Functional Mushrooms: The Sweet Spot of Nutraceuticals

The emerging psychedelics sector can be segmented into four distinct segments: drug development, intellectual property (IP), functional mushrooms and treatment clinics – functional mushrooms are a underexamined growth area in the industry.

Nutraceuticals: A Global Wellness Juggernaut

Nutraceuticals are non-specific biological therapies used to promote well-being, alleviate symptoms, and prevent malignant processes. The term “nutraceutical” combines the words “nutrient” (food) and “pharmaceutical” (medical drug). This term was created in 1989 by Stephen DeFelice, founder and Chairman of the Foundation for Innovation in Medicine, an American organization based in Cranford, New Jersey.

The concept of nutraceuticals is to focus on prevention – the role nutraceuticals have a wide impact on nutrition for a number of stakeholders, whether health care providers, consumers, food producers and distributors. The way nutraceuticals are defined varies by jurisdiction by the regulatory body working with that particular local government. They can be generally classified in the four following categories:

  1. Functional Foods
  2. Functional Beverages
  3. Dietary Supplements

Functional Foods

A functional food is generally defined as a food that beneficially affects one or more target functions in the body, beyond adequate nutritional effects, in a way that is relevant to either an improved state of health and/or reduction of risk of disease. It is not a pill, a capsule, or any form of dietary supplement. An overlooked opportunity in the nutraceutical market lies in functional foods – namely functional mushrooms.

Functional Beverages

A functional beverage is a liquid food marketed to convey product ingredients or supposed health benefit. This includes sports and performance drinks, and probiotic yogurt. Categories include energy/rejuvenation, hydration, and weight management. A common example is kombucha tea, a traditional beverage with perceived probiotic benefits.

Dietary Supplements

Dietary supplements are defined as products taken by mouth that contain a “dietary ingredient”. This includes minerals, vitamins, herbs, botanicals, or any other ingredients that can be used to supplement the diet. They are regulated by the Food and Drug Administration (FDA) foods, but that oversight begins after the product enters the marketplace, and mainly takes on a punitive role.

Functional Mushrooms – The High Growth Segment of Nutraceuticals

Functional Mushrooms are categorized as dietary supplements by the FDA along with other natural products and herbal medicine; which means they can be sold without FDA approval. This is a significant advantage getting product to market quickly vs. the pharmaceutical psychedelic market.

Functional mushrooms have been viewed to boost immunity, enhance cognitive function, improve energy, decrease inflammation, and hold many other benefits to human health.

Immunity

Functional mushroom products contain a plethora of antioxidant compounds, which aid in preventing tissue damage that occurs from exposure to toxins and stress. Also, the beta-glucans polysaccharides in functional mushrooms support and promote a healthy immune system. They are high in the prebiotic fibers that promote the growth of beneficial bacteria in our GI tract. Fiber also supports the maintenance of health body weight.

Cognition

Ongoing studies reveal that selected species of mushrooms have beneficial neurotrophic properties. Regular consumption of mushrooms may promote nerve and brain health. This can be potentially useful during injury and / or accidents involving the elderly. As more research is done, varieties of mushrooms are being identified that have preventative or therapeutic functions for the maintenance of cognitive functions.

Energy

Function mushrooms are gaining notoriety as an energy enhancer. For example cordyceps are known as the “Olympic mushroom”, and provide a bioavailable compound called cordycepin. Cordycepin is molecularly similar to adenosine triphosphate (ATP), which provides cellular energy in the body. Mushrooms support lung health, and in turn oxygen absorption.

Popular Mushroom Species

Individual mushroom species have grown in popularity for their perceived health benefits; some of the most popular functional mushroom species include Reishi, Lions Mane, Corodyceps and Chaga.

Reishi: Reishi is called “lingzhi” in China and has been an important part of Chinese medicine for over 2,000 years. Reishi is an adaptogen, in herbal medicine that is regarded to help the body to adapt to stress and normalize body processes. Reishi is also known to support healthy sleep, boost the immune system and reduce stress.

Lion’s Mane: Lion’s Mane has been used in traditional Chinese medicine for at least 1000 years and is used in cooking around the world. It’s a nootropic, meaning it supports the brain and nervous system. It is shown to improve brain function in adults due to several substances in this mushroom that stimulate Nerve Growth Factor (NGF). NGF regulates the maintenance and repair of neurons, as well as increase Brain-Derived Neurotrophic Factor (BDNF) known to support the synthesis of new neurons.

Cordyceps: There are 400 species of cordyceps, found in China, Korea, Bhutan, Nepal, Thailand, and Vietnam. Wild cordyceps in China is a hot commodity – a kilogram can be priced at more than $20,000. The focus of research into cordyceps have been focused on two species Cordyceps Sinensis and Cordyceps Militaris. Cordyceps are a purported energy booster and also viewed to protect against health problems like asthma, depression, diabetes, fatigue, high cholesterol, and upper respiratory tract infections. Cordyceps are believed to have potent anti-inflammatory effects which may help prevent hypertension. These benefits have been attributed to cordycepin; a compound similar to adenosine.

Chaga: Chaga mushrooms are found on birch trees in colder climates Northern Europe, Siberia, Russia, Korea, Northern Canada, and Alaska. It’s used in folk medicines in Russia and other Northern European countries. Mainly used to boost immunity and overall health, it’s been used to treat diabetes, certain cancers, and heart disease. Chaga appears to promote the formation of cytokines (specialized proteins that regulate the immune system), the mushroom stimulates white blood cells, which aid in combatting harmful bacteria and viruses.

Functional Mushrooms: A Fragmented Industry Poised for Growth & Consolidation

The global functional mushroom industry is highly fragmented and therefore ripe for consolidation. Established and emerging brands include: Om, Four Sigmatic, Spore, Host Defense and HAVN Life.

The global functional mushroom market is one of the fastest growing verticals within the nutraceuticals, the market is estimated to be valued at $8B today, with a projected growth of 9.3% annually, reaching $19B by 2030.

Psychedelic Investment Landscape

Within the psychedelic investment landscape, we believe that functional mushrooms are one of the most attractive cash flowing verticals.  Functional mushrooms sit in the investment sweet spot of psychedelics and nutraceuticals.

HAVN Life Sciences

We view HAVN Life Sciences (CSE:HAVN) is one of the best positioned within the category, having recently acquire one of the leading US functional mushroom brands in Spore Life Sciences, which compliments their own HAVN Life brand.

The Spore Life Sciences acquisition provides HAVN Life a U.S. consumer base of 110,000 customers, nearly 40,000 subscribers, and year-to-date revenues of nearly $8 million CAD (as of the end of November 2021), with recent sales at a run rate of more than $1 million USD per month.

HAVN Life is a market awareness client of Capital 10X. 

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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