#34: Investor conversations with Dr. Pooja Sikka (GP at the Innovations in Mental Health Fund)

Hi friends,

What do VCs think about mental health investments right now? In today’s post, we have a conversation with Dr. Pooja Sikka to find out.

Pooja is the Founding General Partner of the Innovations in Mental Health Fund and alongside Daniel Dickens, they’ve launched this new, early-stage VC fund to back mental health startups.

Pooja has had a long career operating and investing in healthcare. She has 20 years of experience as a clinician and GP with the NHS (including having worked in mental health services in her early career) and has an intercalated degree in Clinical Psychology and Neuropharmacology. She’s been in corporate venture and venture capital for nearly a decade and invests across the health tech space: digital health, medtech, diagnostics and tech bio.

So, safe to say, she has lots of fascinating opinions on the role technology can play in improving population mental health. 

I caught up with her for a chat about the launch of her new mental health VC fund and to get her insights on the landscape. 

We discuss;

• What you need to know about the Innovations in Mental Health fund 

• What sort of businesses the fund is most interested in

• Pooja’s perspectives on the mental health market and its challenges

• What she wishes founders knew when approaching investors

• The importance of a strong evidence base and how to build one as an early-stage business

• The trends in mental health innovation Pooja is most excited about

• What makes Pooja hopeful for the future of mental healthcare

Let’s get into it.

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Thanks, Steve

Steve: Hey Pooja, so great to chat. I want to start with you… why did you want to launch this fund?

Pooja:  Hey Steve! So, we launched the fund because, at the heart of it, we believe that technology has a significant role to play in the prevention and provision of mental health care.

As a clinician I have found it deeply frustrating, no let me correct that… actually upsetting, that we have such a lack of capacity to support patients, their families and the carers, through what is often a treatable condition with the right input. It’s sad when patients present when they’ve already reached the edge and feel they have no options left. We want them to come in earlier, we want to refer them if they need it and we want them to receive the appropriate input much faster. I really feel for my colleagues working in mental health institutions and across the community and private sector. We’re all trying to do our best when the demand (for lots of existential reasons) is increasing. But it’s not enough.

On top of this, in some places around the world, a combination of stigma and lack of access to healthcare services means mental health care has been at the bottom of the priorities for innovation. 

But I also have a macro point.

OK. Imagine you’re looking at our planet from outer space. ‘What are your issues?’ You might see that it’s the economy, or politics, or climate or healthcare.

And you’d say; ‘OK, well what’s holding you back from solving these, specifically, from bringing talent to work on these major challenges?’

You’d see that to solve these big challenges we need to address the productivity and meaningfulness of our society. You’d see that there is an inherent link between well populations and the advancement of humankind and impact goals. To break that down more,  people being out of the workforce, or not being able to function well due to unaddressed mental health issues, is the quiet public health crisis facing us across the globe and is a threat to us achieving many of our priorities at a macro level. From low-level stress to severe and disabling mental health, not being mentally well is holding us back. 

So if we can improve the underlying mental health of our society, not only are we helping those individuals to live healthier, more fulfilling lives, but we are also delivering a massive knock-on impact for many other societal challenges. Whilst there is no epiphany in this view - we’re all debating this in some way or another - we have not done enough to mobilise technology or funding to address how we shape mental health capital. 

As for this fund specifically, I believe we can make a real impact by connecting private capital with startups and helping them become embedded in public healthcare systems.

Steve: So what exactly is the Innovations in Mental Health fund?

Pooja: IMH is a new £20m fund launched by KHP Ventures and we’re focused on backing early-stage (pre-seed to seed), technology-based mental health ventures. We write cheques from £250k to £1m and are focused on ventures that deliver clinical outcomes, are globally diverse, and demonstrate significant potential for scale. While we’re based out of the UK, we are globally focused and are excited about the role we can play in this broader ecosystem. 

Wellcome (the charitable foundation) is an anchor investor in the fund and they’ve committed £8 million ($10.2 million).

Steve: What’s unique about the fund?

Pooja: We firmly believe that if you want to make an impact in healthcare, it’s not enough to have an innovative new solution. You have to be able to integrate that into the public health system, or into other B2B channels like health insurance, and deal with all the complexities of that reality. That’s where a lot of mental health companies will struggle.

So our goal with the fund is to bridge that gap and help founders integrate their solutions into the public health system, employer-led models, and health insurance so that more promising innovations can reach patients. We’re also seeing innovations that are interesting for schools and universities and provision outside of healthcare. 

To do that, we realised we needed to be more than a capital provider so we partnered with the South London and Maudsley (SLAM) NHS trust and created programmes to immerse startups in the realities of the healthcare ecosystem. Founders get access to clinical expertise and the opportunity to generate real-world evidence to ensure their solutions are both clinically credible and scalable within the health system. 

This, combined with a lot of how we’ve structured the actual fund, is about trying to de-risk what we see in early-stage healthcare businesses. One example of what we’re doing here is our Immersion Programme which starts soon. 

Steve: Yes, I’ve seen that program. Can you tell me a bit about it and how it works?

Pooja: Of course. It’s a 12-week program designed to prepare mental health startups to succeed in public healthcare systems (like the NHS) as part of their Go-To-Market strategy and to consider how to develop products and innovations which are clinical-grade and have a competitive advantage across markets. It’s free and gives startups access to mentorship, clinical and investment expertise as well as a pretty intense education on navigating scaling and regulatory challenges. We cover things like policy trends, NHS structures, and how to engage with key stakeholders like pharma companies and insurers.

Our aim with this program is to ensure that startups are not only investable but also capable of delivering solutions that clinicians trust and recommend. At the end of the programme, venture-backable and growth-ready startups will have the opportunity to be considered for investment from the fund. 

We’ve just closed applications for the Immersion Program and it will kick off for successful applicants next month. We’re delighted that we received nearly 100 applications and over a third of them were international. It’s in part thanks to people like you Steve, that we got the message out.  

Steve: That’s so good to hear. I love how you’re helping to bridge the gap between startups and public health systems. It’s a very tough challenge for founders, especially those who may not have experience within the system. 

Tell me, what are some of the specific challenges you see in the UK mental health market for founders? We’ve been writing a 101 guide to this market so would love your insights.

Pooja: If you want to succeed in the UK, you need to deeply understand the NHS. 

A lot of founders don’t realise that NHS adoption often requires more than a great product. You need evidence, regulatory compliance, and a strong Go-To-Market strategy. Importantly, founders should be able to speak the language of clinicians and policymakers. If they can’t align their pitch with the latest NHS priorities, they’ll struggle to get traction.

Another big challenge is a lack of understanding of the healthcare buyer in the UK. Selling into the NHS is not like selling to consumers or even businesses. Founders need to deeply understand the policies, priorities, and pain points of public health systems. They need to appeal to clinicians and decision-makers alike, and you can’t just drop in an innovation. You have to spend time implementing your idea and hand-holding into the care pathway. If it’s not easy to use, or if the UX/UI is clunky, or if in some cases, it's not helping to keep the data in a single accessible space, it won’t be sticky enough to get clinicians to want to use it. Anything that reduces effort but at the same time supports the delivery of better clinical outcomes will win. 

The tough thing about working with the NHS is that you need to spin all the plates. You need;

• an amazing product that incrementally improves allowing you to keep a competitive edge

• an ability to demonstrate return-on-investment - ideally delivering on quality, safety and savings

• a solution patients and healthcare workers love to interact with

• data or outputs that integrate with the health record (where relevant)

• enough demand and policy urgency to fund your growth 

Oh and yes… it needs to be scalable, so it is adapted to the infrastructure and regulatory requirements of the system.

Essentially those are some of the key ingredients to the recipe. NHS stakeholders also need to trust you. That trust isn’t built overnight, and when you have advocacy, because those advocates have carefully selected you and also deeply care about the NHS, that helps. 

Founding teams need to combine their own product or commercial capabilities, with NHS experience, whether from a clinical or management lens. They have to be able to align with the system’s complexities and then collaborate with the right stakeholders if they really want to drive impactful decisions.

Steve: What are some of the success stories you point to in the mental health market?

Pooja: The solutions that succeed are often those that take a holistic view of a patient's needs and (again) align themselves with the priorities of the NHS. 

For example, Sleepio, a digital therapeutic for insomnia developed by Big Health is a great story.  For years, clinicians have been desperately trying to get patients off benzodiazepines. They can be harmful drugs of which the long-term effects were not really understood at the time when people were prescribing them. And so, over many decades, people got addicted. We also learned not to prescribe them in the first place, but we didn’t have a ready solution or alternative for the management of insomnia that was scalable. 

Sleepio, the CBT-based digital therapeutic, is now approved in the NICE guidance as a first-line treatment for insomnia. Suddenly we have another tool in our box. One that has proven to be clinically effective and has a much lower risk profile. 

It took years of clinical validation and working closely with the NHS for the Big Health team to achieve that but it’s a huge success. Before they were successful in the NHS, they doubled down on their footprint in the US, which more readily accepted them. The same approach is required for other digital therapeutics: build clinical credibility, engage with public health systems, and make sure the solution is practical, cost-effective and scalable.

Steve: On the importance of clinically-backed solutions, I know that it can very hard for startups to build an evidence base. What advice would you have for those startups?

Pooja: Start thinking about evidence early. There’s an abundance of wellness apps in the market, but few are what we call “clinical grade.” That means they’ve been tested and validated in a way that gives clinicians the confidence to recommend them. It’s not just about the technology working; it’s about proving that it works in a way that healthcare professionals can trust.

It doesn’t necessarily mean running a full-blown clinical trial from day one, but it does mean ensuring that your product has a solid foundation of scientific rigour. Working with academic partners or getting real-world evidence through pilot programs can help establish that credibility, and help to identify and iron out ‘friction’ that might be holding back success.

Steve: Another big topic on MH founder’s minds is fundraising. What advice would you have for founders when pitching to investors?

Pooja: Founders often don’t fully understand how investors assess potential returns. It’s not just about having a great product or story; it’s about showing a clear path to revenue and growth, and understanding that we, as venture capitalists specifically, examine the potential for exit and estimations of exit valuations to decide whether to invest. If we can’t make an uplift on our investment, we can’t invest no matter how good your solution is or how much early traction you’ve made.

So approaching fundraising carefully and being really clear about tangible and intangible value, your intellectual property strategy and your strategies to stay ahead of the competition or to be defensible really matter to how we examine your potential.

Those of us deeply embedded in healthcare can also spot the BS!

We love working with mission-driven founders, but they also need to understand the commercial side. How will you scale? How will you achieve recurring revenue? And how will you sustain your growth? These are key questions that founders need to answer convincingly.

It has been put to me that at early-stage - ‘the numbers are all wrong and why does it matter? Everything will change anyway’. But the test is about how you think commercially, how much you understand the pricing and the market channels you want to sell into, and you know how long it takes to sell into. If you’re telling me from day one it will take 6 months to get a £1m contract with big pharma, I’ll be thinking you haven’t done your research and you’re naive - unless for example, you hired the head of partnerships from that same company. 

Most good founders I meet know all this, but there might be a funding constraint or in reality there is just too much going on by the time they want to raise so it feels like their commercial plans are disconnected from reality. So really having some coaching and time to breathe to get this right, and then getting out into the market and having the exploratory conversations, really prepares you for engaging with VCs.

So many founders go head-first into pitching. Practice makes perfect. Even VCs have to go through that! Lol!

Steve: Great points. I previously wrote a piece on understanding venture decision-making that readers might find helpful if they want more details.

You’re deeply involved in the UK health system and healthcare market (as an investor, operator and clinician). What trends are you seeing in the mental health space?

Pooja: Access to care is still a huge topic within the UK health system and I’m interested in any businesses which are tackling that problem. With AI capabilities and the cost curve on that coming down, it might not be the most exciting element, but innovations that help to manage demand still have their place

Another thing I’m seeing is an increasing desire to use data to genuinely improve services. With mental health, patients are rarely just interacting with the healthcare system. They’re interacting with the social care system, housing and employment agencies. And we know those environmental factors play a huge role in outcomes. Combining all that data and making it useful and actionable is a complicated thing to do, but there are people who have done that.

Finally, we want to see new therapeutics and solutions reducing the demand for more intensive services. We’re seeing a tonne of gamification and VR solutions. The ones that will stand out are the ones with outsized impact and a clear route to market and customers demonstrating a willingness to pay because the alternative is so costly not only on the healthcare service but also on social care and broader economic costs. 

Steve: And what about mental health innovation more broadly? You are partnered with some leading research institutions and get to see a lot of startups. What do you see that gets you most excited?

Pooja: I’m particularly excited about precision psychiatry, specifically combining traditional mental health assessments with digital and pathological biomarkers to deliver more tailored treatments. Imagine being able to predict mental health risks based on a combination of speech patterns, facial expressions, and even biological signs. Combine that with genomics. I think that’s super exciting.  

Also when there's a way to have a continual relationship with patients, that could revolutionise how we diagnose and treat mental health conditions.

I’m also excited about anything that creates scalable access to high-quality treatment, like digital therapeutics. 

Another area is the development of digital companions for drug treatments (like what exists for other physical health conditions like diabetes). One major development in the mental health space recently has been the introduction of Cobenfy as a treatment for schizophrenia. I’ve been thinking, could a digital companion for this drug help to improve efficacy? Something that has an interface for patients and clinicians on how it's working, where patients can report side effects and monitor their symptoms. That’s an interesting area. 

I’m also seeing potential in brain-computer interfaces, though the technology still needs to mature. Again, the key is ensuring these innovations are practical and scalable within existing healthcare systems.

Steve: Finally, I think we should end on a hopeful note… what makes you optimistic about the future of mental healthcare?

Pooja: We’re at a pivotal moment. Mental health is now recognised as a key issue globally, and there’s a lot of momentum behind finding solutions. The UK is a great place to build solutions. It has a rich history of innovation, a strong entrepreneurial community and a health system that can provide significant scale if you are able to embed yourself within it.

While the NHS presents unique challenges, it also provides a fertile ground for testing and scaling new ideas. Health insurers and employers are also waking up to the opportunities in this space. The key is to build solutions that can make a real impact here, and then expand globally. With the right support, I believe we’ll see mental health innovations that not only improve individual lives but also drive productivity and societal well-being on a much larger scale.

That’s all for this week. Many thanks to Pooja for chatting with me. If you want to learn more about the Innovations in Mental Health fund, you can check it out here.

Keep fighting the good fight!

Steve

Founder of The Hemingway Group

P.S. Feel free to connect with me on LinkedIn

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