How the world’s first mental health-focused VC Fund Masawa is changing venture investing

Founding or being employed by a startup can result in a plethora of mental health challenges. The constant pressure to design and build novel tech solutions, fundraise, and gain customers can result in stress, sleep disruption and burnout. Many founders and their employees struggle with imposter syndrome, financial stress, and exhaustion from the treadmill of meetings, business trips, public speaking, and pitching. 

VCs often emphasise that a startup is only as strong as its founding team. Yet, few provide access to professional support for managing entrepreneurship's stress and psychological challenges, prioritising high financial returns and rapid exits instead.

European venture capital fund Masawa is a Seed-stage fund with a difference. Its the world’s first mental health-focused venture capital impact fund.

It invests in companies addressing mental illness cures, mental wellness improvement, and the social determinants of mental health.

Further, it supports founders in building healthy organisations by utilising a "Nurture Capital" approach, designed to minimise human capital risk by strengthening leadership effectiveness, team resilience, and social impact.

I spoke to its co-founders, Joshua Haynes and Sabine Fléchet, to learn more. 

Setting startups up to succeed

Masawa believes that focusing on organisational health and founder wellbeing can set companies up for sustainable success, as many startups fail due to people problems.

Its developed a Nurture Capital framework that mitigates the risk of human conflict — often cited as the cause of 65 per cent of startup failures — by blending capital investment with human-centered support and financial system innovation:

It offers entrepreneurs access to therapists, leadership experts, and coaches, helping them emotionally and financially thrive. 

According to Haynes, these services, covered over the first 12 months, "create a safety net that enables founders to manage or anticipate team conflicts, develop as responsible leaders, nurture company culture and employees, and scale their organisations in a healthy, sustainable way."

For unsuccessful or transitioning founders, Masawa offers a mental health package to help with closure and get them back on their feet and innovating.

Masawa's 'Solidarity Capital': a new model in venture investing

VCs are starting to recognise the importance of supporting their portfolio companies in a more personal way.  Cherry Ventures launched a new program called Copilot in March 2025, requiring all newly-backed founders and key employees to engage with an executive coach from Cherry's curated network for a minimum 12-month participation period.

However, according to Haynes, Masawa's approach is more holistic. 

"Our approach extends beyond individual founder coaching to encompass a more systemic view. We recognise that a founder is part of a complex ecosystem, interacting with various stakeholders, including their team, suppliers, customers, and investors.

We focus on how the founder evolves within this system and how we can support the entire team's success.

Our support plan is highly tailored based on insights gathered during our thorough due diligence process.

We employ an end-to-end solution that assesses the founders' needs through our internal framework, while also considering their specific interests and goals."

Further,  as part of Solidarity Capital, 50 per cent of Masawa's GP carry is tied to external impact targets co-created with founders. 10 per cent of Masawa's GP carry is reserved for founders.

Tax-beneficial donations (currently for US and German tax residents/entities) are treated as investment capital in the fund and/or support Nurture Capital activities, potentially reducing overall management fees. 

Masawa's GP carry earned above a multiple of 4x on invested capital at the portfolio level is directed to the Masawa Foundation, collectively managed by the Masawa team, advisors, and selected LPs and investees.

How personal struggles and COVID shaped a new approach to venture capital

Haynes's career started in software B2B SaaS enterprise implementation. He later moved into emerging markets, working in Morocco, Niger, Mozambique, and other locations to develop software solutions bridging nonprofit and for-profit sectors. Seven years as a diplomat in the Obama administration, managing a $200 million social impact portfolio at USAID followed.

He later worked with the Swedish government on innovative capital structuring.

According to Haynes,  "When we moved to Berlin, I faced personal mental health struggles and saw a massive gap in mental health financing, especially in Europe. This led me to explore setting up a fund to support early-stage founders in mental wellness."

Fléchet started her career in investment banking and strategy consulting before transitioning into VC seven years ago. At Lidex Capital Partner,sheI focused on food tech, supporting pre-seed and seed startups. 

She recalled:

"During COVID, I saw firsthand how crucial mental health was to startup success as many founders faced burnout. That realisation pushed me towards integrating mental health into venture capital. 

Joshua and I met at a BMW Foundation event on responsible leadership, where we discussed creating a VC fund with a dual focus: investing in mental health solutions and supporting founders' mental wellbeing."

The team also includes Dr Youssof Oskrochi, a public health and digital health expert with over a decade of experience across the NHS, NICE, and UCL and Elisha London, a global mental health advocate and founder of United for Global Mental Health and Prospira Global.

Startups shaping the future of wellbeing

Masawa has invested in two startups (with plans to soon announce another):

Five Lives (UK/France) is a digital health startup dedicated to dementia prevention and early detection of cognitive decline. Primarily targeting women aged 50-75, who are disproportionately affected by dementia,  it offers a clinically validated app that assesses dementia risk and provides personalised coaching to improve brain health.

The company collaborates with academic institutions like Dementia Platform UK (DPUK) and partners with insurers and employers to integrate its app into wellness programs.

Quan (Netherlands) is a Y-Combinator-backed workplace wellbeing platform that helps teams and organisations improve employee wellbeing through an evidence-based assessment. It evaluates five key dimensions :

• mind, 
• body, 
• meaning, 
• social connectedness, and
• self-fulfillment

This provides insights into the underlying factors affecting team wellbeing, guiding managers through quarterly discussions to foster psychological safety and prioritise areas for improvement. 

The real challenge of behavioural health solutions

The evolving healthcare landscape presents both challenges and opportunities.  

Fléchet shared:

"What we often see — but aren't particularly excited about — are tech solutions focused purely on behavioural change. No one has truly cracked the ability to demonstrate long-term adherence. Without solid scientific evidence proving retention and stickiness, relying on behavioural change alone is a tough sell.

Otherwise, it risks becoming just a marketing exercise, driving user acquisition and engagement without delivering a meaningful, lasting impact.

From a business perspective, we're cautious because there's no proven model for sustainable returns in this space."

She is, however, excited about the evolving go-to-market landscape. 

"We're seeing greater flexibility from key stakeholders such as insurers and pharma companies, who are more open to piloting and partnering with startups. 

On the insurer side, there's a focus on prevention, such as tools that help policyholders manage their health and prevent injuries. 

For pharma, a promising new regulatory framework allows companies to demonstrate improved drug efficacy when combined with digital tools—such as apps, gamification, and patient engagement solutions—to enhance compliance."

According to Haynes, social determinants like nutrition and childhood mental health are significant areas for potential, not just looking at children but also parents.

"Around 50 per cent of mental illnesses start before age 14, making early interventions crucial. Autism, ADHD, and dyslexia are also areas of interest due to increasing diagnosis rates. 

We also like data platforms and plug-and-play solutions rather than niche meditation apps or basic therapist-matching services."

Ultimately, Masawa aims to lead by example and prove that its nurture capital model works.

According to Haynes, we need to move away from purely exit-driven metrics.

"Success shouldn't be about becoming a unicorn but about long-term impact.

If we create an environment where founders can thrive holistically, the whole ecosystem benefits. If we can show that compassionate investing leads to better startup success rates, more VCs will adopt similar approaches."

Lead image: sergeycauselove.