Hi friends,

What holds back mental health innovation? I spend a lot of my time thinking about that problem. 

I also think about who can help solve this problem.

Who are the organisations with the capabilities and influence required to bring innovation to patients in a way that moves the needle on population mental health?

One of these organisations is the American Psychological Association (APA). The APA represents over 170,000 members and is the single largest group of psychologists in the world. As a result, they hold significant influence in our space. 

They also have an interesting perspective on mental health and the larger ecosystem - one that those on the tech side of this world may not always see. 

In February, the APA did something interesting. Something a lot of people wouldn’t have anticipated. Under their companion organisation, American Psychological Association Services Inc. (APSAI), they launched APA Labs, a new initiative to accelerate innovation in mental health technology. 

I actually hadn’t heard about APA Labs until last month. But over the last few weeks, I’ve been catching up with their team to learn more about what they are doing, to get their perspectives on mental health tech, to hear their plans for supporting innovation and specifically, to discuss an upcoming event they are running to build better solutions in this space.

In today’s post, we discuss:

• Some key barriers to mental health innovation.

• The story behind APA Labs, and how they are thinking about mental health tech.

• My take on APA Labs, their initiatives, the value they will bring and challenges they may face.

• The “Inside the Lab” event, all the details on APA Lab’s flagship event for startups, clinicians and funders.

Let’s get into it.

This is a sponsored post. In fact, this is my first sponsored post with The Hemingway Report. I’ve had people reach out about sponsorships before, but I have strict criteria for who I will work with, which you can see here. As you’ll see from this report, APA Labs is an organisation that’s aligned with these criteria. They are taking a thoughtful approach to encourage collaboration and actually build real solutions in mental health. I think we need much more of that, which is why I am happy to be working with them.

If your organisation is interested in sponsoring The Hemingway Report, send me an email.

The Key Takeaways

• The barriers to delivering impact from mental health innovation are real, but many are solvable. Aligning with scientific and clinical best practices can be time-consuming and costly. Getting reimbursed (especially at good rates) requires a strong evidence base, but that evidence base is hard to build. Getting providers on board with your innovation is necessary, but often challenging. There are a bunch of challenges facing mental health startups, but despite them being solvable problems, there has historically been no good playbook for getting past them. 

• Doing the right thing isn’t always rewarded. The mental health market is opaque, with few ways to signal trust or quality, especially to patients. Often, the solutions with the lightest evidence base are the ones that get traction. This also makes it difficult to develop any pricing power. This is not good.

• Mental health has a collaboration problem. Too often, founders and technologists are pitted against the clinical community. While scepticism from both sides is sometimes justified, this lack of collaboration is holding back innovation and, importantly, restricting patients from the fruits of that innovation. 

• APA Labs is a new initiative from APASI that was created to tackle these challenges and better support innovation in the mental health space. They have launched a number of initiatives to do this, including Inside the Lab, their flagship event in Austin at the end of October. For startups, clinicians, researchers and funders will be a hands-on, this two-day event will be focused on building (not just talking about) real solutions to the challenges we see in mental health. I think it’s pretty cool, and if you want, you can sign up here.

Barriers to Mental Health Innovation

We’re all excited about mental health innovation. But we can also agree that, as an ecosystem, we have not yet realised the full potential of this innovation. So why is that?

One reason is that it’s really hard to build organisations that are both commercially and clinically successful. Until we can repeatedly do that, we won’t have a mechanism to deliver better treatments to the people we want to help. Some of the drivers of this problem are systemic - most healthcare systems are not set up to encourage innovation or even pay for things that work. That’s a wicked problem to solve.

But other drivers are more easily defined and more easily solved.

Scientific and clinical alignment. 

Most mental health businesses want to ensure their products align with best practices. They want to comply with the existing scientific evidence base as well as leading clinical and ethical standards. If they do, their products will perform better. When this doesn’t happen, it’s rarely because of a lack of motivation; it’s because of a lack of capability and capacity. Any founder will tell you just how hard it is to navigate the evidence base and to implement best practices across their product. It’s time-consuming and expensive. For startups with a million competing priorities and limited resources, this is a difficult challenge. 

Building an evidence base.

There is no clear playbook for building the right kind of evidence base. What research should you be running? With whom? How? What level of evidence do payers actually require? What counts as “good enough?” How can you actually run all of this and pay for it? These are hard questions, and there’s historically been no good playbook for founders to follow. 

Getting clinicians on board. 

Clinicians might be the users, buyers or referrers of your product. But no matter what role they play, most mental health businesses will need to get them on board with their mission in one form or another. The challenge is, most clinicians don’t know which products to trust or how to engage with them. Therapist forums are often filled with questions like: “Should I work with X organisation?” or “Can I trust Y software?”. Many clinicians hold a scepticism of the tech world. Whether you think this scepticism is justified or not, it exists, and it makes it harder for startups to get clinicians on board with their solutions.

Market signalling.

If you run a mental health business, you’ll be acutely aware of some common challenges. One is pricing. Margins are tight, and you need to find ways to develop pricing power with payers, but that is very difficult.

Another is client acquisition. Finding patients has become expensive and difficult. The market is competitive, and businesses must maintain good CAC metrics while still driving growth. 

The issue of market signalling plays a role in both of these challenges. Even for startups doing everything right - rigorous evidence, ethical development, clinical buy-in, etc. - communicating these practices to buyers or patients is challenging. Especially in a way that is easy for them to understand, shows differentiation and translates into purchasing decisions. 

Don’t believe me? Go to the App Store right now and search for any mental health-related term. Then try and figure out which one of those apps you’d actually trust to help a loved one. How do you think a layperson would make that decision? 

We want to reward quality. But without a way to signal this in the market, it’s hard to get these rewards. As a result, it is often the flimsy products with light evidence bases that gain traction, simply because they are cheaper or easier to market. This is awful for our ecosystem. 

People running mental health businesses face these challenges every day. But they are not intractable problems. We just need better, easier ways for businesses to implement solutions to these challenges. These solutions will come from collaboration across businesses, clinicians, researchers and funders. But that kind of true collaboration is not always easy to find.

This is what APA Labs is trying to change.

The story of APA Labs

The American Psychological Association (APA) has been around for a long time, since 1892, apparently! They’ve long been active in issues related to healthcare innovation, advocacy, and practice standards. But in the last decade, they’ve been witness to the unprecedented rise in mental health technology. From mental health apps, to clinical tools, to teletherapy marketplaces and now, the rise of AI.

While they are supportive of innovation (it’s a clear part of their strategic plan), some of the trends in this space concerned them - specifically the consumer traction of products with limited scientific grounding, and at worst, startups that were downright ignoring any semblance of ethical practice. Unfortunately, we’ve all seen these businesses. 

Now, APA has been doing important work in the digital mental health space for years through its Office of Healthcare Innovation and Scientific Affairs Office. They’ve assembled expert committees on mental health tech and measurement-based care, and led efforts on regulatory standards, reimbursement, interoperability, consumer protections, and more.

But leaders within the APA recognised that there were additional opportunities for them to make an impact. Specifically, by expanding how APA engaged with the emerging players in the mental health tech ecosystem.

So in February 2025, APASI (American Psychological Association Services, Inc., a companion organisation to APA) launched APA Labs to address this gap.

The initiative was designed as a more flexible, entrepreneurial arm of the association that could interact directly with innovators. Its purpose is to help ensure that new products in mental health are developed with attention to evidence, ethics, and clinical insight, while also supporting practical pathways to adoption.

They are using the association’s scientific expertise, practitioner networks, and convening power to support innovation in this space. To see one of the world’s most influential organisations in mental health lean further into supporting innovation in this way is pretty exciting.  

So what do they actually do?

First, they provide an advisory service that startups can engage directly for support. They also offer product testing opportunities with their large network of psychologists.

On top of this, they launched a digital badge program to help improve market signalling (a problem discussed above). This badge program provides insight and guidance on the factors to prioritise and investigate when evaluating digital mental health tools. It will also give organisations a way to communicate that their products align with evidence and ethical standards.

Across the board, they are trying to provide a playbook for scientific and clinical best practices, making it easier for startups to adopt these practices into their offerings.

They are also hosting an event to encourage better collaboration across the ecosystem (more on that later).

So why should startups engage with APA Labs? 

In short, because there is a strong business case for the science, provider network and signalling that APA Labs can provide. In the long run, the companies that will succeed are the ones that make people better, that are adopted by the clinical ecosystem and are paid well to deliver that impact. If you have better scientific and clinical engagement, a stronger evidence base and an ability to signal your good work to the market, you are more likely to build that kind of business. 

APA Labs represents a shift in posture for the APA. Rather than engaging primarily as a standards-setting organisation, it is stepping into a more collaborative role with the broader ecosystem. And I commend them for that.

Join The Hemingway Community

We now have almost 200 members in our Hemingway Community. It’s a great mix of top founders, executives, clinicians, researchers and investors, all interested in coming together to shape the future of mental health. If you are interested in joining this crew, applications for our next cohort are now open. You can learn more and apply here.

My Take on APA Labs

APA Labs’ approach is grounded in the realism that mental health technology is advancing with or without the APA. It recognises the huge potential of tech in this space and tackles some of the core challenges facing startups. It encourages genuine collaboration across the space - something I’ve been banging the drum on for a while now. For all these reasons, I am super supportive of what they are doing.

However, this initiative will not be without its challenges.

Some startups may have scepticism around APA Lab’s intentions. They might be concerned that they are more interested in protecting the employment of their members than in innovation. Yes, the APA is a professional membership organisation, but there is nothing in their constitution that is in conflict with supporting true innovation (yes, I did read their by-laws and strategic plan). They want to “advance psychology as a science and profession and as a means of promoting health, education and human welfare by the encouragement of psychology in all its branches in the broadest and most liberal manner”. So while they do have a responsibility to support psychologists, there is no reason this needs to be in conflict with organisations building ethical, scientifically grounded solutions.

There’s one other challenge they may face.

The hard thing about innovation is that you don’t always have the evidence base for your idea. That’s what science is all about. If we only tested things we already knew to be true, we’d never learn anything new. The challenge for APA Labs will be to find ways to engage with startups that are trying to build something for which there is no existing evidence base.

If startups are open about where they don’t have evidence, and APA Labs is willing to accept that and help them (ethically) test their new solution and build evidence for it, then they have the potential to create real impact.

One topic that will test both of these areas is the concept of AI therapy.  When talking about this topic with Tanya Carlson, Managing Director of APA Labs, she said:

That is a fair statement. There is no evidence to prove that AI can (or should) fully replace humans in therapy. But I wonder if APA Labs would be willing to work with an organisation that wants to test that hypothesis? Hopefully, they would be. 

I commend APA Labs for their desire to encourage collaboration, action and building in this space. Their Inside the Lab event next month is a great example of how they are making that happen.

Inside The Lab

I don’t enjoy most conferences. After an hour or two, I’m tired of listening to people shill their own ideas.

I’m more interested in intimate events that are designed to encourage actual solutions, not just a rehash of the problems we already knew existed. 

At the end of October, APA Labs will host Inside the Lab, a two-day event in Austin designed to move beyond talk and into practical collaboration on mental health innovation.

The format is different from most conferences, which is why I think it’s cool. They will combine cross-stakeholder discussions in the mornings with “Collab Labs” in the afternoons. These are small working groups where participants from different parts of the ecosystem work on shared challenges. The goal is to surface practical insights, test ideas, and build the relationships that help innovations move forward. I think these would actually be pretty fun!

Yes, they will have speakers too. They’ll include leaders from across the ecosystem: enterprise tech companies, AI-focused startups, funders, and practising psychologists, but they’ll be super focused on how to build actual solutions. 

For those building businesses, it’s an opportunity to test assumptions with payers, clinicians, and funders. You can get their feedback on your product and GTM strategy. I chat to a lot of founders each week, and I think this would be a great way for them to do some intense market research. Meeting a bunch of relevant people in person over two days is much easier and more valuable than dozens of Zoom calls. 

I know there are a lot of clinicians also interested in learning more about the mental health tech ecosystem, and I think this would be a great way for them to dip their toes in this area. With visibility into emerging tools and a chance to influence how they are developed, it could be a productive couple of days. 

Finally, for health systems and payers, it is a window into the kinds of solutions that are being developed to expand access and efficiency across the mental healthcare system. Something they should all be interested in.

I love the idea behind APA Labs and this event. I’m keen to see more collaboration across our ecosystem like this, and to see more events focused on real solutions. I’ll be closely following the work of APA Labs and will keep you updated with any new initiatives they launch to support mental health innovation.

And finally, if you register for the event, let me know, I might see you there!

That’s all for this week. As always, let me know what you thought of this email. Your candid feedback is the most helpful thing you can give me.

Keep fighting the good fight!

Steve

Founder of The Hemingway Group