July 20, 2020

Investing in psychedelics - how does that work and where to start? By Marik Hazan.

Investing in psychedelics - how does that work and where to start? By Marik Hazan.

Marik Hazan, the Founder at Tabula Rasa Ventures explains what does it even mean to "invest in psychedelics" and how this can be done. If you are interested in investing in CBD and related fields or if you want to open a startup in this field, this episode is just perfect for you.

Tabula Rasa: https://tabularasa.ventures/

Psychedelics Industry Analysis: https://fraqtal.space/

(no similar episodes really, this one is unique)


Transcript

Alright, this is fundraising radio, and today's a guest speaker founder add to bull a rust of ventures that invest in psychedelic space, which you've heard, right it's psychedelic space. 

So, today we're gonna talk about investing in a really tough, highly regulated fields that need FDA approval and stuff like that. 

So, unless you call by, you giving us some background on yourself and onto bull or Ross adventures. 

Definitely, yeah, so thanks for having me really appreciate it and to give you a little bit of background. So we started tabular Ross around two years ago. 

Most of the work that I do is focused on counter culture, controversial advocacy, so really looking at stigmatized and alternative communities and seeing how can specifically entrepreneurship build a foundation for greater access to resources and human rights. 

When large human rights foundations might not necessarily provide that infrastructure. So I spend a couple of years working on technology for the sex worker rights movement. 

I spent a couple of years contributing to the decentralized governance space over the last two years have been primarily focused in psychedelic. 

And what tabular offset is, is, we're really trying to build an infrastructure for investing and entrepreneurship within the psychedelic space and tabular ross's. 

One of the things that we work on, which focuses specifically on incubation and being able to make investments currently via syndicate. 

But looking to continue raising a fund over the next twelve months, and hitting a twenty five million funds that we can invest out of ourselves. 

That's really interesting. And let's first discuss the psychedelic space so I mentioned that I hope most of my, I mean, don't not hope, but I imagine that most of them always know what that is, but let's go in depth into this. 

So, what does investing in psychedelic space mean? Because, I mean, psychedelic cells are highly, highly regulated and somewhat illegal substances. Right? So how, what does it mean to invest in that space? Yeah. 

So they're not as illegal as you might think, quote unquote. There's there's certain compounds that are federally legal. So, ketamine is federally legal for treating resistant depression. Currently. There's more than a hundred ketamine clinics throughout the country. 

That your doctor could basically prescribe you kinda mean to be able to go and get either a ketamine infusion facility or be able to get ketamine assisted therapy for treatment resistant depression. So, even in the US, there's already kind of an open market with one psychedelic compounds. 

Are seen as a compound, and then we have other countries across the globe that have less regulations around specific other substances. Suicide suicide in is the active ingredient in what? 

People term magic mushrooms. So, just like th. C. is the psycho active compounds within cannabis, or at least one of them. So, assignment is that psycho active compound for mushrooms is legal within Jamaica. 

It's legal in a very particular form in in the Netherlands as well. 

And so there's already businesses sprouting up in those places that are basically using so five in and hope plants mushrooms to be able to do everything from consumer packaged goods to retreat 
sensors and everything everything else along the supply chain.
So that's.
Yeah, 

that that's kinda what the market looks like today and I think in the next couple of years right now there's a lot of policy in place, 

and a lot of research that's been done to basically get suicide in an, 

through the FDA approval process somewhere around twenty twenty two, 

twenty, 

twenty three, 

specifically targeting treatment, 

resistant, 

depression and treatment resistant. 

So it's very likely that we'll see those changes in policy in the next two to three years and that will open up a market in a way that we just haven't seen before. 

Right, I think I've checked the stats, like a while ago and I remember there was a huge number of people in the United States specifically suffering from depression. 

So, looking forward to see those regulations going by the sentence, and hopefully they'll get approved, but let's go over more in depth into what you invest in. So can you like two examples of the companies that you've invested in? 

So, there's, you know, we all have some understanding of how. What specifically can be invested in this field? 

Yeah, so some of the, some of the memos that we've written and passed around our network are for one is from my health, which is a really incredible company building tech for the psychedelic assisted therapy process. 

You could say, or for practitioners to be able to do things, like data management, capturing data, understanding it but also, things like screening, for instance, and just many other roles that technology can play. 

Another one is a company called Mexican biomedical, which is focused specifically on ketamine for pain management. So that's more of a typical kind of FDA approval shrunk development sort of play. 

So those are some of the companies we're investigating one media company right now, and looking to issue deal memo for them and then another kind of more drug development company that's focused on analogs and derivatives of MDMA as a compound as well. 

So, yeah, there's, there's a lot of different areas to focus on, but I would say the most accessible ones right now are basically media companies, because they are not actually touching the substance and really just reading Valley. 
And those tend to be some of the first acquisitions actually that happen and kind of newer industries. That's what we saw on cannabis. At least. 

There's a lot of data that media companies typically have about customers and consumers and so there's a lot of interest in them as acquisition targets. 

And then there's also kind of the standard drug development plays, which is definitely a much longer time horizon. You're looking at ten to twelve years, possibly more to really be able to take a drug through the FDA approval process for specific elements. 

And then finally, what we're most passionate about is the technology. There's a lot of tech that needs to be built for the psychedelic assistant therapy process. Psychedelic assistant therapy is very different than traditional therapy. It's significantly more intensive. 

You have syllabuses this session could last for eight hours eyeball gain assistance. Sessions could last twenty hours. 

So, 

you really need a lot of infrastructure in place to be able to actually facilitate that and get real time feedback and be able to modify your interaction with the patient, 

for instance, 

and be able to then take that data really be able to understand what types of people are most prone to having psychotic breaks, 

for instance, 

or schizophrenic breaks, 

if done properly, 

or even have a background of that. 

So, there's a lot of considerations that are taken into place when you're thinking about patients that technology can really help us aid and be able to. 

Just developed a significantly less harmful and more forward thinking ecosystem. So we're definitely passionate about the tax, especially as it relates to the, the pap process itself. 

Got it so, this again sounds like a very, very complicated field both in Zac and specifically in regulations. So, what's your recommendation to founders? 

Who who feel that there was the same issue and who wants to solve this problem but don't really know where to begin with. So what would you recommend to them? So, let's say they have some idea, but basically, no funding no, no money in the bank accounts. Where should they go? First? 

Yeah, I would say that, like, contributing to either an organization in the space or startup in this space. 

Really reading about the space first kind of understand the lay of the land I think just in general, even when it's not psychedelic entrepreneurship, it's just any entrepreneurship. 

One of the first few things that's best to do is take your idea and basically put it through the shredder with a hundred customer interviews and just see and not even customer interviews. Just like ecosystem interviews. 
You could call them right understanding how that market works and getting a perspective from all of the different players to really understand how would they interact with the technology like this? Because I think too often entrepreneurs just go out. 

And they only interview who they think their customer is for what they think their idea will be and that tends to limit your scope and tends to give you a very biased perspective on what's actually needed. 

And it's important to understand how that product or service fits into the ecosystem as a whole and to who interacts with not only your customers but who your customers interact with. 

And so, I would say, spend time, you know, spend at least a few months, just really reading, talking to folks, understanding this ecosystem. Whether your solution is actually going to solve something that's redundant. 

And there's other people who, whose work you can contribute to first to learn more. So, yeah, just kind of learn learn first, come into humble, understand that there's decades of work. 

That had been done before before you and there's a lot to learn from that. Not only from an entrepreneurial sense, but also from. 

An advocacy sense also from an ethic says this is a very different field, because you're dealing with substances and compound that literally are capable of changing human consciousness. 

We've never there's never been a product like, this will never be a service like this. You can fundamentally change human consciousness with, you know, a tiny dose of a specific compound here. 

And that's a very different way of interacting with capitalism with startups and investment. Then if it was more of a traditional technology company, because there's a lot more at stake frankly. 

And there's more ethical considerations to be had about how this is rolled out the pace at which it's rolled out and the considerations that are taking into place as we build. Right? 

And you mentioned something that I get asked about a lot, which is feedback collection. I'm not an expert in that. I feel like in my previous Serbs, I had a horrible strategy for feedback collection. Probably that's why they failed. 

But what's your recommendation to founders basically, in any field in terms of feedback collection? 

So, I know there was some tools that allow you to be, like, a hundred bucks and get twenty forms from potential customers or from random people heavily targeted. What's your recommendation to to founders out there? 

Should they just use those tools? Should they try to actually run as for their submission forms or what's what's recommendation? 

Yeah, I mean, it really depends on the type of products in the market. I think that, like, qualitative interviews have been significantly more useful to me before and, you know, I haven't. 

It's sometimes, yeah, you need, like, just surveys to go and get a sense of, like, a brand or something and, like, how a brand would perform. 

What I would say, though is, especially if this is like an idea for a company, and that company will have many different roles that it plays to different customers and internally with itself. I think it's just again important to get an ecosystem type perspective. 
So, literally, just getting on the phone with movers and shakers in those industries, and hearing their perspectives on some of these things and how you're thinking about this and getting feedback from them and then just kind of jotting down notes. 

And, you know, you'll start building out the mental models, just naturally for how to go about interacting with that ecosystem. 

But it's really, you know, I think it's just about getting on the phone talking to people, sharing your idea and not being glued to your idea, allowing for it to reform and to really just completely change. 

Like, the first startup that I was really heavily involved was a company called iliac and. It started out with basically an idea of,
how do we, 

how do we actually get pornography to be able to compete on ethics and a better standards for sex workers instead of on price instead of kind of these subscription models and this premium content and that quickly led me down a 

path of pitching what I thought would be a great idea, 

which was ethical pornography and quickly I found after talking to actual performers, 

actual sex workers. 

I very quickly became educated on the fact that these ideas of what is ethical pornography is actually significantly disparaging and is actually significantly harmful to sex workers. 

Because there are already a lot of standards in place to show how ethical pornography is and painting that there could be a category of specifically ethical pornography takes away the power and the voices of many sex workers who are already conducting themselves to the highest standard. 

And are already building things that are truly ethical and equitable in their foundation, and so quickly,
that idea reformed,
and kind of transformed into us, 

attempting to build an infrastructure for performers to just be able to have significantly greater power within the adult industry. 

And, in fact, work in general is being able to have greater leverage when they interacted with production studios and agents and directors, and our startup didn't succeed as well. But we've learned a lot and we were building an infrastructure that was actually needed. 

And the reasons why it failed wasn't because we weren't solving the need, it was more just our personal financial situations, and we weren't able to bring in capital fast enough. And it was also. 

The political climate of the Trump administration coming in, and the changes that happened around legislation around pornography and sex work at the time. So, there were a lot of things that kind of added together but we were building something for the ecosystem. That everyone was excited for. 

And willing to pay for, it's just we didn't have enough time to see that forward. So, I think it's really important to allow for your idea to change is the moral that story and allow for yourself to be building 
something. That actually resonates with the whole ecosystem. 
And really understanding what each player has, the feedback that each player has, and being able to feed that back into the startup that you're working on. Right? Being able to do with super early on. 

That's way. That's great. So, let's go back to bull or us Ventures and let's talk about your personal, basically, investment preferences. So, what are the things that you're looking on on the beach deck when you're considering the company for an investment? 

Yeah. 

So some of the things we look for is what I would look for is, 

what is, 

what is their business model and how are they actually going to be financially stable and be able to scale back to some capacity and we also are really looking fairly at team who are, 

who are these individuals where they connected to what are their intentions with this? 

Are they really considering implementing impact focused into what they're building and this is kind of where it transitions into more of an impact investing model we're also really looking at. 

Yeah, 

underrepresented founders and also just, 

you know, 

again, 

what does that started doing to be able to provide more patient, 

focused impact instead of kind of these broad systemic focused ideas impact that typically can leave people and actually a worst place. 

Then they were before that startup got started, so,
yeah,
just really, 

you know, 

team who's the team who's behind this project what is their path to financial stability and then everything to do with impact and how they hope to kind of go about the space and really actually add true value to improve people lives and fulfills them. 

Instead of just kind of pushing another product out in the market. 

Right, right that's quite a standard choice of price. Those sender sets that. I generally see I mean, I didn't really hear from PCs. So, let's move on to talking about sourcing. 

That's a question that I personally asked a lot and how do you find those deals? So how do you find those companies that you think will. 
Change this field that will become the next union cords. How how do you find them? Yeah. So a lot of them come to us, because we've been in this space for a long time. And people feel that we're probably one of the more values aligned investing groups in the space. What? I would also say that we built. 

We built out a database, which has the most investable opportunities in psychedelic today. At least, I believe that's the case is called fractal. 

So people can just browse read research, be able to see investable opportunities and so people entrepreneurs wants to be listed there as well. 

And so we're able to get in touch with them through that too, 

then we have kind of a media arm that does conferences and events and that's another way that we're able to find deals, 

but really just meet people in the ecosystem and get to know people better who, 

then can look at us and say these folks are really doing something right and are really prioritizing impact. 

Even if they're dealing with capital and high growth startups. 

And these are folks that we want to introduce our community to our entrepreneurs to because there's everyone in the psychedelic space is entrepreneurial, everyone wants to contribute something. 

Because people are so passionate people have had profound experiences with these compounds. And so everyone's passionate. 

It's just a question of how do you channel that passion to create tangible, tangible changes that actually benefit people and yeah. 

Like, 

being able to provide people with platforms and a pathway towards actually making their ideas and dreams something more tangible, 

and taking their passions and making it something actionable I think,
is something that everyone's trying to figure out how to empower and to do better. 

And I think that we've done a great job of helping helping entrepreneurs specifically, be able to take that route forward. 

That's great. And speaking of helping entrepreneurs, I want to get back to the thing that you mentioned earlier, which is in actual English incubator program to bull. Russell Ventures was. 

How's it different from your major investment operations? Basically yeah, so we're looking at. 

We're looking at people who are even more tied to specifically I guess the psychedelic psychedelic community even say the psychedelic community is very widespread. 

There's a lot of different factions, but I would say the more psychedelic OJ community that folks who have been there for several decades of time. 
So, folks who are much more connected to that specific community folks, who might be coming in 
and haven't had the opportunity to build startups before for a variety of reasons. But are very entrepreneurial in how they work. 

We're looking to really help underrepresented founders. So two thirds of our first batch is female, and we're hoping to continue replicating that for just further. There's a lot of incredible female entrepreneurs in the space. 

And I think that that's something that's not really being paid attention to too much. 

So, yeah, so there's those are some of the things that we focus on for the incubator and yeah just really also allowing for the batch to be well rounded and really helping one another work and really building an environment of trust with one another. 

So, they can help each other grow because you really need any entrepreneur needs a community around them to be able to go forward and be successful. And building that community, I think, is really, really important for us. 

That's absolutely right. And speaking of bacteria incubator, who should consider applying to incubator and who should just go try to raise money straight from to go Ressa. 

Yeah, 

so the folks who, 

if you have a data room prepped and you have revenue, 

or you have a great business model, 

and you're, 

like, 

stacked in regards to your team and, 

you know, 

your serial entrepreneur then it probably makes sense to come to us more as writing a deal memo, 

if you're, 

you know, 

earlier on in the process, 

if you're trying to if you have a really great idea, 

if you're well connected to the psychedelic community, 

then I would say that probably the incubation program is better but yeah, 

there's there's a lot of capital out there right now that's looking to put put itself into psychedelic and the psychedelic ecosystem. 

We're definitely a very particular flavor of investment in the space, but I think there's for folks who are looking for. 
I think people who are just earlier on should probably seek an incubation model, and people who 
already have all their documents in order to all the pieces of documentation that they need not just pitch decks, but everything else that goes along with, like an actual raise. 

I think those folks can probably seek out capital, but if you're earlier on than probably trying to pair up with an incubator first to build that community, build that data room and really go in strong, I think is is gonna be better. Right? So you mentioned something. 

I personally be quite a bit of attention to HR documents. That are basically required by the investors. What do you think are the major documents that the founder needs to bring with to, to raise money? 

Yeah, I mean, there's a, there's a long list that we have. And we kind of share it with our folks and this is actually something that our Co founder Henry Mariano would be significantly better at talking about. He's, he's in charge of kind of helping a lot of these startups prep their data rooms. 

What I would say,
though is,
you know,
kind of standard all the formation documents, so articles of incorporation, 

things like that financial projections, your pitch deck, 

any sort of customer testimonials can be can be helpful product demos so a lot can go into data room. 

It also depends on the type of product, the type of service,
but yeah,
there's, 

there's quite a few things that need to be there and we try to prepare startups, 

especially through the incubator to be more on the heavier side of documentation so that they can just kinda go through and everything's laid out very clearly and neatly for the investor and we're able to just kinda go through and get that started 

funded and not worry. 

Worry that investor doesn't have to worry about asking all the questions and then having the founder symbol stumble around that they know that the founder has done the diligence for themselves and has done the work to know exactly what an investor is going to ask and answer those questions beforehand, 

so that's really how we think about assembling a data room, got it nice and yeah,
you mentioned two major documents. 
So thanks for that. Hopefully, that's a revision for most of my listeners, because there is an episode on five, most essential documents that you need to bring to an investor to raise money. 

So, if you haven't listened to that one yet, go on and check it out in the description of the episodes, but we are moving on to the last question of today's episode, we choose a call to action. So, what's the one thing that you would like to do? 

As soon as that is over. 

Yeah, so feel free to, you know, if you want to keep up with our work, go to tabular also dot Ventures. I'm sure Konstantin will include the link somewhere in the podcast, but feel free to go there feel free to go to fractal dot space. 

That's another link that can be provided and check out the database and kind of activity that's going on outside of that, you know, get start following organizations like maps, maps out work. And that work. 

They're probably the most notable organization in the space, and just start just start reading reading about like a Dallas. There's so much stuff out there. And I think it's important to just be knowledgeable and know what's out there. And what these compounds are great for. 

And where things can go wrong and just being more conscious, and more conscious citizen, I think, you know, educating yourself on all the changes that are happening and seeing. 

How can you either psycho, activate your life, or allow for the people in your community to do so in a really safe, safe way as we kind of move into the next decade of. 

Rolling out these compounds and in the best way possible right. Does great advice. And my, my cultivation will be pretty much the same just go on and check out what's in the description of this episode because recently I started, including some decent links to. 

That's not as I used to, you know, just the official website, the first time interviewing, but also a bunch of other helpful resources. So, go and check it out at this point. We'll wrap it up. 

Thanks a lot, Marie for coming up and for sharing the knowledge. And skills, I think, though is a really special episode never recovered anything about psychedelic. So thank you for sharing your knowledge. Yeah. Thanks so much. Really appreciate it.