Quit Genius, Wondermind make money despite investment slowdown

Several behavioral health startups have battled a recent slowdown in investment in the digital mental health space and secured funding.

Quit Genius, Wondermind, Kona, Caraway and Wysa, for example, have raised venture funding in the past few weeks.

In the second quarter, investment in digital mental health plunged 53% year-over-year, following notable years for investment in 2020 and 2021. In total, around $5.5 billion was invested in digital mental health companies in 2021. according to data tracked by CB Insights.

The digital mental health experience is similar as a pool for digital health investments. Investments in digital health as a whole are down 40% in the first half of 2022.

Despite the downturn, virtual B2B addiction treatment provider Quit Genius, listed as Digital Therapeutics Inc., disclosed that it has raised about $11.5 million of a $15.3 million funding round in a filing with the Securities and Exchange Commission.

The New York-based startup has seen previous success in raising capital. About a year ago, the company announced that it had raised $64 million in an oversubscribed Series B round. In March 2020, it announced an $11 million Series A.

Quit Genius recently announced that it has been so successful with pilot programs in full-risk payment models that it has made them a standard company offering.

Another New York-based startup, Wondermind, received a $5 million Series A investment at a pre-launch valuation of $100 million. The company will develop and launch online resources to help people develop “mental fitness,” according to its website.

Wondermind was co-founded in November 2021 by TV and pop star Selena Gomez, Daniella Pearson and Mandy Teefey.

Serena Venture, the investment fund of tennis great Serena Williams, led the Series A round. Lightspeed Venture Partners, Sequoia Capital and former Allergan CEO Brent Saunders also participated, according to Fortune.

San Francisco-based startup Kona aims to help people build healthy habits for their mental health. Incorporated as Sike Insights, the company announced a $4 million seed round led by Unusual Ventures on July 26.

The company uses data generated from team chats to give managers insight into the state of their workforce. In turn, managers can use Kona’s tools to improve wellness, mental health and retention efforts in remote work settings, according to a news release. The company was launched in 2019.

Investment rounds were held in July for other digital mental health early stages, such as women’s digital health company Caraway.

Caraway focuses on students and provides an integrated platform for mental, reproductive and physical health care. It came out of stealth mode with a $10.5 million seed round led by 7wireVentures and OMERS Ventures.

Caraway focuses on a team approach to care, which may include gynecologists, psychiatrists, family practitioners, adolescent specialists, therapists, nurses and care coaches.

Through an app, Caraway customers can get 24/7 access to virtual care.

The largest digital funding round for mental health in the past few weeks came from Boston-based Wysa’s $20 million Series B round. HealthQuad led the round. The new funding will support the company’s international expansion.

The Wysa platform has FDA Breakthrough Device Designation as a digital therapeutic for chronic musculoskeletal pain and related diagnoses of depression and anxiety.

Wysa uses an AI platform that guides people through cognitive behavioral therapies and other meditation and mindfulness interventions. Wysa has facilitated more than 400 million conversations with 4.5 million users in 65 countries, according to a news release. It has raised $28.5 million so far, according to CrunchBase.

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