Investing Across the Full Spectrum of Mental Health

With Danish Munir from GreyMatter

TRANSCRIPT

Danish Munir: My name is Danish Munir. I'm a founding partner at GreyMatter Capital. We're an early stage venture capital firm, advancing innovation in mental and brain health. I'm a founder turned investor. I spent ten years building a mental health company. And I thought it was fund because I felt there was a gap in the market. And there was no VC firms that were specialized in helping founders navigate the challenges that come with this industry.

And as someone who had built a company before, I was very deeply aware of what having the right capital partner means. And so we're building the firm that I wish existed 15 years ago, when I started my journey in the mental health space.

CMHI: Amazing. I love that. Tell me, in terms of what you’re looking at, what are the areas of mental health, or is there particular area of mental health that we think is investable right now?

Danish Munir: So we invest in the entire spectrum of mental and brain. We invest in, prevention and wellness companies, focus on consumer business models around problems of isolation, loneliness, spirituality, community. We invest in technical care delivery companies, that are building specialized, disease based, care models.

We invest in companies that are software, tooling and infrastructure, that are improving the back office of mental health or just reorganizing how the industry works. And then we invest in Frontier Technologies, neuro tech, brain-computer interfaces, devices, wearables. The area that I'm surprisingly and somewhat cliched, most active in right now is AI in mental health. Simply because that's where the entrepreneurial activity is.

We see half a dozen new AI mental health companies a week right now for the last several months. We've looked at over a couple of hundred now, in the last twelve months. AI is just so, it's changing every industry. It’s going to change all of our lives in so many ways. Mental health, even as a form of health care is really unique in that so much of the surface area of mental health is talk based.

And that lends itself really well to the applications of large language models. So one. Two, for the longest time what happens inside care sessions instead of therapy sessions instead of psychiatry sessions has been a black box. So many other parts of health care are very well documented. EMR has existed for over a decade now. There’s great adoption.

Mental health has not had that adoption. So for the very first time, using things like AI scribes, we are getting an unprecedented amount of visibility to what goes on in these sessions. And then by connecting the dots across the sessions. This will open up insights into what actually works in a way that's never happened before. It hasn’t been possible for our field.

So this is like the moment in mental health that was the equivalent of us mapping the genome. You know, a few decades ago for other disease areas, it's a really powerful moment.

CMHI: In terms of the business model you’ve seen hundreds decks. Typically, thousands of decks. And this is quite often the question when it comes to mental health. Who’s the payer?

Danish Munir: So typically what's the business model that you’re seeing, particularly within AI and mental health. It depends. So we are seeing all kinds of business models. So if the companies that are going to be working within the healthcare system that are creating, you know, whether it's supporting providers or augmenting care, they might be focused on traditional business models, like selling health plans, to selling to health systems.

But the really interesting opportunity is that, AI is part of the consumerization of health care. And so there will also be new business models that haven't existed before where you can bypass the healthcare system and go straight to the consumer or the employer, in a way that is less possible in, let's say, services or less possible in other places, just to implement.

CMHI: And when we know that there is so much need that perhaps is an untapped demand that is caught up in waiting lists.

Danish Munir: Absolutely. It's not just, it's not just, releasing pent up demand. The most interesting things about any innovative technology is that they create new demand and expand an industry. So for instance, the addressable market size of black cars, you know, pre 2010 was actually quite small, right?

And so if you are trying to underwrite investment in Uber, you couldn't look at the total addressable market of taxis or black cars and say, hey, this is a rational market. Uber expanded the consumption of ridesharing. And in so many ways, there are so many parts of our lives that where we could use support, that we don't have support today, that AI will make possible.

And so the addressable market size of that support of being able to be a better version of ourselves, to manage our thoughts and have better reflective capabilities in them, what will we consume is going to look like a drop in the ocean compared to what we will consume a decade from today.

CMHI: It's very exciting and useful way of putting it. In terms of as a fund, what is your expected return? The trajectory of what we’re looking at, I appreciate it, I think that’s a broad portfolio, but yeah.

Danish Munir: So generally. It’s a great question. So typically in a venture capital fund you know you can't guarantee your terms, venture is a very volatile asset class. But we are building a competitive market focus towards fund which means that we're shooting for what is like the top quartile of top decile of venture returns, typically north of 3 to 5X, for an emerging fund manager.

That's the goal. And so if you're successful in our strategy and executing a strategy, our fund is designed to deliver 2 to 5X or beyond, and capture that outsized outcome that is only possible in venture as an asset class, it’s not possible in other asset classes.

CMHI: We've talked about what's already really exciting. What is an area that you're particularly monitoring as a fund that perhaps you're thinking in the next 3 to 5 years will come on as a big area?

Danish Munir: Yeah, it's a great question. So there's an incredible amount of science that is changing our understanding of how the brain works, the interconnection between what we've traditionally seen as a mental illness and underlying systems, and functions that, drive how the brain works. And as that understanding is increasing the overlap between the fields of psychology, psychiatry and neurology, we're going to have just a immense amount of breakthroughs that will allow us to have diagnostics, treatments that are step function change in what we've had before.

That's the part that I'm really most exciting about. We spend a lot of time tracking these companies and technologies. Many of them are not yet ripe for commercialization, but some of them are very quickly getting there. So, for instance, accelerated TMS is something that has very quickly gone from the lab to now being deployed in commercial settings.

Neuromodulation, is something your modulation using focused ultrasound is something that we have spent a lot of time in. We've made some small investments and are looking to make more investments in that category. It has the power to be really this powerful innovation that can be brought into the consumer's home and be non-invasive, and does not have any of the side effect profile of drugs.

Those are some of the areas. And then, of course, psychedelics remains a strong area of interest for everybody, including us. We have not yet made investments there. We are continuing to monitor the regulatory environment. And as soon as we feel comfortable, that's area that I would like to make some investments.

CMHI: Amazing Danish, Thank you. Such a star, thank you.

Danish Munir: Thank you very much. Thank you for having me.