In 2024, the digital mental health landscape was dominated by large platform companies, often referred to as the “Goliaths” of the industry. These companies work with major customers, possess advanced technology capabilities, and attract significant investment. As a result, smaller digital mental health providers, the “Davids” of the field, found themselves struggling to carve out their place in the market, as highlighted in Rock Health’s 2024 year-end funding report.
Adriana Krasniansky, lead researcher at Rock Health Advisory, emphasized the importance for smaller mental health startups to adjust their goals and expectations in light of the industry’s current landscape. While some Davids may consider partnering with larger companies, others may opt to be acquired as part of an anticipated wave of consolidation. The report noted a decrease in overall digital health investing in 2024, with a shift towards early-stage startups receiving funding.
Despite the slower-than-expected increase in consolidation, 2025 is poised to be a potentially fruitful year for mergers and acquisitions, particularly for later-stage startups facing challenges in fundraising or valuation. The report also highlighted the growing interest in artificial intelligence (AI) within the digital health space, with AI-enabled startups receiving record-high funding in 2024.
Mental health remained a top priority for investors, with the industry continuing to lead in funding for the sixth consecutive year. The persistent lack of access to high-quality mental health care in the U.S. and the increasing focus on holistic well-being are driving factors behind the sustained interest in mental health services.
Looking ahead, digital health care players are expected to explore the intersection of mental health with physical health, as well as the relationship between mental health, nutrition, and weight management. The industry is evolving rapidly, with smaller startups navigating the challenges posed by the dominance of larger platform companies while seeking to make a meaningful impact in the realm of mental and behavioral health care.
