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Hypnosis for health? Investors have placed a $1.1 million bet on Mindset Health that it can work

Chris and Alex Naoumidis came to hypnotherapy through dresses.

As The New York Times reported last year, the two brothers initially started their careers as startup entrepreneurs with a peer-to-peer dress-sharing app for women. The Australian natives were overcome with doubt about their ability to succeed in startupland; when apps didn't work, their father suggested they try hypnotherapy.

Those sessions led the brothers to launch Mindset Health and raise $1.1 million in funding from investors including Fifty Years, YC, Gelt VC, Giant Leap VC and angel investors across the U.S. and Australia.

It's a lot of backers for a small round that closed in November of 2019, but it's indicative of the kind of bets that investors are willing to take in the mental health space these days.

A whole slew of apps have come to market to treat the mental disorders that seemingly accompany living in the modern world. There are companies that facilitate matching with therapists, companies that provide mental wellness tools in the form of cognitive behavioral therapies, billion-dollar companies that offer mindfulness and meditation and companies that offer hypnotherapy.

The hypnotherapy sessions that Alex and his brother took gave them an idea. "Could we do this similar to meditation and bring this to market in a way that would be helpful?" Alex Naoumidis told me.

Meditation is a multi-million-dollar business, with apps like Calm and Headspace raking in millions of dollars in venture financing and giving them billions of dollars in perceived valuation.

Alex Naoumidis stresses that the app isn't therapy -- the company can't pitch it that way under current regulations. "It's more of a self-management tool," he said. "Helping people with anxiety or [irritable bowel syndrome] to manage those symptoms at home to complement the work they're doing."

The goal, according to Alex Naoumidis, is to have a number of apps under the Mindset umbrella that deal with specific conditions. While it began as a more general mental wellness app, the company now has Nerva, its IBS-focused product, alongside its general mental wellness Mindset toolkit.

Nerva's not a cheap subscription. There's an upfront payment of $99 and then an $88 three-month subscription. The Mindset subscription service costs $11 (priced to sell in the COVID-19 era) down from $64 when the Times' writer, Nellie Bowles first tried the product.

Here's how she described it:

As a first step, the app suggested that I text a friend or tweet to the public the quote “He who conquers himself is the mightiest warrior.” For the next 19 minutes, a soft male voice told me that my mind can slow down. It can convert concerns to decisions. The process can even become second nature. And if it does, I can be a person of action. A person of action.

I did another module, Increase Productivity, which is voiced by a peppy younger man — a start-up bro right in my ear asking me to repeat after him: “I give myself permission to know what I want to be and what I want to do and do it efficiently.”

These mental health apps, or any app, supplement or business that's promoting wellness need to have some clinical studies to back up their claims, and Mindset is working with doctors on the products. The initial Mindset app was designed in concert with Dr. Michael Japko, while the IBS app was designed with Dr. Simone Peters.

Both receive revenue share with the company for their work developing the course of therapies.

The company's co-founder says that they're unscientifically seeing successes come from the service. People self-report their symptoms at the start and at the end of the program. For people who complete the program, 90% have reduced symptoms (I'm not sure what percentage of signups complete the program).

"Our idea is we want to help researchers who develop these amazing programs deliver them digitally," said Alex Naoumidis. "We worked with world-leading researchers to make it more accessible."