A meditation app can be valued at $2 billion, and VCs can't figure it out

This article is from the WeChat public account "China-Venture" (ID: China-Venture), author: Joy, 36Kr is published with permission.

In September 2021, a very Internet word was born in the venture capital circle, "spiritual psychological Internet track". In order to better understand this track, I talked to several senior VCs who invested in technology and medical treatment in the circle, and the responses were similar but different:

1) Have been paying attention, but have not voted;

2) Has been paying attention, there are already projects ready to invest;

3) Have been paying attention, related projects are chatting.

From several investors, the biggest consensus is: this is undoubtedly a just need track, will not not pay attention to; at the same time, their biggest doubts also come from a consensus: how to standardize this track?

<h3>A 300 billion-scale just-needed track</h3>

No matter what "micro-words" everyone has for capital "fanaticism" to invest in a certain track, there is no doubt that the place where capital is infested must be where there is market demand.

According to a 2020 global health institute (GWI) research report "Defining the Mental Health Economy", the global mental health market has reached a size of $121 billion. If you look at the Chinese market, many people in the industry give a rough range: 300 billion yuan.

300 billion yuan, not a small amount, this space is enough to grow dazzling unicorns or star projects.

And why has this track become a just-needed track?

The survey data of the "White Paper on the Mental Health of Urban Residents in China" is very shocking: only 10.3% of the population with mental health in China, and 76.3% and 16.1% of the people with different degrees of psychological health and psychological problems are accounting for 76.3% and 16.1% respectively.

According to this data, perhaps only one out of 10 people can be considered mental health.

Not only that, but mental health is still an area with very blurred boundaries, but this does not prevent it from becoming a hot label for consumer items in the past two years. For example, in the functional food track of the fire in the past year, the effects of "decompression" and "relieving sleep" have been emphasized.

Then if you want to divide the mental/mental health track into specific areas, it can be roughly divided into three categories: psychiatric diagnosis and treatment, psychological counseling, and psychological and emotional relief. None of these three areas are a small track.

In the field of psychiatry diagnosis and treatment, first of all, the number of confirmed depression patients in China alone is as high as 95 million, and only 5% of the patients have been treated under such a high number of patients; among them, young people, pregnant women and postpartum women, and the elderly are at the peak of depression.

Secondly, the number of people with mental disorders in China has reached 250 million, and the total prevalence rate is as high as 17.5%.

Therefore, when the good mood and Dr. Zhaoyang can get an investment of 200 million yuan and hundreds of millions of yuan in the second half of 2021, it is very logical.

When it comes to alleviating psychological emotions, it should be the most favored track for capital this year in addition to Internet psychiatric diagnosis and treatment.

In August 2021, mental health brand FLOW Meditation received multi-million dollar angel funding co-led by Evolve Ventures and Lightspeed China; Yibo Shao, founder of Evolve Ventures, also invested in Heartly lab, another meditation + mindfulness platform, in July.

The investment logic given by investors is very basic: "People call for peace of mind from the bottom of their hearts", and the market and users need to be "brought more beautiful imaginations about life and life".

If you benchmark the U.S. market, it's not hard to imagine why investors prefer such projects. For example, the two major celebrity meditation apps in Europe and the United States, Calm and Headspace, have reached a valuation of $2 billion.

In addition, the investment network exclusively learned that there is currently more than one institution in the market that has decided to invest in meditation projects; it is expected to complete the delivery in the next few months.

<h3>Best suited for online tracks</h3>

An industry friend who led a round of financing for the head project of the mental health track put forward a very interesting point: this track is very suitable for moving online.

That's true.

In China, the fact that the medical supply is seriously unbalanced also provides incremental space for online medical platforms; this is no exception in the field of psychiatric diagnosis and treatment.

According to the data, there are only 40,000 psychiatrists in China, which is equivalent to less than 2 psychiatrists per 100,000 people, which is less than 1/4 of the international standard. In addition, according to the analysis of the National Mental Health Work Plan (2015-2020), China's psychiatric medical resources are mainly distributed in provincial and prefecture-level cities, and there are few psychiatry and psychological departments in primary medical institutions at the county level and below, and the supply of mental health is insufficient and the distribution is uneven.

An international study in which Beijing Anding Hospital participated shows that there is a huge "treatment gap" for mental illness in China, and the proportion of patients who need treatment but do not seek or do not receive treatment is extremely high. In China, 92% of people with severe mental illness go untreated.

Secondly, due to the particularity of mental illness, a considerable number of patients have different degrees of "stigma", and the online platform provides an excellent space for this part of the group.

It is also worth mentioning that a number of investors mentioned that an important reason why capital has paid more attention to the field of Internet psychiatric diagnosis and treatment in recent years is the tilt of the state's policy direction toward depression.

For example, in September 2020, the National Health Commission issued the "Work Plan for Exploring Special Services for the Prevention and Treatment of Depression", proposing that by 2022, a social atmosphere of national concern for mental health, support and participation in depression prevention and treatment will be initially formed in the pilot areas. As one of the key groups, the program calls for depression screening to be included in their health examinations, and mental health courses are set up for them, equipped with mental health teachers, and provided with psychological abnormalities attention and assistance.

This is the first major policy document in China specifically aimed at the prevention and treatment of psychological diseases such as depression, and it is also the first time that the depression group in colleges and universities has been paid attention to from the institutional level.

Reflected in the platform data, the revenue can also prove that capital is optimistic about the online psychiatric diagnosis and treatment platform. It is understood that the revenue of Good Mood in 2019 was nearly 300 million yuan; in the first half of 2021 alone, good mood business increased by more than 300% compared with the same period in 2020.

At present, in this track, according to the data of Tianyancha, Good Mood has completed 4 rounds of financing, with a cumulative financing of nearly 400 million yuan; Dr. Zhaoyang has also been raised to the B round. In addition to the two, Xiaoyi Health has also completed two rounds of financing.

Like many Internet platforms, the fate of the Internet psychiatric diagnosis and treatment platform is roughly similar: the head effect is obvious, and it is easy to become an oligopoly pattern.

<h3>"It's hard to figure out the track"</h3>

More than one investor expressed the same view on the investment network: dare not invest, because I don't want to understand.

This is especially evident in the field of Internet psychological counseling. At present, the more well-known track is still those: one psychology, simple psychology, one point spirit.

According to Tianyancha, One Psychology, founded in 2012, has completed 5 rounds of financing, and investors include Northern Lights Venture Capital, Saifu Investment Fund, Toutou Dao Investment Fund, Xinyang Investment, Maple Sea Capital, etc. The most recent round of funding was 2019, Series B.

Founded in 2014, Simple Psychology has completed 3 rounds of financing, and Zhen Fund and Huachuang Capital are its investors. The most recent round of funding was in 2016, Series A.

Founded in 2015, Yidian Ling has completed 5 rounds of financing, and 58 Industry Fund, Yuansheng Venture Capital, Proxima Centauri Venture Capital, and Yoyin Venture Capital have participated in the investment. The most recent round of funding was in 2021, Series B.

In addition to Yidian Ling, the last round of financing for most Internet psychological counseling projects stayed in 2019, and the longest one was not more than the B round.

The investment network learned that the reason why investors will be discouraged from this track is still the problem of how to standardize this track. "It's just needed, but the disk doesn't quite understand," one VC said.

In addition, the scarcity of professionals is probably also an important reason why this track is difficult to expand. According to some data, less than 10% of the practitioners in China are really competent in psychological counseling.

After taking stock of more than 10 overseas mental health projects, the 58 Industry Fund, which has invested in Yidian Ling, summarized the commonalities that 3 projects need to have in order to succeed: digital drive, service productization, and cross-border teams.

It can be said that whether from the capital level or the individual consumer, mental/mental health is undoubtedly receiving unprecedented attention. However, the inevitable problem is that compared with the United States, China's mental health industry is still groping for development on the demand side, payment side and supply chain.

But it is precisely such a special field that we should expect and justify it. Whether it is a patient with mental illness or a group with psychological distress, we must firmly believe: "No matter how long the night is, the day will always come." ”