No Truffles with this Trippy Startup 🍄🕶️

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Happy Monday, folks.

So it’s H2 now. I’m sure all of your New Year’s resolutions are still alive and kicking.

What? You haven’t finished a single book this year?

Might I recommend Diary of a Wimpy Kid to help get back on track? Easy read, and they’re true page turners.

In addition to offering a chance to reflect back on the (lack of) progress of some of these goals, the midyear point also presents the perfect opportunity to analyze the venture trends shaping the 2023 startup scene.

So after a quick detour to a startup that is alright, alright, alright, I’ve got a bunch of number nuggies for you to chew on. Bring Your Own Fries.

I’m as tired of the “back in my day” stories as the next guy, but you‘ve gotta give the “walked five miles in the snow, uphill both ways” generation some credit for the 60s and 70s. Now, it’s starting to look like the cool genes have skipped a generation. Sorry, Gen X.

Shrooms are back, baby!

Specifically, there’s been a resurgence of interest in psychedelics, largely driven by demand for its claimed effects in stress and mental health issue relief. Bob Dylan is somewhere shaking his head, reminding us that he told us so.

While their humble origins might be in the mental state- and sense-altering recreational use of deodorant antagonists, much of the newfound interest has been driven by recent scientific studies and adoption among respected professionals, something that was once a big no-no.

It’s reported than everyone from Bill Gates to Sergey Brin is a dabbler. Elon is said to microdose quite frequently, which, yeah. Makes sense. Bay Area parties have become more concentrated with fungi than a bowl of truffle risotto.

As for the science, after many studies were ctrl + alt + deleted back in the 70s, new research into the drugs’ promising potential in alleviating mental conditions such as OCD, PTSD, and depression have fueled a renewed fascination once reserved for first-time watchers of That 70’s Show.

In fact, in 2019, the FDA even designated psilocybin, the magic in magic mushrooms, a “breakthrough” therapy for treating depression, meaning progress can proceed faster than Toad after getting a rocket from the mystery box.

As acceptance of the substances continues to spread, startups are popping up to service this Harrison Ford-ed industry. There are even entire venture firms, such as Iter Investments, investing exclusively in this market because of course there are.

Iter’s portfolio spans the entire range of the supply chain, and while many are attempting to navigate the puff cloudy regulatory environment, one startup is already bringing the beneficial effects of psychedelics to customers anywhere, even to those a bit hesitant to really take a trip down rainbow road: aNUma

Rather than allow you to up your fiber intake and trip out, the company is leveraging VR technology to provide the experience of tripping balls to alls while not inducing any actual chemical changes. Given Steve Jobs’ own experimentation back in the day, it’s no wonder Apple has invested so much into its headsets.

The company is out to transform human connections while battling conditions such as depression, addiction, and even loneliness in the process.

So far, the company has two products, one for dealing with end-of-life distress and another for combatting severe depression. Each follows a timeline including an introductory call, sending the VR equipment to the customer, and a couple sessions of psychedelic-like experiences.

aNUma claims that these experiences leave participants feeling “calmer, happier and more connected.” Given how many companies claim their team culture is one of “family” (okay, vin diesel), it’s no wonder that the startup sells a shortened version for corporate virtual wellness retreats.

Curious what these experiences are like? Yeah, me too. After all, who wouldn’t want to find themselves existing as a form of “pure luminosity” which “releases them from a lot of judgments and projections.” In other words, you can gather as mingling balls of light.

If this all sounds like (mushroom) cap, the company has a page with the science to back it. I’m no scientist, and no matter how many times I dm Bill Nye, he won’t subscribe, so I’ll leave you to draw your own conclusions, but at least they have the receipts.

As aNUma continues to prioritize growth and effectiveness, the company’s services are actually free for now, though they ask kindly that you give it your all and fill out the impact survey that comes with it when they ship you the VR gear so that they can improve the experience. If they really wanted to be all-in on customer service, it should come with a Value Box from Taco Bell, too.

The company’s progress has been aided in no small part by the belief of prominent investors such as Iter Investments which led its seed round, and it’s easy to see why.

The global mental health market is estimated to be worth $230 billion by 2028, growing at a CAGR of 5.5% with improving science and the waning stigma around getting help leading to more medical diagnoses.

Segmenting this down further, the psychedelics market is expected to reach $6.8 billion by 2027 at a growth rate of 13.3%. The growing base of literature supporting zoomer power and alternative treatment options are helping this industry to fly oh so high, and it doesn’t hurt that taking a bite no longer leads to 10 behind bars.

In order to tap into this massive market, aNUma will have to demonstrate its ability to differentiate its VR platform from the competition, though it certainly has the leg up in not being subjected to the same legislation. A few other of these other companies:

• Compass Pathways is working on a fungus-assisted therapy for treatment-resistant depression

• MindMed is developing LSD-microdosing therapies (Phase 2 clinical trials for depression) for a variety of mental health conditions

• Field Trip Health and Numinus Wellness’s psychedelic clinics combat various mental health conditions

It’s also no guarantee that this is the future of mental health treatment, and aNUma will have to compete with mental health service providers of traditional psychotherapy, cognitive behavioral therapy, medication, and other forms of alternative therapy.

In order to stand out, the company needs to demonstrate the efficacy of its platform in clinical trials, obtain regulatory approval, and prove more effective than well-established companies. Given its sans-shrooms approach to psychedelic-assisted therapy, the company might have a leg up in getting to go to market sooner than its true trippy truffle competition.

In 2020, the startup was founded by

• Gregory Roufa, CEO, who brings decades of experience in the tech space, including as founder of Mindbloom (you can guess what they do)

• Joseph Hardy, Chief Science Officer, is a cognitive psychologist and former director of the Digital Therapeutics Lab at the University of California, San Francisco

• David Glowacki is a VR researcher and former director of the Virtual Reality Lab at the University of Southern California

The team combines expertise in management, psychology, and VR. If anyone is going to ensure that you can bloom your blues away, it’s this one. See you all on Cloud 9 🥰☺️🍄 😶‍🌫️ 😹 

aNUma, a startup using VR to simulate psychedelic experiences, aims to transform mental health treatment through immersive group sessions and corporate wellness retreats. They're poised to tap into a rapidly growing mental health treatment market, aided by better research, lessening stigma, and more people exploring alternative remedies. The team’s expertise across the board and innovative approach position it well to cash in on the ~high~ expectations.

Emerging Managers Struggle to Raise Funds

Movie depictions of freshmen getting shoved into lockers might be a bit of an exaggeration (i hope? if not, i’m so sorry), but life really is hard for newbies. Just ask your average greenie venture capitalist.

Emerging managers are on pace to raise their lowest amount in 7 years with outside investors on pace to pitch in just $20 billion.

The data from Pitch Book, which defines emerging managers as those with firms that have raised fewer than four funds, also shows that established names out-raised rookies straight up, a massive irregularity as on average, newer investors raise 2-3x more.

Not only does this trend mean less money for startups altogether, but the struggles of these managers could have profound distributional effects. These investors tend to focus on more niche founders, geographies, and industries. Let’s just say that there aren’t many established managers focused on psychedelics lol.

Even less capital available for these less mainstream companies means we might see a return to most startups being founded by a bunch of white guy Google alums building in SF.

Even for those managers seeing some success, it’s half-hearted. Average fund size is down more than 50% this year, hitting just $41.7 million.

And I thought I was broke my freshman year…

Female Founders Face Funding Frustrations

Getting stuck with child-birthing, defending the garbage that is Emily in Paris, and getting unfair treatment in the workplace. Such is the life of a woman.

Luckily, I’m not talking babies or baguettes, but I have the unfortunate privilege of letting you all know yet again that women are getting a shitty deal when it comes to raising money. Despite this disparity getting more public acknowledgement, things aren’t getting any fairer.

Through H1, companies with at least one female founder raised $13.4 billion, the lowest value over a half since H2 2020, across 1,537 deals, the lowest count since H2 2018.

It’s worth pointing out that funding is down everywhere, so it’s not just women getting no cash, but even when accounting for the broader downturn, most data suggests the gender gap did increase.

Certain industries were less bad. Women software founders still raised $3.8 billion, and biotech had a hefty $3 bil. Much of these were driven by the massive $450 million Anthropic C Round and the $275 million Metagenomi B Round. S/o Daniela Amodei and Jill Banfield for carrying the load.

Crypto Fundraising Numbers Fall for Fifth Consecutive Quarter

So you think you have diamond hands, huh? Well, we’re about to see how committed to hodling you really are.

It’s with a heavy, non-fungible heart that I report that fundraising numbers for the crypto space fell for a fifth consecutive quarter.

In total, there were 382 deals worth $2.34 billion, a far cry from Q1 2022’s $12.14 billion. The biggest deals were LayerZero’s $120M Series B and Worldcoin’s $115M Series C. Average valuations also fell another 15% from Q1 of this year, meaning they’re down around 70% YoY…

Some investors say monkeys just don’t have the shine they once used to. Others say they were tired of receiving pitch decks via Discord. All have concerns over the future of the industry given recent regulatory crackdowns, though, amplified by the mass exodus of startups trading in the stars and stripes for fish and chips.

I’m still bullish here, but @Tim Draper, wen $250K?

I admit it. I don’t subscribe to every newsletter that I plug here. Frankly, I can only handle so many messages cluttering my inbox, and I only learned how to read last week.

Still, I have Siri read aloud every single word from Startup Rabbithole. Seriously. It’s that good. Hit that subscribe button and find out for yourself.

Cheers to another day,

Trey