Mental health startups look at offline play to boost patient retention

Only a few people repeat online-only therapy sessions because the outcomes are not tangible, said Dipanjan Basu, co-founder and partner at consumer-focused venture capital firm Fireside Ventures. “Like any other healthcare service, an in-person experience is crucial.”

Mental health support in India requires high-need clinical care with technology and physical infrastructure going hand in hand, added Amit Malik, founder and chief executive of Amaha Health. “We’re available in eight locations right now and are gearing up to open our first mental health hospital in Bengaluru in May.”

The facility will provide in-patient care in line with services offered by single-specialty hospitals, he said.

Amaha, which secured ₹50 crore in an extended Series A funding round led by Fireside Ventures in 2024, is gearing up to raise more capital in the second half of 2025.

Waning investor interest

The mental health sector, which once enjoyed high private investor interest because of the growing demand for teleconsultation during the pandemic years, appears to be losing favour.

Mental health startups, a tiny part of the overall healthcare market, raised $8 million in 2024 compared to $41 million in 2022, according to data by market intelligence firm Venture Intelligence.

To be sure, private equity and venture capital investors put in $3.7 billion in the healthcare sector in 2024, down marginally from $4.2 billion in 2022.

Healthcare investments in the country hit a record high of $5.5 billion in 2023, according to the Bain India Private Equity Report 2024. “Ongoing consolidation in multi-specialty and the emergence of scale assets with attractive business profiles in single-specialty were key factors,” the report said.

“Mental health and wellness continues to be among the under-penetrated areas in healthcare, given its novelty in the country. Hence, funding in the space remains low despite healthcare as a whole being fairly well-funded,” said an investor at a healthcare-focused venture capital firm in India on the condition of anonymity.

Emerging market

India’s mental health market is projected to reach a valuation of $62.8 billion by 2032 from $6.8 billion in 2023 at a compound annual growth rate of 28.16%, according to estimates by market research firm Astute Analytica.

For context, the overall healthcare market in the country reached $372 billion in 2023 and is poised to touch $638 billion by the end of 2025, according to a December 2024 study by Bajaj Finserv AMC.

Lissun, a startup backed by RPSG Capital Ventures and Zerodha’s Rainmatter, does nearly 8,000 consultations a month and is now doubling down on its support centres called ‘Sunshine by Lissun’, which provide physical care for children with special needs aged 2-10 years.

“These children need services such as developmental therapy, occupational therapy, speech therapy, as well as testing for autism and ADHD [attention deficit hyperactivity syndrome]. Parents of children with special needs are also becoming more aware of the importance of seeking help early,” said Krishna Veer Singh, co-founder and chief executive of Lissum.

Lissun bagged $2.5 million in pre-Series A round from RPSG Capital Ventures, Multiply Ventures, and Atrium Angels. Its current repeat rate is more than 60%, according to Singh.

There are more than 550,000 children under the age of 14 with an intellectual disability in the country, excluding autism, according to a January 2023 analysis of the National Statistical Office’s 2018 report on disability in India.

About 0.5% of boys and 0.2% of girls, 10-14 years, were on the autism spectrum, found a 2017 study by the Indian Council of Medical Research (ICMR).

Overall, as per the Census 2011, India has over 27 million children with disabilities, with only 61% of them having access to formal schooling.

“We believe that specialized care is the future of mental health solutions in the country. You have an app, a doctor, and a psychologist, but eventually, it is the platform and the brand that creates trust with the patient,” said Fireside’s Basu.

Scaling challenges

While investors acknowledge that mental health support remains a major gap in India’s healthcare market, they are now giving much more thought to the prospects of scalability.

“Mental health is a tricky area because the definition of mental health itself is not very clear. It’s hard to ascertain what would qualify as a mental health issue, and there is a lot of misinformation in the space,” added Basu.

Currently, over 200 million people in the country face mental health conditions, yet only 10-15% seek professional help, based on estimates in the National Mental Health Survey 2015-16.

Moreover, there is still a lot of work to be done to draw consumers aged 40 or older, which presents a roadblock in the scaling journey of startups. “Younger users are more aware, and it’s good, but they rarely believe in loyalty. And with a service like counselling, the lack of tangible results may not drive the user to repeat the service,” said the healthcare investor quoted above.

Having said that, there is scope for a wide range of services within the realm of mental health and wellness, such as meditation apps. Basu noted that a blend of physical delivery and online consultations is the way to go, as it has shown signs of success in allied healthcare fields such as IVF and hair transplantation.

Technology can solve the problem of access and reach, especially outside the metro cities, but deeper penetration will only be possible with an in-clinic and hospital play, said Amaha’s Malik.

Preventative healthcare in India has faced its fair share of challenges. Health insurance policies exclude preventative care, and patients’ hesitation to adopt digital tools has led to a shift to reactive care.

“Mental health is preventative care, and it is only now picking up in the country. It’s hard to say how much it can scale,” added the healthcare investor.