At $60 million, Aura Health is reasonably priced for a company that brought in $6.9 million in annual revenue for 2022. The leading competition in the industry, Calm and Headspace, are valued at $2 billion and $1 billion, respectively. To make a 10x return on investment, Aura Health would need to reach a $600 million valuation, in which case it would emerge as an industry leader among these giants. The biggest concern is how much room in the market there is for that kind of growth.

The U.S. mental health app market stands at around $1.8 billion. The market is not massive by any means, but it is growing quickly, at an annual rate of 13.9%. The pandemic served as one of the major market drivers. COVID-19 spurred a decline in mental health for many and increased familiarity and comfortability with online health services. The mental health crisis and inaccessibility of current therapy options may also push users to adopt a cheaper, more approachable version of mental health care like the Aura Health app.

Aura Health was founded by brothers Steve and Daniel Lee. Steve has a background in product and holds a UC Berkeley-UCSF joint master’s degree for health care entrepreneurship. Daniel is a much more green founder with experience as a research assistant at his alma mater, UC Santa Barbara. Chief Technology Officer Jerome Curlier came from Microsoft and IBM, while Chief Data Officer Brian Richmond came from WeWork. The advisory team represents companies including Uber, Eventbrite, Slack, MasterClass, Credit Karma, and HubSpot. 

In isolation, I am not fully confident in the founders’ ability to execute, but they are surrounded by strong advisors and have brought on competent C-Suite team members with technical backgrounds that will serve the company well. Steve’s academic background in entrepreneurship should aid in his ability to bring on capital complemented by the Berkeley network.

Calm and Headspace are the two heavy hitters in the mental health app market. Both are still private companies but have raised hundreds of millions in outside capital. The Aura Health app has some of the most comprehensive content coverage, ranging from ASMR to hypnosis. Calm and Headspace focus primarily on guided meditations, breathwork, and sleep aids. Aura Health is slightly cheaper than Calm and Headspace ($59.99 annually vs. $69.99). The product is high quality — I have used it myself and can vouch for the value. You could find much of this content elsewhere, but I have yet to see an app that is a one-stop-shop for such a range of material. Differentiation by price alone is not a winning strategy and content can always be replicated by large competitors, but the team is working on new innovative strategies to capture more market share that I can’t share quite yet.

To date, Aura Health has 7 million users, 100,000 of whom are paid — which resulted in $6.9 million in annual revenue for 2022. Co-founder Steve Lee expects to do $10 million to $14 million in revenue within 12 months post-funding. There are 400 vetted creators on the platform, including licensed therapists. This is a strong start considering much of Aura Health’s defensibility lies in its traction. The company is also venture backed and has just under $1 million in cash on hand, a solid position for a startup as we enter turbulent economic times where funding may be hard to come by. Much of the company’s growth is entirely organic. If the company ramps up its conversion rates and paid marketing, traction could quickly skyrocket.

At $1.8 billion, the market for mental health and wellness apps is small. Two massive incumbents, Calm and Headspace, have already made significant headway in eating up much of that $1.8 billion. At a $60 million valuation, Aura Health needs the market to grow significantly to make room for a 10x return on investment. This is not out of the question, but the already small market doesn’t leave much room for current unmet demand. 

Aura Health’s somewhat green founding team is flanked by C-Suite executives with very impressive experience and an advisory team from top tech and consumer goods firms. And founder experience is less important than proven execution. Co-founders Steve and Daniel Lee have promoted consistent growth year-over-year in both revenue and user adoption. Aura Health’s low marketing spend thus far is promising, in that there is still much in the arsenal to ramp up traction. The brothers plan to use the money they raise this round to power product development and marketing. They have an impressive growth strategy that includes exciting and innovative features and partnerships that the pair is not quite ready to make public. 

Aura Health is a new player in the small but burgeoning mental health app space. Offering more comprehensive content than existing apps and at a lower price point, the company is well-positioned to eat up some of the market. The founding team is relatively green, but is surrounded by impressive C-Suite executives and advisors — a team that venture firms have already bet on. Traction has been stellar to date and with little to no marketing cost. Should adoption and revenue continue to tick up, getting in at this $60 million round could be a steal for investors. 

Report written by KingsCrowd Investment Research Manager Olivia Strobl on March 28, 2023.