Ei.Ventures

Early Stage

Invest In The Future of Psychedelic Medicine

Analytics

Raised to Date: Raised: $193,675

Aggregate Commitments $

Platform

Fundme

Start Date

01/15/2021

Close Date

02/10/2021

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$1,000

Security Type

SAFE

Funding Type

RegCF

Series

Seed

Valuation Cap

$111,000,000

Discount Rate

80%

Rolling Commitments $

Status
Funded
Reporting Date

02/28/2021

Days Remaining
Funded
% of Min. Goal

775%

% of Max. Goal

18%

Likelihood of Max
Funded
Avg. Daily Raise

$7,449

Momentum
Funded
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Location

Kihei, Hawaii

Industry

Alcohol, Tobacco, & Recreational Drugs

Tech Sector

HealthTech

Distribution Model

B2B/B2C

Margin

High

Capital Intensity

High

Business Type

High Growth

Ei.Ventures, with a valuation cap of $111 million, is raising crowdfunding on FundMe. It is a leading plant and life sciences company focused on botanical psychedelic therapies. The company has control IP for three botanical psychedelic formulations- Psilly, MY-D, and MY-MDMA. David Nikzad and Jason Hobson founded Ei.Ventures in 2019. The current round of crowdfunding has a minimum raise of $25,000 and a maximum raise of $$1,070,000, and the proceeds will be used for conducting pre-clinical, clinical development of the drug candidates, intellectual property development, and general corporate purposes. Ei.Ventures plans to launch its mental wellness and health app partnerships in 2021 and MANA medicinal mushroom nutraceuticals in the first quarter of 2021.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$0

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$0

$0

Accounts Receivable

$0

$0

Total Assets

$0

$0

Short-Term Debt

$0

$0

Long-Term Debt

$0

$0

Total Liabilities

$0

$0

Financials as of: 01/15/2021
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Ratings

Analyst Report

Synopsis

As the world turns more global, the West is opening itself up to all manner of philosophies once dismissed as outlandish and exotic. One such trend growing in prominence in some circles is the use of psychedelics and other traditional treatments to treat disease, physical and mental alike. Use of complementary and alternative medicine (CAM) has been on the rise for decades. Significant proportions of Americans are turning to cures from pre-scientific eras as the so-called “miracle drugs” of the 20th century have lost some of their luster.

Psychedelics in particular appear potentially poised to claim ever greater proportions of medicinal markets. Such neuro-altering plants have been swept up in the decades-long War on Drugs that also criminalized less dramatic substances such as marijuana. As marijuana legalization measures sweep across the U.S., psychedelic drug legalization is starting to follow. In the 2020 election, Oregon became the first state to legalize so-called “magic mushrooms”, aka psilocybin.

While national legalization of psilocybin is presumably much further down the road than marijuana legalization, Ei.Ventures hopes to become a leader in the manufacture and distribution of psilocybin based drugs, as well as other psychedelic-based medications based on DMT and MDMA. It plans to capitalize on Americans’ increasing inclination towards nature-based and traditional remedies to turn modern pharmaceutical medicine on its head.

The company plans to develop nanomolecules based on these substances that can be employed by research companies seeking to develop psychedelic-based treatments. Additionally, Ei.Ventures will develop its own psychedelic drugs and begin the process of gaining FDA approval for their use in treating various mental health conditions like addiction and anxiety. Ei.Ventures is also developing mushroom-based, non-psychoactive nutraceuticals called MANA, which it plans to release in Q1 of this year through private label partnerships and direct-to-consumer e-commerce. The startup’s explicit goal is combat the alarmingly high levels of mental illness across the U.S. and the world using the power of traditional psychedelics.

Ei.Ventures’s current FundMe raise has been rated an Underweight Deal by the KingsCrowd investment team.

Price

Ei.Ventures is raising a Crowd SAFE at a gigantic $111 million valuation, with an 80% discount rate. The company will have to make significant capital investment up front to develop its product offerings, making this valuation even more unreasonable at this stage. Although the high discount rate may appeal to some investors, Ei.Ventures’ price score is very low due to its unjustifiably high valuation. 

Market

Assessing Ei.Ventures’s potential market size is tricky, simply because many of its product offerings are facing legal hurdles. Some psychedelic-based drugs are being approved for FDA use — the first of these was Johnson & Johnson’s SPRAVATO nasal spray to treat depression, which was approved in early 2019.

The psychedelic drugs market as a whole is projected to reach $6.87 billion by 2027, growing at a CAGR of 16.3%. Even at such a high growth rate, this is not a massive market size for a company with such high development costs. The global behavioral health market overall — which includes the creation of treatment facilities and programs for mental health patients — is expected to reach $240 billion by 2026. Ei.Ventures would only operate within a small niche of that larger market. If psychedelics continue to grow in popularity, the company could also face competition from larger, more established drug companies. 

Overall, the psychedelics market is growing rapidly — a boon to Ei.Ventures’ future prospects. However, the market is still niche currently, limiting the company’s current market potential. Balancing these factors together, the market score for Ei.Ventures is middle-of-the-road.

Team

CEO and co-founder David Nikzad is an angel investor who has made a living for himself by investing in startups like Airbnb. His record of investments include notable startup investment platforms WeFunder and Republic. His most significant contribution to Ei.Ventures is likely less a gift for business than a kind of “New Age credibility.” Nikzad’s life story of engagement with nightlife and postmodern philosophy — he proclaims a high level of emotional intelligence, which he abbreviates “Ei,” on his LinkedIn page — exhibits the kind of markers that potential psychedelic treatment seekers could be looking for as signs of authenticity. This comes across in Ei.Ventures’s marketing. That said, he does support a number of “farma-centric” businesses including Ei.Ventures through his parent company, Orthogonal Thinker.

Nikzad’s co-founder and partner through Orthogonal Thinker is Jason Hobson. Hobson seems to have a similar outlook on life, but he follows a slightly more traditional business path. He spent several years as an attorney, owns his own law firm, went through the MDE program at UCLA, and served as a VP at Alliant Capital. While Hobson’s extensive experience with the law could help in guiding the company through the FDA approval process, he has little in the way of relevant industry experience to recommend him.

Dr. Linda Strouse, the Director of Clinical Trials, offers something more in the way of experience. Strouse brings more than 25 years of experience working in the pharmaceutical industry and is therefore quite familiar with the traditional “big pharma” companies oriented to oppose Ei.Ventures’s rise. Strouse is co-founder and VP of Randy’s Club — a medicinal cannabis company — and is the principal for Strategic Clinical consultants, representing seven and a half years of clinical research direction. Strategic Advisor Najla Guthrie and Chief Medical Officer Dr. Jack Rentz likewise offer relevant clinical experience to the company.

It should be noted that Nikzad himself is the only team member who prominently proclaims his role at Ei.Ventures. Due to the lack of industry experience that both Nikzad and Hobson share, the team score for Ei.Ventures is very low.

Differentiators

If Ei.Ventures’s astronomically high valuation is a downside for investors, here is the upside. Ei.Ventures’ proprietary API — Active Pharmaceutical Ingredients — and other products have patents pending. The millions that have gone into development represent a threshold that will present significant obstacles for potential competitors. Provided that products that require FDA approval receive it and Ei.Ventures can establish reliable partnerships and distribution, high profit margins are guaranteed. The company’s decision to move in multiple directions could also offer it multiple verticals for profit and growth.

There are also competitors in the space. Johnson & Johnson, as mentioned above, is one such competitor. Other notable emerging companies include Mind Medicine — a Canada-based company that made a big splash on the investment scene — has lately opted to focus on LSD over psychedelics as a treatment compound. Revive Therapeutics is another Canada-based company that has acquired Psilocin Pharma Corp. and plans to use psilocybin in similar ways to Ei.Ventures to treat mental health conditions. Lastly, there’s COMPASS Pathways, a London-based company that seems to have pulled significantly ahead of Ei.Ventures. COMPASS has developed psilocybin for use in patients with treatment-resistant depression, and is conducting an FDA phase IIb clinical trial for its use. Apparently the FDA is highly impressed with the treatment, deeming it a “Breakthrough Therapy.” 

Due to Ei.Ventures’ patents and the high level of capital required for competitors to develop similar products, the company’s differentiators score is its highest across all five metrics.

Performance

As a pre-product company, Ei.Ventures has little in the way of performance to recommend itself. A lack of financial records make it impossible to track the company’s expenses and asset buildup. The company is developing mental wellness and health app partnerships for launch in 2021, but has yet to declare any notable partnerships or contracts. With essentially no data available for assessment, Ei.Ventures’ performance score is its lowest across all five metrics.

Bearish Outlook

First, the market for psychedelics-based medicine is basically nonexistent. Ei.Ventures is among several companies attempting to grow that market from the ground up. In its marketing material, Nikzad is quick to point out that in order to reap the full benefits of so-called unicorn companies, investors must get in on the very beginning of such trends.

What he doesn’t say is that such investment comes with significant risk. Risk that the target markets won’t grow as expected (or in this case, that regulations will not loosen over time), risk that products will underperform, and risk that competitors will push past a would-be market leader. Despite Nikzad’s touting of his knack for prediction, the truth is that no one knows how the market will behave — especially in predicting such socially-divisive trends. Thanks to the high valuation, investors will need enormous, truly unicorn-level returns to capitalize on their investment. Even should Ei.Ventures succeed in that regard, such success is likely many, many years away. 

Investors should remember that for every unicorn, there are hundreds if not thousands of failed or moderately successful businesses. Additionally, co-founders Nikzad and Hobson don’t have strong industry experience — it isn’t clear that they are the right team to lead such a venture to success. 

Bullish Outlook

Legalization of marijuana and legalization of psychedelics in Oregon do point to trends of greater relaxation of restrictions on psychedelics overall. As global mental health worsens and science-based cures and therapies often prove lacking, Americans could be drawn to psychedelics as one among many forms of alternative medical care. The lure of the narrative is likely part of what the market will need to grow significantly.

Is Nikzad right about psychedelic medicinal companies being the next unicorns? Maybe. It’s always a gamble, and in this case, a significant one.

Executive Summary

Emerging into a trending space of psychedelic medicine, Ei.Ventures is developing mushroom-based pharmaceutical ingredients and products. The startup hopes to ride an emerging trend of greater legalization and medical acceptance of traditional drug therapies and reach unicorn status as an industry mainstay.

The company’s products, once developed, have the potential to treat an assortment of physical and mental illnesses such as depression and anxiety. Investors have cause for significant doubt here, though. The valuation is extremely high, and the team doesn’t appear particularly well-positioned to pull off a unicorn-level rise. Additionally, there is major market uncertainty due to legal regulations. All products developed will require FDA approval, increasing the capital commitment necessary to bring them to consumers. Therefore, Ei.Ventures is an Underweight Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Benjamin Potts.

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