Philantropy, technology needed to transform Israel's mental healthcare - opinion

The potential of technology to transform mental healthcare is enormous, and still vastly underutilized. In Israel today, the need is urgent.

Tens of thousands of reservists and their families are grappling with trauma and mental health challenges. The civilian population is showing alarming signs of distress. Despite promising pilots, the gap between innovation and access remains wide. To close it, we need a new approach that leverages technology as a core part of Israel’s mental health recovery, not an add-on.

Recent data from PollyLabs and ICAR Collective show just how deep the need is. Among reservists’ families, 45% of reservists and 68% of spouses report significant mental distress, yet only 25% of spouses are receiving any emotional support, according to data published by the Reservist Wives’ Forum. Alarming behavioral changes are being reported in children, and systemic strain is affecting employment, education, and family stability.

Despite hundreds of millions in government and philanthropic funding flowing to the mental health ecosystem, there is still no scalable, tech-enabled infrastructure to support these families. New solutions exist but the ecosystem to deploy them at scale is missing.

Data from ICAR’s mental health tech landscape map highlights the opportunity: Israel now has more than 117 active start-ups focused on mental health, spanning self-care, managed care, workflow automation, and research innovations. However, 85% are still early-stage, and most face a fragmented, risk-averse funding environment that limits their ability to scale.

The opportunity is twofold: First, to accelerate recovery in Israel by scaling effective tech-based solutions.

Second, to establish Israel as a global hub for mental health innovation in a market that is growing rapidly worldwide. The global mental health market was valued at $410 billion in 2023 and is projected to reach $573b. by 2033.

But mental health tech is not like other sectors where “move fast and break things” is acceptable. In this area, speed must be balanced with safety, quality, and care. Today’s funding and support ecosystems are not designed for that balance.

This has created a funding dead zone. These start-ups are often seen as too “for-profit” for traditional philanthropy. Yet they are also too risky or slow-growth for venture capital. As a result, many promising solutions stall before reaching real scale. Mental health start-ups received only 12% of total global venture capital healthcare investments.

Blended capital – a mix of grants, early catalytic investments, and other funding – is essential to bridge this gap. Philanthropy must step into a new role, not just writing checks, but actively shaping the ecosystem.

Philanthropy needs to become three things:

Risk mitigator: Acting as the first “investor”/paying client, especially in hospitals and NGOs, to help prove value and safety.

Educator: Investing in research to show what works and identifying systemic risks, as well as encouraging their own investment committees to participate.

Orchestrator: Convening the whole ecosystem, including start-ups, NGOs, hospitals, ministries, private investors, and global partners.

Jewish philanthropy has the reputation, networks, and financial tools to build the infrastructure needed. Blended and catalytic philanthropy is the next frontier of strategic giving, and it has been significantly underused in Israel’s recovery efforts so far.

Once philanthropy plays its role, Israel’s private sector must step in. Generalist venture funds and medical funds have a major opportunity: to seed the next wave of mental health innovation, not as charity, but as a strategic investment. Recent data shows that almost 60% of consumers are willing to pay out-of-pocket for digital health solutions, including mental health apps, particularly when they are easy to use and accessible.

This is a competitive vertical for Israel to lead globally. With local momentum, international investors will follow. Israel has proven repeatedly that when sectors are well-orchestrated, it doesn’t just participate in global trends, it sets them. Mental health tech can, and should, be the next area where Israel leads, not follows.

Promising models are already emerging

XRHealth is running a pilot providing VR headsets to 300 reservist households. The program has facilitated over 1,000 treatments, helping reservists and families manage trauma symptoms with validated progress tracking (PCL-5, GAD-7, PHQ-9). In a uniquely Israeli twist, some reservists even brought their VR headsets back to the front lines to manage stress in real-time.

Kai.ai offers scalable, AI-driven emotional support rooted in CBT and positive psychology. Partnering with Reichman and Ben-Gurion universities, Kai.ai is supporting reservists while enabling clinicians to prioritize critical cases, expanding resilience-building support across new populations.

Taliaz deploys AI triage systems to resilience centers, reducing mental health service waitlists by over 85%, and accelerating psychiatric care access from months to days. Its technology, Predictix Care, optimizes clinical intake, freeing up scarce therapist capacity and directing urgent cases to appropriate interventions.

Mental health start-ups that want to operate in Israel need to rethink how they approach their capital stack. Today, too many impact-driven start-ups view philanthropy mainly as a way to subsidize users – a stand-in for future payments from governments or HMOs, missing a larger opportunity.

Philanthropy should not just be seen as a payer, but rather as a strategic partner. Start-ups should work with philanthropic funders around areas like data collection beyond their own platforms, early-stage validation across diverse target markets to find the best market fit, and leveraging impact measurement for product growth.

This shift in mindset can also shape pricing strategies. Early grant funding should be used to secure long-term client commitments upfront, bring in big brand-name partners, and experiment aggressively with product and pricing models while risks are de-risked by blended capital.

Without strategic capital planning, even the most promising mental health tech solutions risk stalling. Israel has the talent, the urgency, and the creativity. Now it needs an ecosystem – and a mindset – ready to meet the moment.This isn’t just about start-ups or capital efficiency. It’s about responding to a national trauma that affects every family, school, and community. Scaling mental health innovation is a critical pillar of Israel’s resilience today, and for generations to come.

Gila Tolub is the executive director of ICAR Collective and has 20 years of experience in strategic consulting, including 12 years with McKinsey & Company, focused on healthcare and its role in improving society. Alina Shkolnikov Shvartsman is the chief partnerships officer at PollyLabs and an adjunct professor at The New School in New York City. She specializes in impact innovation and catalytic capital.