Here’s where the money goes – Crunchbase News


For founders and investors of startups focused on addiction recovery, their attraction to space often begins with a personal story.

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Stephen hays, a mental health-focused venture capitalist, attributes his motivation to find and fund new treatment approaches in part to his own struggles with alcoholism. Years of unsuccessful attempts at sobriety culminated in an inpatient rehab stay a few years ago that left him in better physical and mental health, but financially devastated.

Now, as he searches for promising startups for his investment syndicate What if companies, Hays sees many founders sharing similar stories. While struggles with drug addiction are nothing new, he points to a more recent shift in people’s willingness to both talk about their experiences and seek out better options.

“What happened, I think, is that the normalization of the conversation around addiction freed up the founders who themselves struggled with it to go and build in this space,” Hays said.

Reducing stigma is only part of the picture. Add to that a strong growth in the adoption of telehealth technologies, along with an ever-improving body of evidence regarding effective treatment approaches, and you have sort of a perfect storm for seed funding around addiction.

The figures confirm this idea. A Crunchbase survey found that venture-backed companies working on drug addiction treatments and service offerings have raised more than $ 1 billion in funding over the years.

More recently we are seeing a great deal of early stage seed and activity. A sample list of U.S. companies from Crunchbase, for example, found 21 drug addiction upstarts, mostly seed or early stages, which have thrown rounds in the past two years.

Meet the startups

Some of the most heavily funded startups include Therapeutic Pear, a developer of digital therapies for addiction and other disorders, as well as Groups recover together and Health bike, two providers of telehealth-focused drug-assisted treatment for opioid addiction. Beyond the best fundraisers, a plethora of early stage businesses are also growing.

There is no standard model for these startups. Some offer treatment for multiple categories of addiction, while others focus on one area, such as alcohol or opioids.

However, we see common themes. The first is that several startups are offering several types of treatment, including therapy, community support, and prescription drugs to decrease cravings or ease withdrawal symptoms. A preponderance of startups also offers offers marketed as affordable and accessible to a large part of the population, with a strong dependence on telehealth.

“Most people don’t have access to evidence-based treatment for drug addiction,” said Yusuf Sherwani MD, co-founder and CEO of startup Quit Genius. “And the challenge when you don’t treat people with chronic illnesses is that the cost increases exponentially over time. “

Quit Genius has raised $ 14.7 million to address these issues, with each round being “massively oversubscribed,” according to Sherwani. The startup presents itself to employers as a digital clinic for multiple addictions. It is offered as a benefit to employees who may be among the four in four Americans struggling with substance abuse.

A common observation among the founders of the space is that while some treatment approaches have proven to be more effective, there is no one-size-fits-all solution.

“Yes, you can go to AA. But it’s not for everyone, ”said Justin geller, co-founder and COO of Monument, a startup aimed at helping people overcome alcoholism and alcohol problems. The New York-based company offers free access to its online support community and also sells plans offering therapy and medical teleconsultations.

Varied mix of founders

The founding population of addiction startups is a mix of healthcare professionals with extensive experience in the field and types of entrepreneurs from more diverse backgrounds drawn to an area where they see an opportunity for impact.

CEO and co-founder of Monument Mike Russell, a serial startup entrepreneur with Geller, points to his long-standing habit of heavy drinking as an impetus for starting the business. He’s been able to quit through a combination of medication, therapy, and peer support – an approach he wants to extend to others.

Holly whitaker, founder and CEO of Storm, a digital recovery program for drinkers, written on his battles with alcohol, weed, cigarettes and binge eating. Nick Gulino, Founder of Addiction Treatment-focused Startup Y Combinator Recover, says he grew up watching his own family and friends struggle with addiction.

Sherwani of Quit Genius says that one of his motivations behind driving is to reduce the stigma associated with drug addiction as well as to offer privacy-protected treatment options, thus enabling more people to get access to it. ‘help.

“We have to educate people that drug addiction is a chronic disease, it is not a moral failure,” he said.

Jeff De Flavio MD, founder of Groups Recover, writes of a similar motivation, noting that he “was drawn to addiction medicine because structural discrimination and prejudice stifled the most effective types of treatment.” As a result, the best of modern medical science has traditionally not been available to those who need it most.

Past and future outings

While addiction-focused startups thrive in the early stages, several more mature venture-backed companies have already gone public or sold to acquirers.

Probably the highest and highest profile is based in Munich ATAI Life Sciences, a company backed by a billionaire Pierre Thiel who is known for his research on psychedelic-based treatments for mental illness. The startup, which went public last week and recently had a market cap of around $ 2.8 billion, is studying applications for opioid addiction, among other ailments.

A few months earlier, based in New York MindMed, another psychedelic biotech company developing drugs and therapies to fight drug addiction and mental illness, began trading on the Nasdaq, getting a recent valuation of around $ 800 million.

We have yet to see a major exit from any of the many venture-backed companies working at the intersection of drug treatment and telehealth. But it’s still the start of the heats. Most of the companies in our listing are in the early stages.

Yet, looking at the large and promising mix of recently funded addiction startups, it’s easy to imagine that at least some of them will grow into something really big.

In the long run, of course, the greatest hope is not so much to make mass exits as to reduce the suffering of drug addiction itself, helping to alleviate the suffering associated with an illness that affects untold millions. This is the real promise of value creation.

Drawing: Dom guzman

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