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January 19, 2024
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Thriving or Fading: A Glimpse into 2024 Behavioral Health

The 2024 venture outlook for the behavioral health sector has been outlined in this article, with particular emphasis on investing in youth behavioral health, expectations of industry consolidation, and the progress of value-based care contracting.


  • Investors are becoming increasingly interested in the under-invested youth behavioral health market due to rising rates of mental health disorders among young people; there is particular emphasis on investing in companies that offer services and products specifically designed for children and teenagers.
  • Industry consolidation is expected to occur in 2024 due to the high number of behavioral health startups and the amount of investment capital in the sector; however, some companies may struggle and not all businesses will survive.
  • The shift towards value-based care contracting is a trend to watch; although risk-based contracting for behavioral health conditions is not yet widespread, it is expected to increase in the future.

After a surge in investment in 2021, behavioral health startups have experienced a slowdown in venture capital funding in the past year. Despite this, venture investors still see significant opportunities in the sector, and predict significant changes due to the development of innovative payment models and maturing companies.

One area of particular interest to investors is the youth behavioral health market. Although investment in this area has not kept pace with other areas of the industry, there has been increased energy and funding for mental health in general, particularly since the COVID-19 pandemic. Many investors recognize that young people have the greatest burden of mental health need and are looking to invest in startups that co-design their products with children and teenagers.

Another anticipated trend is industry consolidation. The behavioral health space has seen a boom in investment over the past few years, but this has delayed consolidation. Some companies may need to reevaluate their valuations to be attractive for acquisition, and not all businesses will survive.

Finally, there is ongoing discussion around the shift towards value-based care contracting, which many expect to see significant gains in. However, there are obstacles to overcome before risk-based contracting can take off, including payer and provider readiness and the need for data analysis.

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