What's Hot in Mental Health Innovation?

With Daniel Koppelkamm from Convergence Partners

TRANSCRIPT

CMHI: Dan, it's lovely to have you with us. Can you just start by telling us a little bit about Convergence Partners.

Daniel Koppelkamm: So Convergence Partners is a VC firm we set up in 2018, to focus on health tech across Europe. And here again in sectors with a large unmet needs. And we've identified two key sectors of investment.

One is brain and mental health, both neurology and psychiatry. The other one is women's health. Because we feel that, you know, they are underfunded as huge investment opportunities, a lot of new startups coming to the market. And, things for investors, this would be really, really interesting and not just in terms of financial returns, but also creating a big social benefit and focusing specifically on brain and mental health.

CMHI: What are some of the areas within that that you feel, highly investable now and perhaps even give us some examples of investments that you've made where companies are really being hugely successful and, achieving large growth.

Daniel Koppelkamm: Yeah. So, so in our experience, really having a holistic approach to mental health care. So really using different modalities in a personalized manner. You know, it's the most effective approach. Right.

And as an example, we invested in a company called Neural Cab, which is, the German, Munich based startup. We were an early investor. So they're manufacturing, a certain hardware device, especially TMS. Neurofeedback, explain TMS, transcranial magnetic stimulation. So this is a technology that has been around for, you know, probably 20 years, but only now really starting to take off, you know, because the price levels used to be too high.

But I think now there's an enormous adoption. And if you combine TMS with, talk therapy, it significantly enhances the, the effectiveness, in terms of remission and response rates of patients. And, and we're just seeing so many like, new modalities also come into the market that, it can significantly enhance, you know, really curing people, right? Not just suppressing them with medication.

Right. Like it's being this one kind of one size fits all approach that we've had down until now, but really curing patients. Right. And, and we are particularly you know, excited about new modalities, like psychedelics, that have come into the market. We feel this will be a game changer, a paradigm shift in mental health care.

But it will take a while, obviously, for this to be fully, you know, like a legalized and approved, you know, in the market. I mean, this is the first drug developer struggling with the regulatory process. But, what we are particularly excited about right now is an area we called Techno Deluxe. But you basically use, technology sort of combination of sounds, haptics, frequencies to get, you know, users and patients in a psychedelic like transpersonal state.

Not maybe like not a complete, complete psychedelic trip and dissolution of your ego, but really the ability to like, deal with trauma, for example. Right. And to get you in a deeply meditative state. And, and we're seeing some enormously interesting, you know, technology companies, in fact, we're investing in one as we speak.

CMHI: So for something like Techno Deluxe as a fund, what would your expectations be? Sort of return timelines give us a sense of the trajectory besides that it I appreciate it's a broad field.

Daniel Koppelkamm: Yeah. So I think, just giving you that example of the company investing in right now. So they're talking to actually the wellness space first, right? Rather than, you know, mega medical applications. So, so what they've developed is a brain massage pod, that combines, basically, special frequencies, like, you might have heard of binaural beats or monoaural beats, but also, like Isochronic tones, you know, with haptics, and really get you into, either a deeply relaxed state, you know, like, get you in, and sleepy state also, like, highly concentrated in those state and just only within 30 minutes.

And, we are seeing an enormous interest from high end wellness groups, you know, to adopt this technology. So you go to the gym just to train your body, but actually train your brain as well and massage your brain. And, in fact this is this particular company is, is now talking to the biggest hotel group in Europe to roll this out and, and all of the wellness centers around the world.

So I think that's a huge wellness trend starting. And so these guys, for example, they license out their core technology, which is obviously makes it highly scalable. So this is a business that could go into hundreds of millions in revenues within 5 years.

CMHI: So for that one the business model it’s B2B?

Daniel Koppelkamm: It’s B2B. Yes.

CMHI: And what do you say for some of the other things that you think are investable now? Sometimes with mental health there’s an undisputed need and the demand, but sometimes questioning who's going to pay for it.

Daniel Koppelkamm: You know, so I think just in terms of reimbursement rates, we're seeing more and more willingness, authorities to reimburse TMS, you know, treatments. We're seeing an enormous amount of innovation, you know, coming, you know, in the TMS space. And then the moving from the, you know, kind of large stationary, you know, like, set up to more portable devices, you know, for like home use as well.

So I think that's definitely an interesting area to invest in. And then also, you know, like neurofeedback technology, right? I mean, for example, for children during ADHD, it but, I think there's a lot of innovation, you know, coming to the market. But again, it's always, and these, these kind of single point solutions, you always have to see how they can be embedded, like in, in, in a more holistic treatment, like, you know, like protocol basically.

Right. And, because it's so difficult to scale these companies in Europe alone, we have a very strong focus on taking them to large healthcare markets, usually starting with the US, but also taking them to China. In fact, I just came back from, from, like one week, you know, virtual with six start-ups in China, where we met potential investors, and also, you know, potential customers with huge interest in European technology.

So if you can actually open up these large markets to European start-ups early, you can scale them in a much better fashion, right? And even in countries like China, mental health is like on top of the agenda now.

CMHI: Can you perhaps just talk us through an example of something that you have seen go from startup through to scale and into larger fundraising.

Daniel Koppelkamm: Yeah. So one example is really Neurocare. So they started out as a medical device, you know, manufacturer. And then we started, developing a digital, therapeutics platform, you know, own protocols. They opened their own clinic. So they actually now operate nearly 30 clinics around the world, from Australia to Europe, to Middle East, to US when they, you know, like, combine the fastest and, you know, offering truly, you know, like, personalized mental healthcare and, you know, this quarter actually, they overtook their closest competitor first time in terms of revenue.

So, they're targeting 50 million in revenues this year. We just we raised some big money. We had like some big investors coming in like TVM capital, like for the biggest pieces. And, and, and is really on track to be listed on the Nasdaq and over the next two years. Right. But again, the key like, you know, metric of success is really response and remission rates.

Right? And they have data that can prove that they're the combination of their modalities, nearly doubles the probability of success for treatment of mental health patients. Right. And I think if you can prove that, you know, it's obviously a really strong sell to investors.

CMHI: Last question, somebody who's looking to come into mental health best. Is there something that you have particularly started to ask or a particular resource that you found?

Daniel Koppelkamm: How so? You're kind of top tip, I would guess, for someone coming into this new. Coming to the real conferences, of course. You know, like, becoming part of the Kokoro ecosystem and, you know, also following our work. Right? So we are, actually also organizing a mental health day in Davos, you know, for the World Economic Forum again in 26.

And, yeah, just educate yourself. Get in touch with us if you, if you would like to.

CMHI: Amazing. Dan, thank you so, so much.

Daniel Koppelkamm: You're welcome.