Cryptocurrencies haven’t worked out so well for tech investors. Thus far, neither has the metaverse. Self-driving cars are slowly emerging, and social media is not as fast because it was a couple of years ago.
So where can a savvy tech investor look for the subsequent big idea immediately? Two words: dietary supplements.
As a consumer product, supplements are associated more with Kardashians or Joseph Rogan than Silicon Valley. The industry is infamous for its lack of regulation under a Federal Act of 1994 which exempts supplements from most Food and Drug Administration scrutiny, and it does has flourished lately despite the effectiveness questions.
Roelof Botha, managing partner of Sequoia Capital, one in every of the largest
“Inadvertently, we’ve entered an era where we had the alternative stance between humans and the remainder of nature,” he said. “We were overusing antibiotics. We used soaps. And now we’re back in balance.”
Botha is best known within the tech industry for early bets on Instagram and YouTube, but he said he became curious about gut health after Sequoia invested in genetics testing firms reminiscent of 23andMe. This interest led Sequoia to speculate in Pendulum, a San Francisco-based startup that sells probiotic supplements.
He takes them himself. “There’s nothing higher than introducing live microbes into the body,” he said.
Sequoia has loads of company. In 2021, enterprise capitalists invested $488 million in probiotic firms and other complement startups worldwide, five times what they invested five years earlier, in line with PitchBook, a research firm that tracks startup investments. The cash went to 99 separate funding transactions last 12 months – a record activity, in line with Pitchbook.
Amongst the cash there are investments of pharmaceutical and food giants, but in addition Silicon Valley elites that don’t come from the world of biotechnology.
Khosla Ventures, headed by co-founder Sun Microsystems, is also an investor in Pendulum. Y Combinator, a widely known tech incubator, has a stake in Persephone Biosciences, a startup researching potential cancer treatments involving gut microbes. Social Capital, one other major enterprise capital firm, is investing in a startup called Zbiotics that sells a probiotic drink as a hangover cure.
This is a welcome development for some startup founders.
There has already been one cautious tale of how a probiotic startup might fail. uBiome, a San Francisco startup that promised to provide people insight into their microbiome based on tests of fecal matter, attracted tens of thousands and thousands of dollars in investments including from the enterprise capital firms Andreessen Horowitz and Y Combinator.
But last 12 months, federal prosecutors said uBiome’s tests weren’t scientifically valid and so they charged the founders, Zachary Apte and Jessica Richman, with fraud. Each have lived in Germany since last 12 months and haven’t been extradited to face charges, Wall Street Journal reported. Their lawyers didn’t reply to requests for comment.
As an organization, probiotics and other supplements have not less than two benefits that enterprise capitalists are likely to look for. One is regular recurring revenue, which comes from people taking pills each day or food manufacturers using them as additives to manage insulin, improve digestion or attempt weight-loss.
The second is the dearth of strict regulations. The ingredients should be there generally considered protected and producers cannot sell supplements As shown to be more practical than research, but supplements haven’t got to undergo the identical rigorous approval process as pharmaceuticals.
DNA sequencing “progressed faster than Moore’s Law,” he said. And, he added, it makes the sector goal for Silicon Valley. “It’s about understanding biology as an information science.”
Elisa Marroquín, an assistant professor of dietary sciences at Texas Christian University, said that the science around the brand new wave of supplements is still latest, but she said not less than some tech startups appear to be on the proper track. She said she has no financial relationship with any startups, though she has talked to them about getting samples for research.
“We’re still very early in understanding these bacterial species,” Marroquín said. She was a co-author science review This 12 months i discussed that future probiotic supplements show promise in comparison with supplements which were available for many years.
“I feel they are going to have a stronger impact on our health than the present probiotics which might be available on the market,” she said.
Amongst some scientists, “probiotics are definitely the voodoo,” said Colleen Cutcliffe, co-founder of Pendulum and its CEO. She has a PhD in biochemistry from Johns Hopkins University and her two co-founders even have PhDs.
“In actual fact, in the primary eight years of our company, I didn’t let anyone use the p-word to debate our product,” she said, referring to probiotics. “I said, ‘This is a microbiotic intervention.’
Cutcliffe said there are tens of 1000’s of gut bacteria to review, with $60 billion the worldwide probiotic industry is waiting for latest products – which has caught the eye of investors.