BetterUp, Coaching, Mental Health
Disclosure: I tried the BetterUp service and found it extremely bland. I do not have direct experience with some of the other platforms here. I have had a job conversation with at least one of them, though I mention nothing proprietary here.
Another big funding round this week. BetterUp, the online platform for coaching, raised money at a nearly $5 billion valuation. ($4.7billion, 100MM above Lyra to presumably claim “largest mental health and coaching company”). BetterUp is “the first company to democratize coaching across the enterprise”. I have heard through the grapevine that they are also looking to expand into consumer coaching. You may have seen them tout a marquee hire, Prince Harry! You may also wonder what the difference between coaching and therapy is! BetterUp’s funding announcement places them in the mental health category. My big question here is how many multi-billion unicorns the larger mental-health space can accommodate.
Let’s break it out into a few dimensions. We note that this is roughly $20 billion in market cap currently.
Mental Health + Enterprise GTM: Ginger (1 billion+), Spring Health ($2b), Modern Health (1 billion), Lyra Health (4.6 billion)
Mental Health + Consumer GTM: SonderMind ($1 billion+), TalkSpace (560mm), Headway (750mm), Alma ($500MM), Grow Therapy (small)
Coaching (enterprise and consumer): BetterUp ($5b)
Wellness: Calm ($2b) and many others (smaller)
BetterUp has an interesting wedge in that they can play in both consumer and enterprise (plausibly any of these companies can, but BetterUp is more overt about it). There is a clear argument to be made for both coaching and mental health in the enterprise. The great thing about B2B is it can be boiled down to a cold ROI decision. Mental Health and underperformance cost $500b+ to enterprises. Well-funded enterprises have the resources to invest in highly-ROI positive endeavors like this. Looking at the Enterprise angle, I have a hard time understanding how one of these competitors will emerge as the dominant market winner. I do suspect that this market is going to end up closer to 30/25/20/15/10 market shares than 70,20,5,3,2. I also suspect that BetterUp sees themselves unlikely to dominate this market, hence the broadening to consumer.
The market for consumer is interesting, though I have heard that everyone eventually pivots into enterprise in the mental health space. Coaching is having a bit of a moment in my circles, but how many people are willing to pay out of pocket to juice performance? What is the difference to a typical consumer between therapy and coaching? I can articulate an answer, but I’m not a typical consumer here. The service is substantially more expensive than a meditation app, sessions are pretty brief relative to therapy, and I do not believe insurance will cover coaching. The hypothesis here for me is that coaching will need to absorb a lot of the slack demand in the system, as the imbalance of mental health need to supply cannot accommodate our growing crisis. I suspect the market size in users is bigger for coaching, in that everyone can plausibly benefit from forward progress. I suspect the market size in dollars is bigger for therapy, as there is a more clear “pain” to be addressed and more channels to pay for it.
Some very smart people with access to proprietary numbers were willing to put a lot of money in at this price point. At least one (if not a few) major winners seem on the cusp of emerging here. “With this milestone, BetterUp™ has increased its value by seven times in seven months” is either the statement of a generational company or of a wild funding market.