The Next Best Emerging Industry Investment Behind Cannabis & Psychedelics? | Subversive Capital
Subversive Capital’s philosophy is aligned with Midas Letters core thesis: The company is dedicated to investing in radical companies whose core missions subvert the status quo. Where Midas Letter speaks directly to companies and CEO’s within emerging markets, Subversive Capital invests in them and helps take them public using Special Purpose Acquisition Company (SPAC) strategies. Subversive has already worked with 38 companies within the cannabis, psychedelic and tech industries; Including 5 IPOs, 4 SPACs, with a track record of $500 million + in follow-on investment. We talk with Founder Michael Auerbach to see where he thinks these industries are heading and what is the next best emerging industry he is betting on.
After the US presidential election in November 2020, cannabis boomed with hopes of a cannabis federal legalization. As time has elapsed, the hopes that that will happen this year is dwindling. After the election however, a mass of new investors entered into the cannabis industry (hedge funds, large institutions, family offices). As the patience of these new investors wore thin, a big selloff and consolidation has happened for the majority of this year. Stock prices might now be undervalued compares with company fundamentals which could present real opportunity for buyers.
“This is a longterm investment. I’ve always said form the get-go, even when I started investing in cannabis over ten years ago. The exit and liquidity event for cannabis is the end of prohibition and our ability to list these companies on US exchanges. If you’re for a return before that event, then cannabis investing is not for you.” – Subversive Capital Founder Michael Auerbach
Subversive Capital has worked with familiar names within the weed stocks industry such as Tilray, CannDoc, The Parent Company, and Leafly.
For such a young industry, Subversive Capital has already worked with the most sophisticated companies in the space. The company were behind the IPOs of COMPASS Pathways, Atai Life Sciences, Cybin Inc, and Field Trip. The industry somewhat resembles the cannabis industry of five years ago, as drugs transition from illicit to licit. However, Subversive realize it is a long-term Pharma investment as drug development takes time. While we eagerly await results such as COMPASS Pathways psilocybin trials, it is understood that we won’t see psychedelic prescription drugs for the next few years.
“People are using psilocybin, but they are doing it with a professional. To be able to really understand what is happening with them, as they disaggregate their ego and then they need to rebuild it with a therapist, to have a really impactful state on your psyche, your mind and your mental health trajectory. This isn’t something thats going to be done in a coffee shop. There will be a decriminalization movement “ – Subversive Capital Founder Michael Auerbach
The Next Best Emerging Industry (The Metaverse)
As our world moves more and more online, the next evolution is taking everything into a virtual level. Facebook has made moves with Oculus. Peloton will eventually be an online platform where riders will be able to go and bike the Swiss Alps from their living rooms. It seems like something out of StarWars, but it is an industry to get excited for.
“I’m excited because I think it’s a great investment thesis. Everything that goes along with the real world in terms of laws, rules, and privacy, we’re going to have to create a whole new sense of a regulatory environment for human behaviours and nation-state behaviour as it relates to living in the next version of the internet – which is the metaverse,” “we’re spending a lot of time thinking about that, companies we are interested in and we’ll be making some investments in the space in the coming months.” – Subversive Capital Founder Michael Auerbach
Watch the full interview to understand Subversives history and investment philosophies, and where the company believes investor dollars will flow in the future.
00:00 – Subversive Capital Founder Michael Auerbach
00:40 – Seed investing in COMPASS Pathways
01:18 – Subversive investing strategy
03:53 – Creating venture fund
04:51 – The Parent Company & cannabis industry
08:51 – Psychedelics industry
10:31 – Metaverse industry
13:27 – Recreational psychedelics