In this series, INN explores the due diligence process for investors when it comes to deploying capital in the psychedelics space.
Due diligence is a complicated but critical step for any investor evaluating a proposition — particularly when it comes to relatively new sectors, such as psychedelics.
As excitement ramps up around the tantalizing potential of companies operating in the psychedelics arena, investors will need a more critical eye to ensure they are making bets that are right for them.
With these challenges in mind, the Investing News Network (INN) has put together a package of information for investors who’ve decided they want to jump into psychedelics and want to start performing more thorough reviews of the companies in the sector.
What are the red flags to notice in psychedelic investments?
As with any due diligence project, investors who become familiar with a sector can start to notice red flags when examining companies more closely before deploying any capital.
The challenge in psychedelics is that it’s a new market where established, tried-and-true business metrics don’t always apply.
Matt Carr, chief trends strategist at the Oxford Club, shared with INN some of the ways he likes to break down psychedelics investments and determine which stocks could be winners.
Where to start with so many new companies?
There are a lot of interesting and dynamic options when it comes to psychedelics stocks. Companies across the board are vying for the attention of investors who are curious to participate firsthand.
INN asked experts what people who are diving into space should know before making picks, and the key lesson was that this is a young sector barely out of the starting point.
“I wouldn’t even say that we’re in the earliest innings of a game, because I don’t even think we’re actually on the field quite yet,” Carr said.
Carr, alongside Marik Hazan, founder and CEO of Energia, broke down the current landscape for psychedelics companies and those investing in them.
ETF firm gains experience after psychedelics fund launch
INN spoke with Steve Hawkins, president and CEO of Horizons ETFs Management (Canada), about the progress he has noticed since launching the first psychedelics-forward exchange-traded fund (ETF).
Watch the full interview with Hawkins.
The Horizons Psychedelic Stock Index ETF (NEO:PSYK) made its debut in January. Since then, Hawkins said interest for the sector has only picked up.
“There was a lot of investor interest in getting into this sector pretty early,” he noted.
Companies share hardships of listing process
At the end of the day, a company hitting the public markets is a cause for celebration for its backers.
With the emergent nature of the psychedelics business, more and more of these victories are being seen throughout exchanges. INN spoke with a few companies in the space to find out about their experiences when it comes to the public listing process.
Operating in such a relatively new space adds questions and clarifications that companies must face from investors, exchange regulators and the market at large.
Executives talked about some of the challenges in trying to make a splash as more and more companies jump into the pool in the hunt for psychedelics capital.
Don’t forget to follow us @INN_LifeScience for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.