Psychedelic Investor Survey Q3 2024
Topline results from the latest in our series of psychedelics investor surveys. ∎
In late Q3’24, we distributed our Psychedelics Investor Survey. Prior to that, our last survey was back in Q4 2022, making this latest instalment long overdue.
Indeed, lots has changed in that nearly two-year period across funding, policy reform, and research & drug development. Our Q3 survey also came just prior to the U.S. elections, which is worth keeping in mind when reading these results.
We had just over one-hundred respondents to this latest survey, which is down from 234 in our Q4’22 survey.
Below, you will find headline results from the survey. More in-depth, qualitative findings will be shared with our Pα+ subscribers shortly (learn more and subscribe here).
Jump to Results
Add a header to begin generating the table of contents
Type of Investor
As with our prior two surveys, the majority of respondents were individual or retail investors.
However, the portion of such investors has reduced quite substantially since Q4’22, when 72% of investors who responded to our survey identified as retail investors. Now, that figure has dropped to 62% with accredited and corporate investors, family offices and investment firms representing nearly 40% of respondents.
Our surveys suggest, then, that the dominance of retail investors in psychedelics is gradually decreasing, down to 62% from the heady days of 76% in our Q2’22 survey.
Amount of Capital Allocated in Past 12 Months
When looking at how much capital investors reported to have channelled into psychedelics companies in the previous 12-month period, there’s a clear reduction in the portion of investors making smaller bets on psychedelics companies ($0-$5,000). That’s likely a reflection of the lower portion of retail investors in our latest survey sample.
Investors surveyed in the present period were also less likely to have invested the largest sums, i.e. $10 million or more, however. That’s unsurprising, given the paucity of larger rounds of late.
Type of Investments
As one might expect, private financing rounds were largely the domain of accredited and institutional-type investors, while individual and retail investors largely stuck to purchasing publicly-listed shares. No surprises here.
Current Sentiment
We asked investors where their current sentiment is regarding investing in psychedelics, where 1 represents the most pessimistic, negative sentiment, and 5 represents the most optimistic, positive sentiment.
As you can see, investors surveyed in Q3’24 (red) are largely feeling positive, with 57% of respondents reporting a 4 or 5. These results are largely similar to those we reported nearly two years ago in Q4’22, with a slight trend toward positive sentiment since then.
It’s worth again reminding you that we surveyed investors prior to the U.S. elections.
Now, let’s disaggregate those sentiment scores by investor type.
More institutional-type investors, in red, have become more bullish since our last survey, with nearly half of those types of investors we surveyed reporting a 5, and none reporting a 1.
Retail investors, meanwhile, are significantly less optimistic than in our Q4’22 survey, with only around 4% reporting the most optimistic 5, down from 26% nearly two years ago. In fact, the only score that has increased in frequency among this group is 2, which represents a pessimistic mood among this class of investors.
Accredited investors represent something of a middle ground, with a very similar rate of 5s as in Q4’22, a substantial and minor jump in 4s and 3s, respectively, with a large drop in 2s and no 1s.
Impact of Lykos' FDA Rejection
For this year’s topical question, we asked investors: How did the FDA’s decision on Lykos Therapeutics’ MDMA-assisted therapy application affect your sentiment? A score of 1 means the respondent became ‘much more pessimistic’ or negative, while a 5 means they had become ‘much more positive’ or optimistic.
The high-level results show that a large portion of respondents reported their sentiment toward investing in the field remains neutral, at 3. However, nearly 40% of respondents said their sentiment had become more pessimistic, with just 15% of participants reporting a more optimistic outlook.
If we disaggregate this by investor type, we see that VC, corporate, and other more ‘sophisticated’ investors are somewhat split, with around 45% reporting more pessimistic scores and just 10% reporting a more optimistic outlook. However, 45% reported an unchanged view after the Lykos decision.
Most Attractive Psychedelic Value Chain Segments
Now, let’s look at how investors view various psychedelics value chain segments.
In this chart, we use a traffic light system to show the portion of respondents that find a segment attractive (green), neutral (yellow), or unattractive (red). The lighter of the two shades refers to Q4’22 results, as in earlier charts.
While drug discovery & development and clinics & care delivery remain the most attractive segments by some margin, with nearly 80% and 65% of respondents deeming them as such, respectively, there have been some slight shifts in other segments.
Most notably, both manufacturing and technology have seen substantial increases in the portion of respondents that find them to be attractive segments.
We added a new segment this year to capture investor interest in state-level markets such as those seen in Oregon and Colorado. As you can see in the chart below, it was not at all attractive to the majority of investors.
Viewed more simply, here are the most and least attractive value chain segments, according to the investors we surveyed…
Most attractive:
And now for the least attractive value chain segments…
Least attractive:
Next 12 Month Investing Plans
When we look at investors’ plans for the next 12-month period we see a mixed picture, with relatively similar proportions of our respondents intending to allocate less, similar, or more to psychedelics.
When we chart this data according to the amount of dollars an investor allocated to psychedelics investments in the past year, we see some reassuring staying power among larger cheque writers, with the majority of respondents who invested $250,000 or more in the field in the last year set to allocate the same or more in the next 12 months.
Smaller cheque writers, like those who invested less than $250,000, are most likely to reduce their investments in psychedelics in the next year, according to our survey. Even still, the majority of investors in this class plan to allocate similar or greater funds in the next year.
Investing Time Horizons
We also asked investors how long they are willing to wait to see a return on their investments. There were modest increases in the portion of retail and accredited investors expecting to wait between 1 and 3 years to see a return. There was a significant increase in the portion of corporate and VC respondents who said they were willing to wait more than three years to see a return.
What are Investors Most Excited About?
We asked investors to share a line or two about what they’re most excited about. We then coded their answers to a dozen or so themes, with frequency shown in the following doughnut chart. For more in-depth analysis of investors’ free-text responses, subscribe to Pα+.
The promise of new and effective therapeutics remains a primary cause for excitement among psychedelics investors, though a related category—impact and social benefit—has fallen by the wayside when compared to Q4’22 responses where it featured as the second most popular theme.
Investors are also much less excited about regulatory and legislative changes than they were back in Q4’22, when this was among the most mentioned themes.
Those investors in our survey often mentioned certain drug development programs and clinical trial results as a subject of excitement. And, as one might expect, investors also mentioned return on investment as a key area of excitement.
What are Investors Most Concerned About?
When it comes to key concerns among investors, regulatory and legislative barriers loom large, with a significant portion of respondents worried about developments in this realm.
Safety and ethics, a broad category, is also a substantial concern for some investors, perhaps amplified in light of ethical questions raised very prominently during the review of Lykos’ new drug application and increasingly critical coverage of things like ketamine prescribing practises.
While many investors are excited about trial readouts, a not-insignificant portion of the sample cite it as a key area of concern, with both results and timelines weighing heavy on some respondents.
Investors’ Personal Experience with Psychedelics
We again asked investors to report on their level of psychedelic usage, with results largely mirroring those we saw in Q4’22, though with some slight changes.
Notably, the portion of investors in psychedelics who rated their personal experience at the lowest level, 1, has reduced substantially over the past two years, with that drop largely redistributed to the 3-5 levels.
When disaggregated by investor type, we see that the aforementioned trend is driven in part by fewer retail investors scoring a 1, but also increases in the portion of larger investors scoring 3-5.
Sustainability of Interest in Psychedelics
We again asked investors whether they believed interest in psychedelics will be sustainable, with an answer of 1 implying a belief that present interest in psychedelics is a passing fad, and 5 implying a strong conviction that the field will continue to see sustained interest.
We saw very similar results to those nearly two years ago in Q4’22, with investors generally believing the present interest in psychedelics will be sustainable, and no respondents to our most recent survey providing the most faddish appraisal.
When disaggregated by investor type, we see that the distribution is relatively similar across the sample.
Analysis
In our Pα+ survey analysis, we take a closer look at investors’ qualitative responses to provide a better picture of their key areas of interest and concern.
This content is coming soon for our Pα+ subscribers. Learn more and subscribe.
