Changes
As the mind-training field continues to develop, the pace of change is naturally increasing before our eyes. When we came together as Bridge Builders Collaborativemore than seven years ago, the question my partnersposed was: “Is there anything to invest in in the mind-training space?” We were not sure. Now, we’ve looked at likely over 500 companies in and around the space where we invest. I’m currently observing the continued and accelerating growth — in interest, adoption, and integration of applications that have been created. However as that happens, things are shifting for the companies that operate in the field and for the investors of those enterprises. Here’s a few recent highlights:
Mergers and Acquisitions:Congratulations to the team at Interaxon, makers of the Muse brain sensing headband, on their acqusitionof Meditation Studio(we are investors of Interaxon). This is a marriage that made sense on multiple levels, including a content company merging with a hardware company. It brings together two strong leaders that compliment and respect each other. They have created an opportunity to combine their efforts to reach a higher level of impact. I’ve been saying for some time that I thought we’d begin to see merger and acquisition activity in our field. My sense is that we’ll likely hear of other companies choosing to compliment each others’s efforts through mergers and acquisitions. I also believe Private Equity firms are likely to begin looking at rolling up companies in the space.
I am thrilled that Derek Luke(CEO Interaxon) and Cyd Crouse(Founder of Meditaiton Studio and now CMO of Interaxon) are working together. They are both authentic and collaborative leaders who will add even more strength to one of the more talented and experienced teams I’ve seen operate in our space (Interaxon).
Endings:It was big news that Lantern announced they were shutting their doors.This was a company that provided assessments, daily exercises, and coaches for people who faced mental health challenges. We seriously considered investing in Lantern several years ago. They were one of the early companies in the field and had a leader that I respected. Lantern was a venture backed company with some great investors, which had previously raised $17 M.
At the same time this announcement surprised me, I think there will be more news like this over the next couple years. I suspect there will be more companies with great ideas and good leaders in the mind-training space that have initial promise and early-staged funding, but struggle to pivot to the right model or can’t make the transition when they do. There are a lot of companies in the mindfulness, contemplative practice, mental health space that show initial promise. We seem to be in a market where raising funds for even mediocre concepts can seem relatively easy. If there is a market correction, it will be really challenging for those companies to keep their doors open when they are not cash flow positive.
Beginnings:There a lot of companies still entering the mind-training space, which is still in its infancy. I love talking to entrepreneurs about their ideas and enjoy hearing how their personal experience has translated into an enterprise. It is wonderful to see how the global customer audience responds to ideas and to see how companies are perceived and rated. At the same time I’m seeing many new business models, I’m not always seeing that the entrepreneur’s personal passion aligns strongly with a stated unmet need in the community. Maybe they found a teacher (or guru) they think can be the centerpiece for a new mindfulness app. Maybe they have another new niche in the corporate well-being market. Maybe they believe they can be a large new digital therapeutic. Or a new coaching model. I’m hearing more and more ideas that seem less and less differentiated. And every once in awhile, we come across one which feels differentiated enough that we invest.
Financing Growth:Recently, it was announced that Click Therapeuticsraised $17 M, in a financing round led by Sanofi Ventures. Congratulations to Click’s team on this fundraise. This is on the heels of major announcements in recent months of Akili’s$55 million fund-raise and Pear Therapeutics raise of $50 million. The digital therapeutic space is red hot with investor interest at very high levels in a space that shows fantastic progress, both for returns on investment and for the consumer’s health. There are still a lot of questions that I have about how this space will develop, but the high level of interest and investment at growing valuations portend a bright future for this segment of our field.
As this is happening in the mind-training space, we have an opportunity to create a better world with sustainable enterprises that facilitate positive social change. There will be a lot of money made (and lost) in these endeavors. For the CEOs in the space, here are a few suggestions for operating in an ever-changing landscape.
Hold your cash dearly and ensure you have enough to weather rough times, while investing wisely to pursue growth opportunities.
Consider collaboration, working with others, finding mutual benefit. Your idea might be a great niche for a larger platform but may not have a path to sustainability on its own. I see too many people with ideas they think are large but in reality are best to be smaller parts of a larger platform.
Make sure you really understand what is uniquely different about your product. I listen to a lot of people who think their ideas are unique. I encourage that you frequently consider asking the marketplace for feedback on your product’s or service’s efficacy and point of difference.
Remain connected with people in the space. Your competitors could soon be your merger partners or acquirers.
When you pitch investors, ask yourself whether these people be partners during times that become difficult or when you’re considering a merger. Will they add value at difficult times? In challenging times, you’ll find out a lot about your investors.
Is your organization skilled at change management and can it adapt to market shifts and opportunities. Those that can hold to strong core values but pivot when there’s significant opportunity will likely have a greater chance of success.
Change is a metaphor for our lives. Life itself is about beginnings, endings, collaboration and growth. These are exciting times for our field, and more and more skills will be needed to successfully navigate the change in front of us.