Angels & VCs Start to Move into Psychedelics
Ryan Allway
February 21st, 2020
Policy
Venture capitalists are often the first investors in emerging technologies, from cannabis to cryptocurrencies. Unlike large institutional investors, they are willing to take on high levels of risk in exchange for the potential to 10x or 100x their investments. Many VCs make most of their returns from just a handful of companies per “fund” that they launch.
Angel investor Tim Ferris, an early stakeholder in Uber, Twitter, and Alibaba, has started to take an interest in the psilocybin space, according to a recent Fortune piece. Ferris believes that the next five years will be a ‘fully golden window’ where there’s a chance to realize significant returns and positively impact thousands and thousands of lives.
Peter Thiel’s, a well-known venture capitalist, has also taken a stake in the industry through its investment in Compass Pathways, which is studying how the drug impacts depression. As an existing large-scale producer of psilocybin, the company is well positioned to conduct large clinical trials that could pave the way for cutting-edge treatments for major medical disorders.
Codebase Ventures Inc. (CSE: CODE), a venture capital firm focused on early-stage technology and cannabis companies, has also recently launched a wholly-owned subsidiary to focus exclusively on the psychedelics space, called Titan Shrooms & Psychedelics. The company plans to invest up to C$2 million into opportunities across the emerging space.
What’s Driving the Interest?
Psychedelics have been long associated with counterculture movements due to their recreational use during the 1960s. More recently, they have gained popularity in Silicon Valley as a way to improve focus and creativity through microdosing — a technique that unlocks some benefits without taking an entire “trip” (e.g. entering a state of psychosis).
Despite the recreational interest, the real developments and rationale behind investment has been on the medical side. Early research suggests that psilocybin could substantially and sustainably decrease depression and anxiety in patients with life-threatening cancer, while potentially having a favorable impact on a wide range of mental disorders.
With cannabis setting a precedent, the FDA has already granted breakthrough therapy status for clinical trials looking into psilocybin — the naturally occurring psychoactive compound in psychedelic mushrooms. Approved therapies could help millions of people suffering from a wide range of mental health conditions, including many treatment-resistant diseases.
What’s Next for the Space?
Venture capitalists and angel investors have started to make significant investments into the psychedelics space, while public companies are starting to ramp up their exposure. Retail investors have an opportunity to participate in some of these trends by purchasing public companies in the space, while accredited investors could seek out earlier stage opportunities.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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