Greetings, Agents of Impact!
In today’s Brief:
- Investing in psychedelics for mental health
- Sustainable bioproducts for agriculture
- Navigating impact-linked compensation
- Impact(ed) podcast: Venture capital
Featured: Investing in Health
Net Zero Trauma: Investors in psychedelics aim to disrupt mental health economics – and outcomes. Some investors are concerned that Elon Musk may have partied on acid, ecstasy and psilocybin. Others are instead betting on psychedelic therapies to upend the multi-billion dollar market for drugs and treatments for debilitating mental health conditions. The $100 million-plus Series A financing for Lykos Therapeutics, formerly known as MAPS Public Benefit Corp., signals the intense investor interest in pharmaceuticals that backers say have the ability to not only manage, but cure post-traumatic stress and other disorders. An estimated 13 million adults in the US experience PTSD each year, exacting a toll on the US economy of at least $232 billion a year. “Hearing them say, ‘It’s the first time I have hope’ – that is so motivating,” Lykos’s Amy Emerson said of her early work with women who had been abused. “That’s when I was like, ‘Yes, this is worth doing.’”
- Therapeutic protocol. San Jose, Calif.-based Lykos recently submitted its new drug application to the Food and Drug Administration, along with results of its Phase 3 clinical trials, for MDMA, or ecstasy, in combination with talk therapy. The 11-week protocol for PTSD includes three doses of the drug, one month apart. That contrasts with what is often a lifetime regime of antidepressants, other medications and psychotherapy for combat veterans, victims of abuse, and others suffering from symptoms of PTSD. “The goal would be net-zero trauma, and I think by 2070 this is a realistic estimate,” MAPS’ Rick Doblin said at the Milken Global Conference last May.
- Deeply personal. The financing for Lykos was led by Helena, an ambitious nonprofit investment fund led by Henry Elkus, Sam Feinberg and Suprotik Basu, who joined Lykos’s board. Basu, a longtime advisor to billionaire Ray Chambers, said he was surprised how quickly investors have embraced psychedelic-assisted therapy. “You never leave without people talking about their own experiences,” he told ImpactAlpha. Other investors include the Steven and Alexandra Cohen Foundation, Eir Therapeutics, Vine Ventures, True Ventures, Unlikely Collaborators Foundation, The Joe and Sandy Samberg Foundation, Bail Capital, KittyHawk Ventures and Satori Neuro.
- Psychedelic ecosystem. The investors join a small number of specialized investment funds, including Lionheart Ventures and Palo Santo, that have seeded psychedelic startups, including in software, diagnostic tools and therapeutic training. “We’re investing in the whole ecosystem,” Lindsay Hoover of JLS Fund said on a panel at SOCAP last fall. London-based Compass Pathways is a publicly traded biotechnology company currently in Phase 2 clinical trials for its psilocybin-based PTSD treatment.
- Keep reading, “Net Zero Trauma: Investors in psychedelics aim to disrupt mental health economics – and outcomes,” by David Bank on ImpactAlpha.
Dealflow: Agrifood Investing
FA Bio secures £5.3 million for sustainable bioproducts from ‘superior’ microbes. The UK-based company sorts microbes found in farm fields to develop biocontrols, biostimulants and biofertilizers. It advocates for its microbes as an eco-friendly alternative to chemical fertilizers, pesticides and other inputs. “Intensive agriculture and overuse of agrochemicals have contributed to a 70% biodiversity loss in the past 50 years, which has been made worse by the damaging effects of climate change,” said FA Bio’s Angela de Manzanos Guinot. “With this latest round of investment, we can accelerate our R&D work and development of bioproducts for the agriculture sector.”
- Green biotech. FA Bio’s nearly $7 million round was co-led by UK-based Clean Growth Fund and Dutch impact venture investor Pymwymic. Ship2B Ventures, a Spanish early-stage impact VC fund, also backed the round. Separately, SQIM, an Italian biotech venture that engineers mycelium-based materials for the fashion, food, apparel and construction industries, scored €11 million in Series A funding, backed by the European Bioeconomy Fund.
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Parallel Learning scores $20 million to provide teletherapy to students with special needs. New York-based Parallel Learning partners with psychologists, speech pathologists, clinical social workers and special education teachers to serve students in more than 80 school districts in a dozen US states. Nearly all states face a shortage of special education teachers and other providers, according to the US Department of Education. “I lived firsthand through a number of the same services that we are now providing to students and can personally speak to how impactful the extra support can be,” said Parallel’s Diana Helfonds, who was diagnosed with ADHD and dyslexia at seven years old.
- Gender-lens investing. Parallel completed the $20 million Series A round with $6.1 million from Rethink Impact, a women-led venture capital fund that supports female founders. “Our firm spent years looking at solutions in special education and were incredibly impressed by not only the quality of what Diana and her team have built but by the fact they have so quickly scaled,” said Rethink Impact’s Jenny Abramson.
- Check it out.
Dealflow overflow. Investment news crossing our desks:
- Seedstars Africa Ventures secured a $30 million equity investment from EIB Global to invest in digital tech solutions for education, healthcare, utilities and other basic needs in Africa. (Seedstars)
- Impax Asset Management is acquiring the assets of Danish fixed income manager Absalon Corporate Credit, which has approximately £351 million ($447.3 million) in assets under management. (Impax)
- Sun King secured a $7 million loan from Lendable to finance pay-as-you-go solar products for low-income customers in Africa. (Lendable)
Impact Voices: Impact Management
Navigating metrics and governance of impact incentives for fund managers. Impact incentives like impact-linked carried interest and bonuses align fund managers’ financial incentives with their impact goals—and hold them accountable. Impact fund managers that don’t use such mechanisms cite the complexity of measuring and managing them. Some of their questions: How to select metrics relevant for both companies and portfolios? How many should they track? What is an appropriate level of ambition for impact targets? How are targets weighted within their portfolios, and who approves, monitors and verifies them? The ImPact’s Aunnie Patton Power ticks through the questions with examples from investors and fund managers. “These decisions have far-reaching implications,” she writes. Impact incentives done right “guarantee transparency, independence and accountability, thereby building credibility and adoption.”
- Read Patton Power’s posts on metrics and governance for impact incentives, and catch up on how investors and fund managers are selecting impact incentive structures.
- Dive into the research by the Impact Linked Compensation Project on more than 200 investors, fund managers and impact intermediaries.
- Go deeper on The Call. Join Patton Power, European Investment Fund’s Uli Grabenwarter, Vox Capital’s Gilberto Ribeiro, and Roots of Impact’s Bjoern Struewer on “Compensating impact fund managers for… impact,” Wednesday, Jan. 17 at 10am PT / 1pm ET / 6pm London. RSVP today.
Agents of Impact: Follow the Talent
In Episode 3 of the Impact(ed) podcast, KJ Sidberry of Google Ventures and Evelysse Vargas of Zeal Capital Partners share their unique paths into venture capital with hosts Eric Horvath and Lucas Turner-Owens. Get the scoop on ImpactAlpha and listen to Impact(ed) on Spotify or Apple. Catch up on early episodes on pension funds and foundations.
Tanja Kramer, formerly of Slingshot Ventures, joins ABN AMRO as head of its sustainable impact fund… Yves Frey, previously with SUSI Partners, joins Una Terra as a founding partner and executive board member… Kataly Foundation is recruiting a managing director of programs in San Francisco… Nonprofit Finance Fund seeks an underwriting manager… PlusValue is hiring a senior associate of ESG and impact investing in Milan.
Makeway seeks an impact investment analyst… Applications are open for Integrated Capital Initiative’s Transformative 25 Funds, a list of funds transforming the economy for social, environmental and economic justice… Save the date: Latimpacto is hosting “Impact minds: Standing together,” in Oaxaca, Mexico, Sept. 9-12.
Thank you for your impact!
– Jan. 11, 2024