonely, and anxious.
Until only recently mental health was often a stigma and at best an afterthought from ‘physical health.’ And even still some 68% of patients with mental illness don’t receive treatment each year and the average delay between the onset of symptoms and treatment is 11 years. Considering that 1 in 5 adults and 1 in 6 youth struggle with mental health issues, this separation of mental and physical health has led to disastrous results both clinically and financially.
Annual mental health expenditures in the US topped $234 billion. As large as the direct expenditures are, indirectly it’s estimated that mental and behavioral health issues drive an extra $300 billion in physical health costs from managing patients with a mental and chronic physical health need.
While the financial cost to our healthcare system is huge, the human cost is heartbreaking. The Veterans Administration reports that approximately 22 veterans die by suicide every day. More than 67,000 overdose deaths were reported in 2018 according to the National Institute of Drug Abuse. Then there is the largely underreported loneliness epidemic that leads to unfulfilled lives and poor health outcomes. Nearly 1 in 3 people over 60 yrs. old reported loneliness and there is a strong association between loneliness and poor health outcomes, and even death.
A post today would not be complete without a word about COVID-19. While we don’t have the knowledge to weigh in on its spread or what’s to come, we do believe it’ll have two profound effects. One is the necessity for virtual care and telehealth services. What started as a convenience to make healthcare more consumer-friendly, has become a necessity in a world of pandemics.
The second is the impact of ‘social distancing’. Pre-COVID-19 we already faced loneliness and isolation problems, pandemic influenced quarantine will only increase it. Schools are closed, sporting events canceled, nursing homes are preventing visitors; an already isolated society is retreating back into itself. While we’re hopeful the pandemic ends soon, it’s likely the effects of social distancing will remain as we’ve entered a fearful new-normal wondering when the next virus appears.
Against these dire numbers, we at Empactful Capital see hope. The stigma around mental health is diminishing as it truly impacts all of us. Everyone has a personal story or loved ones who have faced challenges or addictions. And COVID is teaching all of us empathy for what it feels like to be anxious, isolated, and lonely. The healthcare system is waking up to the necessity of coordinating the treatment of mental and physical health. And, most exciting for us, entrepreneurs are bringing to market new solutions to treat and support sufferers.
We believe the total addressable market for innovative mental health solutions is over $40 billion. Rare is the opportunity to do well and do good this large.
To get to a number as big as $40 billion, we need to stop siloed thinking and look for solutions across a full spectrum that is proactive and fully integrated with physical health encompassing Preventative Care & Engagement, Care & Benefits Innovation, and Outcomes Transformation.
Compassionate Disrupters
As noted above, isolation was a problem before the coronavirus and especially so with older adults. Socially isolated people face health risks comparable to those of smokers. On the flip side, engagement in intellectual, social, and physical activities offers protective benefits from age-related cognitive decline, and lowers dementia risk.
That’s why, we’re big fans (and early investors) in Amava. A social platform helping adults to connect with and maintain purpose post-career. Amava provides engagement, volunteer activities, part-time work, and educational activities for members of the largest demographic shift in our history. Amava states in their mission, “We want you to live a long, fulfilling life. We focus on social engagement because, according to research, it can be more important to wellness than genes, nutrition or fitness. It’s downright scary how dangerous isolation can be.”
Another trend accelerating today is virtual care. In many medical specialties virtual care is a consumer-friendly option. For mental health, it’s a necessity. Access to regular and high-quality mental health services is a fundamental societal concern, and is an issue in nearly all communities today. 65% of rural communities lack direct access to behavioral healthcare and 77% of Americans live in Mental Health Professional Shortage Areas.
All of which is why we like Innovatel. Innovatel offers 100% video-based, scheduled psychiatric care to patients in 12 states. Innovatel provides patients with specialized outpatient telepsychiatry experts, including board-certified or board-eligible psychiatrists, psychiatric nurse practitioners and licensed social workers. In 2016, Innovatel established an exclusive strategic partnership with the National Council for Behavioral Health.
These are but two companies of a growing ecosystem of compassionate disrupters challenging the mental health status quo. While the opportunity is indeed very large, our fund will be small and focused. We are developing our fund with a limited number of like-minded LPs who are passionate about doing good and doing well.
Mental health is at a crisis stage. Addiction, depression and isolation impact all walks of life without regard for age, race, socioeconomic status, geography, or political affiliation. It is a complex and pervasive crisis that demands innovative solutions that are fully integrated with physical healthcare. Empactful Capital’s Mental Health Fund partners with the compassionate disrupters who are fighting this crisis.
— Empactful Capital Mental Health Fund Mission Statement