After successfully traveling through the niche wellness-to-mainstream pipeline, mushrooms are set to get more “magical” with the prospect of wider legalization of psychedelics.
An adaptogen craze went mass in 2020; consumers can find mushrooms in just about anything these days, including supplements, coffee, tea, jerky and even beauty products. The global functional mushroom market is said to be worth $23 billion this year, with a projected compound annual growth rate of 5.6% over the next five years. With currently legal mushrooms being touted for their health benefits, the recent news on psychedelic legalization in Oregon has mushroom-related wellness startups closely watching the shroom opportunity on the horizon.
“Over the last year, I’ve seen it really take off,” said Shane Heath, the founder and CEO of mushroom tea startup MudWtr, of the mushroom wellness market in the U.S. “At any pre-Covid social gathering in L.A., everyone there was a founder in the mushroom space, in some capacity.”
Inspired by mushroom coffee startup Four Sigmatic, Heath began making his tea as a coffee alternative when working in the tech industry. He experimented with a mixture of chai, turmeric, and mushrooms including cordyceps, reishi, chaga and lion’s mane — ingredients he called “vessels for certain superpowers, almost.”
The inspiration to turn the concoction into a full-blown business came “after drinking it and bringing it into the office, to festivals,” he said. “Friends just [began] asking me, ‘Dude, what are you drinking right now?’ And I just started calling it ‘Mud.’”
Originally found at niche wellness retailers like Goop and CAP Beauty through brands like Moon Juice and Sun Potion, mushroom-infused products are now widely available at major retailers. MudWtr, for example, is sold not only at L.A.-based wellness grocery store Erewhon, but also nationwide at Urban Outfitters and Free People. It will launch at Thrive Market and Equinox in 2021. Mushroom wellness startup Rainbo, known for its mushroom tincture supplements, sells at mainstream retailers such as Nordstrom and Free People.
Mushrooms have caught the interest of VC firms, bringing a tech startup mindset to the market. “I skipped the farmers’ markets and went straight to building a subscription model,” said Heath, of the brand’s DTC business. The company has raised a total of just over $5 million in pre-seed and seed funding from a range of VC firms including M13 and Alpha Bridge Ventures, as well as angel investors such as Nick Green, the founder of Thrive Market.
Mushrooms have also found their way into the mainstream beauty world. Ulta and Sephora stock Four Sigmatic coffee. Shoppers can buy Youth to the People’s adaptogen deep moisture cream with reishi at Sephora, or Acure’s adaptogen-infused hair conditioner at Ulta. In August, Pacifica Beauty launched a “Mushrooms & Caffeine 7% Solution” to combat puffiness and irritation as part…