Issue No. 132: The ‘Shroom Boom

Courtney Powell

From functional to magical, mushrooms are having a moment.

Driven by chronic burnout, the pursuit of wellness, and a psychedelic renaissance, the shroom boom is big business.

Big Shroom

For thousands of years, mushrooms have been dietary and medicinal staples the world over. Now, functional fungi have become a pillar of wellness culture.

  • Global mushroom market: $69B by 2024
  • Global functional foods market: $275B by 2025
  • Global alternative medicine market: $100B in 2021

Intensified by the pandemic, anxiety and burnout are on the rise. Taking matters into their own hands, consumers are searching for answers. Eyeing an opportunity, countless brands are selling mushroom-infused solutions.

In Issue No. 36, The Wellness Lexicon, we detailed the blueprint for turning functional ingredients, like turmeric, collagen, and ashwagandha, into mainstream products:

“…new-age brands are co-opting ingredients rooted in Eastern medicine or homeopathic remedies, then repackaging them as the antidote to modern ailments.”

On cue, from self-care and supplements to everyday food and drink, mood-lifting, stress-relieving, energy-enhancing mushrooms are here to save us from ourselves.

Functional Fungi

Seizing on this trend, Four Sigmatic is to mushrooms what Vital Proteins is to collagen, a breakthrough brand and product platform built around a functional ingredient.

While others, like Moon Juice, use mushrooms in adaptogenic elixirs, Four Sigmatic made fungus the star. From coffee to protein and energy shots to skin cream, they’ve successfully scaled their mushroom-centric model.

Where to next? Chances are Big Food comes calling.

Last year, Nestlé Health Science acquired Vital Proteins. Terms weren’t disclosed, but the collagen brand was expected to reach $250M in annual revenue in 2020.

Another encouraging sign, in April, Unilever acquired supplement maker Onnit. Known for its mushroom-laced nootropic, Alpha BRAIN, the deal signals a growing interest in this trend.

Laird Superfood also leaned in, adding functional mushroom blends to its portfolio. The company, co-founded by famed surfer Laird Hamilton, went public last year and currently has a $300M market cap.

Elsewhere, MUD\WTR, Om Mushroom Superfood, Apothékary, and Rritual offer mushroom mix-ins. Ready-to-drink beverage makers like Rebbl, Taika, Earth & Star, and Barcode added fungi extracts. Even nutrition bar makers, including Mindright, B.T.R. Bar, and IQBAR are tuning into brain- and mood-boosting mushrooms.

The catch? Like other nutritional supplements, functional mushrooms are unregulated by the FDA, so if the health claims sound too good to be true… well, you get it.

Mushroom “Meat”

In the effort to curb meat consumption, mushrooms have emerged as a viable alternative to animal products.

As we pointed out in Issue No. 93, Meat vs. “Meat,” consumers are eating up protein alternatives and investors are doubling down.

  • Investors put a record $3.1B into alternative proteins in 2020.
  • By 2040, cellular/plant-based meat will be 60% of the meat market.

Beyond plant-based options, fungi could be the future of food. As Food Business News explains:

“The fibrous texture enables a wider variety of types and cuts of meat. The flavor is neutral, eliminating the need for masking agents. It requires only a small amount of land, energy and water to produce, and it packs a nutritional punch that matches meat and rivals plants.”

While popular brands like Beyond Meat and Impossible Foods have been criticized as being unhealthy, fungi meats offer a nutritious, protein-packed alternative to highly processed plant-based options.

Among a growing list of upstarts, Nature’s Fynd has attracted $150M from backers like Jeff Bezos, Richard Branson, and Bill Gates for its fungi-based food platform.

Atlast Food Co. garnered ~$50M to turn mycelium (the fungus mushrooms are made of) into bacon. Of note, while Beyond Meat has 18 ingredients Atlast’s bacon only has six: mycelium, refined coconut oil, cane sugar, salt, smoky flavors, and beet juice.

And Meati Foods has raised ~$60M to make fungi-based steak. According to co-founder Tyler Huggins, two ounces of his company’s “meat” fulfills 50% of daily protein, fiber, and zinc requirements.

Magic Mushrooms

While mushroom coffee is trendy, and fungi meat is interesting, the outlook for psychedelic mushrooms is mind-blowing.

  • The global psychedelic drug sector will reach $10.7B by 2027.
  • One in five people with mental illness say their needs are unmet.
  • The mental health crisis could cost the global economy $16T by 2030.

In Issue No. 84, Psychedelic Wellness, we explored the startups and investors hoping to transform the future of mental healthcare, writing:

“In the 1970s, psychedelics were criminalized, effectively ending research into therapeutic uses. More recently, regulators have eased restrictions on psychedelic research, fast-tracking clinical studies, and legitimizing the space.”

A lot has happened since publishing that piece, and psilocybin, the hallucinogen in mushrooms, is playing a central role.

Combined with psychotherapy, psilocybin can combat treatment-resistant depression, anxiety associated with life-threatening illnesses, addiction, and other disorders.

Last year, Oregon became the first state to legalize psilocybin therapy. Denver, Oakland, CA, and Washington, DC also decriminalized the drug. And several states, including California, are considering similar legislation.

Two psychedelic drug makers, MindMed and COMPASS Pathways, went public. The former has a $1B market cap, while the latter sits around $1.4B. Soon, Peter Thiel-backed ATAI Life Sciences is expected to IPO. The company has raised more than $360M to date.

The downside: Worried that investors and drug makers will prioritize profits over healing, purists are pushing for decriminalization and universal access.

Zooming out: Blurring the line between wellness and healthcare, mushrooms could be gimmicky or game-changing depending on the application. Either way, there are billions to be made as the use cases get sorted out.


🎙 On the Podcast

Today, on the Fitt Insider podcast, we’re joined by Eric Wu, co-founder and COO of Gainful — makers of personalized nutritional supplements.

In this episode, Eric shares his journey from Y Combinator to raising $10M in venture capital. We discuss the opportunities and consolidation in the personalized nutrition category. And Eric explains why he believes Gainful could be a billion-dollar company.

Listen to the full episode.

💪 Road to Recovery

As mask mandates are lifted amid the continued vaccine rollout, gyms are getting back to business.

An uphill battle. Last year, the $35B US fitness industry saw revenues decline nearly 60% to $15B. And an estimated 25% of gyms/studios are expected to close permanently. Meanwhile, at-home workouts took over, putting digital/connected fitness on pace to reach $60B by 2027.

On the bright side. The Gyms Act, a $30B relief fund for health and fitness businesses, was introduced in the Senate. While the bill is being considered, some brands have started to rebound…

Equinox. The luxury gym chain recently saw a 55% increase in new membership sales. Last week, Equinox Group executive chairman Harvey Spevak said: “We’ve been waiting for this day for 14 months, and what we are seeing is a tremendous amount of pent-up demand.”

Planet Fitness. During the pandemic, Planet Fitness opened more than 100 new gyms without shuttering an existing location. With most of its 2,140+ stores open, the company added 600K new members last quarter.

Xponential Fitness. On the Fitt Insider podcast, Xponential CEO Anthony Geisler told us the company earned $435M in revenue and opened 250 new locations amid COVID. They also managed to acquire boxing brand Rumble and could go public later this year.

But… some boutique studios still face operational challenges.

Y7 Studio. Half of this yoga brand’s 15 NYC studios didn’t survive the pandemic. Y7 CEO Sarah Levey said they hadn’t reopened earlier because the “business model doesn’t work at 33% capacity.” Now, the company is struggling to rehire instructors as expenses pile up.

Mile High Run Club. Attendance is down 65% from pre-pandemic levels at this treadmill studio. Like Y7, Mile High is having trouble hiring instructors, some of whom transitioned online. The company is down to seven coaches from 21.

SLT. Pilates studio Strengthen Lengthen Tone is also having a tough time bringing instructors back. Making it difficult to break even, class attendance is 50–70% of pre-COVID levels.

📰 News & Notes

💰 Money Moves

  • Ro acquired Modern Fertility, adding women’s health to its digital pharmacy/telehealth platform. Most recently valued at $5B, Ro is estimated to have paid more than $225M for Modern Fertility.
    More from Fitt Insider: Femtech 2.0 
  • Noom, a habit-forming weight loss app, added $540M in new funding led by Silver Lake, valuing the company upwards of $3.7B.
    Listen in:
    Noom CEO Saeju Jeong on the Fitt Insider podcast.
  • Indoor vertical farming startup Bowery Farming raised $300M at a $2.3B valuation.
  • Ever/Body, a cosmetic dermatology company, raised $38M in Series B funding led by Tiger Global Management.
  • Clearing, a digital platform for chronic pain management, secured $20M in seed funding led by Bessemer Venture Partners and Founders Fund.
  • Camp Gladiator, the outdoor fitness movement, raised $7.6M of a potential $25M offering, per an SEC filing.
    Listen in: Camp Gladiator co-CEO Ally Davidson on the FItt Insider podcast. 
  • Super Bowl champion Ndamukong Suh joined Amp Human as an investor and athlete-advisor.
    Listen in:
    Our conversation with Amp Human CEO Jeff Byers.
  • Olympic speed skating star Apolo Ohno joined boutique fitness brand Brrrn, becoming a strategic partner and investor as the company launches at-home workout equipment.
    More from Fitt Insider: The Athlete VC 
  • Spot Meetings, a platform for walking meetings, raised $5M in seed funding led by Kleiner Perkins.
    Listen in:
    Spot CEO Greg Caplan on the Fitt Insider podcast.
  • Fertility care company Future Family added $9M in funding.
  • Wysa, an AI-powered mental health platform, closed a $5.5M Series A round.
  • Prima, a CBD skincare brand, raised $9.2M in a seed-plus round.
  • TRIP, a UK-based CBD beverage brand, landed $5M in funding ahead of its US launch. 
  • Acai superfood brand Sambazon secured a $45M investment.
  • Better Brand, makers of low-carb bagels and other baked goods, closed a $1.2M investment.
  • Vella Bioscience, a sexual wellness company, raised $7M in funding.
    More from Fitt Insider: Erasing Stigmas