The world of mental health startups has changed dramatically over the past few years. If you're a therapist, you've probably noticed an increase in emails from companies offering new tools, services, and platforms for private practice. Many of these mental health startups are part of a fast-growing industry—but how do you know which ones to trust?

I was recently joined by Michael Fulwiler on the podcast (it's a great chat that you listen to through the player above).  Michael is Head of Brand at Heard, a bookkeeping and tax service for therapists, and was the former Director Of Marketing for the Gottman Institute.  Michael is a good friend and someone that I really trust to advocate for our field.

I was a bit naive to the huge changes our field has experienced so we’ll break down why so many mental health startups have emerged, the risks involved, and what therapists should consider before signing up for a product or service.

Why Are There So Many Mental Health Startups?

Before the pandemic, mental health startups were growing steadily, but COVID-19 changed everything. Here’s why:

1. A Huge Demand for Mental Health Services – More people than ever needed therapy, leading to a shortage of therapists and an urgent need for online solutions.

2.  A Shift to Online Therapy – Many therapists quickly transitioned from in-person sessions to virtual practice, but existing tools weren’t always designed for this.

3.  A Surge in Investment – Venture capital firms started pouring billions of dollars into mental health startups, hoping to cash in on this growing industry.

Between 2019 and 2021, investment in mental health startups skyrocketed from $1 billion to nearly $5 billion. This sudden influx of money led to the rise of many new companies offering everything from therapy marketplaces to practice management software.

The Hidden Risks of Mental Health Startups

While new technology can be helpful, not all mental health startups succeed. In fact, 90% of startups fail. This means that many of the companies reaching out to therapists today might not be around in a few years. So, what happens if you sign up for a service and the company shuts down?

Some real risks include:

• Losing access to your client records or billing systems.

• Being unable to continue with insurance panels if the company was managing credentialing.

• Having to start over with a new platform, disrupting your practice and client care.

So, how can therapists make informed choices?

3 Key Questions to Ask Before Signing Up

Before committing to a mental health startup, take time to evaluate them carefully. Here are three crucial questions to ask their support team before signing up:

1. How Does the Company Handle Client Data?

Protecting client privacy is a major concern, and some mental health startups have gotten in trouble for misusing client data—including selling information for targeted advertising.

When considering a new platform, ask:

• What data do they collect, and how do they use it?

• Is client data ever shared with third parties?

• What security measures are in place to protect privacy?

If you don’t get a clear answer, consider that a red flag.

2. Is There a Clinician on the Leadership Team?

Some mental health startups are created by people with little understanding of therapy.  In other words, they see an opportunity for profit and go all in.   A great way to gauge a company’s credibility is to check if a licensed therapist is on the founding or executive team or if they regularly consult mental health professionals.  A great example of this is Upheal (a HIPPA-compliant AI case note platform), where good folks like Ted Faneuff, LISW-S, LMSW, LCSW, MBA serves as Head Of Clinical Operations. 

If a company is making decisions about mental health services without therapist input, it might not have clinicians' best interests at heart.

3. How Are Therapists Compensated?

Many mental health startups underpay therapists while making big profits. Some platforms offer as little as $20–$25 per session, which isn’t sustainable.

Ask:

• How does the company set therapist pay rates?

• Are there hidden requirements (like needing to see 50+ clients a week to make a livable income)?

• Do they pressure therapists to retain clients just to maximize profits?

If the financial structure seems unfair or unclear, it’s worth reconsidering.

Therapists Have More Power Than They Think

Because of the therapist shortage, clinicians actually have leverage when dealing with mental health startups. If a company reaches out to recruit you, take your time to ask questions, compare options, and check reviews from fellow therapists.

Some helpful research strategies include:

• Searching for the company on Reddit – Therapists often share honest experiences on forums here like the Therapist forum.

• Checking therapist Facebook groups – Many have discussions about startup platforms including the Therapists In Private Practice Group.

• Asking trusted colleagues – See if anyone in your network has firsthand experience.

Final Thoughts

The mental health startup boom has created both opportunities and challenges for therapists. While new tools can help improve client care and streamline practice management, it’s essential to be cautious and informed before committing.

Trust your gut, ask the tough questions, and remember—not all money is good money.

If you found this helpful, let’s continue the conversation on LinkedIn. What’s been your experience with mental health startups? Have you had a positive or challenging experience with a platform? I’d love to hear your thoughts!