Psychedelics Startups Are On a Long Journey to Consumer Markets, But These 5 Vcs Are Taking The Ride

Psychedelics Startups Are On a Long Journey to Consumer Markets, But These 5 Vcs Are Taking The Ride

COVID blew the lid off what had been a smoldering mental health issue for over a decade, like a pressure cooker,” VC Tim Schlidt told TechCrunch. The global incidence of anxiety and sadness soared by a staggering 25% in the first year of the epidemic, according to the World Health Organization. When existing therapy approaches were shown to have limitations, the general public and regulators were more prepared to consider alternatives, including psychedelics.

Drugs like ketamine, MDMA (commonly known as ecstasy), and psilocybin, which were once restricted to underground groups and rave culture, are now being researched to create cures for everything from PTSD to cluster headaches. “Today, there are over 400 ketamine clinics in the United States, and over $200 million has been funded in the last two years to create even more,” PsyMed Ventures founder Dina Burkitbayeva stated. “If MDMA and psilocybin-assisted therapies are allowed, many of these clinics will be venues for treatments derived from additional compounds when they become accessible.”

Psychedelic entrepreneurs are gaining traction thanks to a more favorable legislative and social environment, but they still have to walk a tightrope that is vulnerable to consumer opinion. “While mental health has received a lot of attention, and psychedelics have the potential to be profoundly disruptive, not all of the buzz is merited or justified.”

In reality, the early hype-driven public markets have harmed many investors,” stated Sa’ad Shah, managing partner of Noetic Fund. Three of the five investors we spoke with for this deep dive were Burkitbayeva, Shah, and Schlidt. Each of them has an investing thesis that is heavily influenced by psychedelic applications. Indeed, interest in psychedelic businesses has exploded in recent years, garnering the attention of generalist investors. However, if public market opinion shifts, specialist VCs appear to be more inclined to stay the course.

Which psychedelic uses, both inside and outside of mental health, excite you the most? Outside of depression, anxiety, and PTSD (the usual mood disorders for which psychedelics are used), the case for using psychedelics to treat OCD is persuasive. According to Yale research, there appears to be little to no need for treatment since severe forms of OCD appear to be more like a motor illness than a psychiatric condition.

Psychedelic therapy for a variety of drug use problems is also showing potential. There is convincing evidence for psilocybin’s efficacy in smoking cessation and even alcohol use disorder. Despite not being a traditional psychedelic, ibogaine has been shown to be successful in removing all symptoms of opioid use disorder in just one session. As a result, we are optimistic that psychedelics will prove to be effective treatments for a variety of addictions.