Psychedelics: the next big thing?

I am always looking for the next big thing. Sometimes I am way too early, but by spending time on it before others do so I have been able to start ‘first-to-market’ companies and/or make very interesting investment returns over the years. For example podcasting (I was looking at this in the summer of 2004 already and it gave me the initial idea for Tudou.com, what turned into the first online video company), e-books (I used e-ink readers before Amazon even launched the Kindle), and of course Bitcoin and blockchain technology.

For a couple of months I have been looking at a completely new category, psychedelics. These are a kind of psychoactive drugs that can change your perception of the world, your mood or your creative abilities. You don’t get addicted to them and often one or two treatments can have life changing effects.

My interest in psychedelics started after reading Michael Pollan’s book “How To Change Your Mind”. It describes his journey to learn more about the history of psychedelics and the current status of these hallucinogens. Michael Pollan also tried several psychedelics himself and described the effect they had on him. The book opened my mind: I now understand why psychedelics can make a the world a better place for many people and that despite what governments tend to make us believe, they are not dangerous at all. I see them as a kind of medicine, but one that big pharma does not like because it will eat into its margins.

Some of the more well know psychedelics are LSD, psilocybin (‘magic mushrooms’), ketamine and MDMA. When administered in clinical settings they can have profound effects on people. Michael Pollan’s book gives numerous examples, such as terminal cancer patients suddenly feeling at ease with the fact that they will die (one of them called himself the happiest person in the world a few days after his session). He also describes a study in which 80% of people who tried to quit smoking successfully stopped after just one session, and he gives examples of many people with severe depression or anxiety who managed to live a normal happy life again after a psychedelics treatment. The big difference with traditional pharma is that normally one or two sessions with a relatively large dose are enough to get this result, instead of taking pills on a daily basis for a long period of time. Another way of taking these drugs is by micro dosing them, meaning you take a very small amount that does not make you high but that lets you focus more or makes you more creative.

Many clinical trials for several kinds of psychedelics are happening at the moment and showing promising results. In Canada some psychedelics are legal already when administered in a clinical setting. In the USA the FDA has called psilocybin a breakthrough therapy last year for severe depression, which will help speed up the process of approving this psychedelic. Because of this I believe we will observe a come-back of psychedelics in the near future (many of them were legal until the late 1960s).

Based on these developments I see a very bright future for psychedelics in a clinical setting or by micro dosing them. I am not sure yet about the effect on the recreational use of psychedelics, but my assumption is that it will follow the same path as cannabis (CBD and THC). Therefore I started looking at which companies are operating in the sector and I teamed up with my regular business partner Sean Clark and with Ben Samaroo (who was also involved in several of my other ventures). We decided to set up a small venture capital fund (Synaptic Ventures) earlier this year and started investing in the best private companies in the space.

We strongly believe the Canadian capital markets are open to good private companies in the psychedelics field, so we try to find the best ones and invest in them before they go public. We looked at many different companies over the past months and found some real gems, but (as usual in fast growing sectors) also some real pump and dumps. We try to stay away from the lower quality companies and so far invested in five companies that we believe have great founders and good business strategies, and that most likely will do well. It seems we made some good decisions (or maybe it was just luck), because two of these companies will go public over the next couple of weeks and a third one will likely be taken over by another psychedelics company.

If you are interested in this space and learning more about our venture fund feel free to get in touch with me. If you come across companies that you believe have good potential feel free to reach out as well. Our investment focus is on private companies in North America that are interested to go public, but we also recently started looking at some companies in Europe and Australia.