Some Silicon Valley insiders are convinced that the future of health and wellness trends will remain firmly housebound, even once the pandemic subsides.
Investors have claimed that the coronavirus pandemic and related shutdowns have ushered in changes that would otherwise have taken years to unfold. Many point to the rise of mobile-only banking and skyrocketing demand for grocery delivery as evidence that certain habits incubated during the pandemic might be here to stay. For General Catalyst managing director Holly Maloney, that trend also seems to be true of health and wellness startups.
Maloney has worked in the healthcare investing practice at the Boston-based venture firm for nearly 3 years. She told Business Insider that certain slow-to-start consumer healthcare trends, namely the rise of in-home fitness companies and direct-to-consumer healthcare, were considered business niches not long ago. Now, those companies are headliners in some of the hottest deals in venture.
“New consumer behaviors are fundamentally disrupting this space,” Maloney said. “We are seeing pretty stark changes in behavior across the health and wellness industry, and we think it’s going to be a really dynamic market over the next decade with multiple waves of disruption.”
The disruptive potential is so evident that General Catalyst dedicated one-fourth of its latest $2.3 billion fund, roughly $575 million, to investing in health and wellness startups, Maloney said. That includes Maloney’s latest investment in a $60 million Series B funding round for in-home connected fitness startup Tempo , which was announced on July 29. She is also joining the startup’s board.
“Consumers were hesitant to bring fitness into the home and a lot of them thrived on the community aspect of the in-studio fitness classes or at the gym, but these digital platforms have been able to embrace that community so people are able to engage in a seamless way,” Maloney said. She emphasized that a majority of respondents in a recent poll indicated they wouldn’t be renewing their gym memberships once the pandemic subsides, and added, “This behavior, in particular, has fundamentally been disrupted and it’s here to stay.”
The other key area of investment focus for the former athlete is mental health, another issue arising as a hallmark of the pandemic era, in which many are struggling with wide-ranging aspects of mental health. It’s an area of healthcare that has been neglected, largely due to longstanding stigma, and Maloney said she wouldn’t bet that the renewed focus on mental health treatment is going away anytime soon. She also led the firm’s investment in therapy app SonderMind.
Many therapists don’t accept traditional health insurance and instead rely on a cash-pay system that is easy for them to navigate but heavily limits accessibility for patients. Maloney said there’s a new category of healthcare companies that can combine a telehealth strategy with a more traditional insurance network, and could help unlock mental health care for millions of patients in need.
“In our current environment, I think people are more in tune with acknowledging their mental health and addressing how to democratize and destigmatize the need for quality mental health care,” Maloney said. “Joining an app like SonderMind is an economically neutral decision for the therapist and provides greater access for people that can’t afford to pay for sessions in cash.”
The startups that successfully pull off that balance Maloney is looking for — among the patient, the provider, and the payer — will make up the next round of major venture deals, she said. Especially as more employers opt into remote work full- or part-time, the impulse to make employees’ lives less complicated will become important, not only for retention and morale, but also for companies’ bottom lines. That becomes the type of market opportunity venture investors dream of, Maloney said.
“It’s a huge competitive advantage for employers in this world where life and work is so deeply intertwined,” Maloney said. “Employees will view their employers going forward as part of their life in that they hope to have a turnkey provider for them across work and health.”
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