Issue No. 84: Psychedelic Wellness

How we got here

Psychedelics have been used by a variety of cultures throughout history. The best-known include psilocybin (found in magic mushrooms), LSD (known as acid), DMT (The Spirit or God Molecule), mescaline (found in peyote), ketamine (Special K), and MDMA (ecstasy/molly).

In the US, their use peaked in the 1950s and 1960s. During this period, significant research on the safety and efficacy of psychedelics was published. But that progress was largely undone when recreational use spiked. A highly politicized topic, psychedelics were associated with hippie culture and youth rebellion.

In 1970, when the US ramped up its war on drugs, Richard Nixon made psychedelics a Schedule 1 substance, stifling research and criminalizing their use.

The Psychedelic Renaissance

In recent years, psychedelics have seen renewed interest from the public, regulators, researchers, and funders.

• Johns Hopkins University launched a center for psychedelic drug research.
• The FDA granted “breakthrough” status to MDMA, ketamine, and psilocybin.
• Oakland and Santa Cruz, CA and Denver, CO decriminalized psilocybin.

With an emphasis on mental health and addiction, psychedelic therapy is being used to treat a host of psychiatric afflictions. Recent clinical studies show mounting evidence to support their effectiveness.

In a Phase II trial of patients who suffered from chronic, treatment-resistant PTSD for an average of 17 years, 56% showed no signs of the condition after one MDMA-assisted therapy session. Following up at the one-year mark, 68% no longer had PTSD.

In another study, psilocybin significantly decreased depression and anxiety in patients with life-threatening cancer. After six months, 80% of the patients were still less clinically depressed than before the treatment. Some participants said they lost their fear of death.

Additional research has signaled the effectiveness of psychedelics in treating opioid addiction, smoking cessation, and OCD.

Turn On, Tune In, Cash In

As psychedelics move into the mainstream, technology investors, drug makers, and wellness practitioners are paying attention.

Leading the charge, the Multidisciplinary Association for Psychedelic Studies (MAPS) has played a key role in legitimizing psychedelics. Of note, MAPS is a non-profit organization aiming to treat mental illness through psychedelic-assisted therapies.

Meanwhile, a growing number of for-profit ventures are targeting the space.

• Toronto, Canada-based MindMed raised $30M to develop 18-MC, a non-hallucinogenic compound based on ibogaine, targeting opioid addiction.
• COMPASS Pathways secured $116M in funding from well-known investors like Peter Thiel to create a synthetic version of psilocybin.
• German-based ATAI Life Sciences raised more than $100M to develop innovative psychedelic therapies by investing in other biotech startups.
• With $8.5M in funding, Field Trip is a “mental wellness company” offering psychedelic-enhanced therapies.
• London-based Eleusis is using psychedelics to treat Alzheimer’s disease. The company has raised $13.5M to date.

The downside: As investors and drug makers attempt to corner the psychedelic market, purists are sounding the alarm. Proponents believe access is being restricted to wealthy, well-connected individuals. And there’s a growing concern that big pharma will enact a prescription model, prioritizing profits over healing. As a result, activists are pushing for decriminalization and universal access.

Psychedelics Wellness

Beyond medicinal applications, psychedelic wellness is gaining steam. From educational resources and healing clinics to luxury retreats, consumer-facing offerings could become a vertical unto itself.

Psychedelics-as-a-service. Unlike cannabis, proponents are quick to warn that psychedelics aren’t a commodity, they’re a service. Marijuana is a commodity that can be cultivated and distributed. Psychedelics, on the other hand, rely on delivery — or the service component.

Because education, intention, set-and-setting, and working with a guide or facilitator are central to the experience, new wellness-oriented companies focused on delivery are starting to emerge.

• The Third Wave is a psychedelic education platform.
• Synthesis and MycoMeditations are among a growing number of psychedelic retreats.
• Mindbloom recently opened the first legal psychedelics clinic in the US.
• Nana, a yet-to-launch startup, is building an integrated therapy solution for psychedelics.

And the list goes on… Companies focused on normalizing psychedelics through content and events are seizing the moment as well. The Delic, a media platform devoted to psychoactive compounds, recently acquired Reality Sandwich, a website dedicated to psychedelic news and culture. And DoubleBlind, a print magazine and media company, feels like the Kinfolk of psychedelics.

Looking ahead

While wholesale legalization seems unlikely, especially in the nearterm, psychedelics have the attention of the medical establishment, business sector, and wellness community alike. As conflicting interests come to a head, the various use cases, business models, and regulations will be hotly debated. In the end, ego and power will ironically play a key role in determining the future of a drug known to dissolve egos and relinquish power. Maybe this is a case for getting high on your own supply?

F45 Training, a group fitness chain backed by Mark Walhberg, is in talks to go public by merging with Crescent Acquisition Corp. According to Bloomberg, the deal could be announced as soon as today.

For context: Earlier this year, F45 filed to go public. Then, when COVID-19 hit, the company shelved its IPO. Now, the company appears to be rallying.

Need-to-know: The fast-growing fitness company was founded in Sydney, Australia but now calls Los Angeles home. Last year, actor Mark Wahlberg and FOD Capital bought a minority stake in F45, valuing the company at $450M.

F45 has more than 1,700 locations in at least 40 countries. And the company’s founder Rob Deutsch has said there’s a plan to open more than 10,000 studios worldwide. Of note, Deutsch stepped down from his role as CEO yesterday.

Behind the scenes: According to the Sydney Morning Herald, Deutsch’s resignation is the result of the stalled IPO and an impending legal battle with competitor Body Fit Training. Last year, F45 filed suit against Body Fit, claiming the foe infringed on F45 patents relating to its franchise management system.

Zooming out: As F45 presses on, the fitness industry looks to bounce back. Pre-COVID, Barry’s was shopping itself for an estimated $700M. And Xponential Fitness was eyeing a public offering. During the pandemic, middle-tier gyms like 24 Hour Fitness, Gold’s Gym, and Town Sports struggled, while MINDBODY and ClassPass cut staff. How quickly things rebound remains to be seen.

Last week, we pointed out the growing number of interactive workout mirrors. Now, one of those upstarts is looking to add new funding.

The news: According to Fortune, Tempo is seeking to raise $60M at a $200–300M valuation. Combining a workout mirror with instructional content and free weights, Tempo landed $17.5M from Founders Fund, DCM Ventures, and Khosla Ventures in February.

More interesting, though, Fortune also reported that Peloton offered to buy Tempo. Tempo is said to have declined the offer, but the move signals Peloton’s willingness to acquire complementary hardware companies to maintain their lead and diversify their offerings beyond cardio equipment alone.

WOFH Gold Rush: Under lockdown, connected fitness companies made hay. Now, everyone is looking to cash in. Hydrow recently added $25M in funding from L Catterton. Tonal is reportedly in talks to raise capital. FORME Life launched mid-COVID. SoulCycle has started shipping its at-home bike. And Mirror, Tempo’s chief competitor, is targeting $100M in revenue this year.

Looking ahead, it feels as though M&A activity is inevitable as the connected fitness wars continue to heat up.

• healthOS [Reread: Apple Fit]
• Dopamine dominates consumer decision-making.
• NYT report: CrossFit’s culture of sexual harassment.
• Animal-based chicken nuggets will be obsolete by 2040.
• Meet GHIA, the latest non-alcoholic upstart. [Reread: The End of Alcohol]
• The billion-dollar Great American Outdoors Act passed. [Reread: Camping as Wellness]

• Playbook, a platform for fitness creators, raised $3M in seed funding. More from Fitt Insider: The Rise of the Fitness Creator
• Big Health, a digital platform for mental health, closed $39M in Series B funding.
• Kaia Health, a digital physiotherapy company, secured a $26Minvestment.
• One Year No Beer, a UK-based alcohol-free online community, raised £1.1M in funding.
• CDIB Capital is seeking a buyer for its stake in Taiwanese gym chain World Fitness Services.
• The LIVEKINDLY co, a media platform turned food company, acquired Swedish plant-based meat company Oumph!. 
• Plume, a hormone replacement therapy startup, raised $2.9M in funding led by General Catalyst and Slow Ventures.