Psychedelics aren’t only about getting high, and a new wave of startups is here to explore everything there is to know about using natural and synthetic drugs to tackle the globe’s growing mental health crisis.
In Episode Two of The Sifted Podcast, sponsored by Zendesk for Startups, Sifted editor Michael Stothard interviews Iberia correspondent Tim Smith on the history of psychedelics, from ancient Greece to the 1960s, and how it’s now become a golden opportunity for Europe’s entrepreneurs.
But before we dig into the podcast, just how big is the market? We crunched the numbers.
Psychedelics in numbers
Psychedelics are a class of natural and synthetic compounds that include psilocybin, esketamine, MDMA, LSD, ibogaine and DMT. Each is able to alter sensory perceptions and thoughts.
Last year saw the global psychedelics sector grow to $2.8bn, receiving a big boost from the global mental health crisis brought on by the pandemic.
According to Dealroom, VC funding has also skyrocketed, jumping from €3m in 2016 to €399m so far this year, a 130x increase.
And it’s not slowing down — the market is expected to reach $7.6bn globally by 2028. But that’s still small compared with the global cannabis market, which is expected to be worth over $70bn by 2028.
In Europe alone, the value of the psychedelics sector is $5bn, jumping from $1.9bn just last year — both far more than $300m in 2018, according to Dealroom data.
Big European players include UK unicorn Compass Pathways, which patented a synthetic version of psilocybin to treat depression and floated in 2020 — it's now valued at $1.3bn.
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Germany-based and Peter Thiel-backed ATAI Life sciences and GH Research in Dublin also listed, each at unicorn valuations.
Newcomers to watch include Swiss-based MindShift, UK-based Eleusis and Denmark's Octarine Bio.
And there are several startups that are venturing beyond the usual drugs like ecstasy and ketamine — Oxford-based startup Beckley Psytech raised $80m in August to accelerate clinical trials using toad venom to treat depression.
A big gap to fill
So what’s fuelling this market growth?
It’s no secret that the pandemic has not been good for our collective mental health. Rising rates of anxiety and depression are likely to further expand the global use of antidepressant medication, a market that is estimated to be worth $18.2bn by 2027. But we know that these treatments don’t work for everyone.
It’s thought that more than four in ten people don’t respond to antidepressant drugs, even after 12 weeks of daily medication. Figures like these make it easy to understand why investors are taking a chance on what seems like a total step change in mental health treatment.
Listen to Episode Two of The Sifted Podcast now
In this episode, you’ll hear from Dr Carol Routledge, chief scientific and medical officer at psychedelics startup Small Pharma, about how psychedelics help the brain break out of negative cycles, and Natasha de Jong, cofounder and CEO of Earth Resonance, a startup for psilocybin microdosing.
We’ll also discuss how psychedelics have created a new world of startup spiritualism, where business leaders take their teams on psychedelic therapy retreats — and the dangers that come with it.
Julius Dreyer, founder and chief executive of PlayaMedia, is one such founder. We’ll hear from him and one of his employees about how their company psychedelic retreat nearly ended in disaster.
Finally, you’ll hear from five-year-old Eliza, who will grill de Jong on just what makes magic mushrooms so great in the second edition of Baby Shark Tank.
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Host: Michael Stothard
Producer: Georgina Ustik
Editor: Tim Smith