By TREVOR VAN MIERLO

In 2021, digital mental health and substance use startups attracted a record-breaking $5.1 billion in funding. Despite the surge, the promise of scalable, transformative digital health platforms remains unfulfilled.
Following the surge, investment plummeted. Unlike other industries that have been revolutionized by digital-first solutions, digital health struggles with models that fail to address cost, complexity, and access.
What we’re left with entering into 2025 are a smorgasbord of solutions clamoring to attach themselves to traditional enterprise incumbents (Health Insurance Providers, Electronic Health Records, Hospital Systems). These incumbents have achieved scale – but not the type of scale that digital health needs to flourish.

Incumbents Build Deep, Startups Go Wide
Incumbent scale is infrastructure-heavy, slow, and linear, and focuses on deep integration within their established markets.
In contrast, startups aim for technology-driven, exponential, and global scale, leveraging digital platforms to serve millions of users quickly. While startups have the speed advantage, achieving scale similar to incumbents requires win-win partnerships and fundamental shifts away from established business models.

The investment market does see the tremendous opportunity: a massive, growing global customer-base proactively demanding help as social stigma decreases. And as time passes, this customer-base grows exponentially with technology pervasiveness.
What investors see is unmet demand for mental health and substance use treatment, and a historic opportunity for digital health to step up and deliver solutions that are scalable, accessible, and affordable.
However, the delivery mechanism to these populations, though digital, is obfuscated through the blurred lens of incumbent purchasing power. We can’t get past incumbents’ size, their reach, and their connection to patients. In this common view, incumbents are the customer. This view is promoted by both industry and academia.
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