I don’t invest in many consumer hardware companies. Every now and then I spend a lot of time with a CEO who is amazing, their product is damn good (I use it myself) and they growing so damn fast that I write the check. That happened with the Oura Ring ($143M funding) and I am now writing a check for Sensate.
Like many of you, this past year for me has produced a supersized helping of stress and anxiety. Fortunately, I have been on a 10-year search for the best tools to attack these forces and have spent thousands of dollars on dozens of practices and devices. The Sensate is one of only two devices still in my daily toolbox. I have gotten to know Anna, the CEO over the last two years, and am excited to be able to join Unlock, ExpertDojo, and TenOneTen in investing in the company. We are investing in a very limited inside round ahead of the imminent Series A in the fall.
Sensate: Turning the tide on the global anxiety tsunami.
The Story
“Almost everything will work again if you unplug it for a few minutes, including you.” [[Anne Lamott]]
Since suffering a debilitating bout of depression after the IPO of my first company (TED talk here), I have been on a decade long journey to find solutions that actually work. I started with therapy (fail), Prozac (fail), and spent tens of thousands on every product or service that claimed to work. Most masked symptoms but didn’t address the root causes. As I dug into the literature, a common theme emerged. Those with depression, stress, and anxiety tend to be in a high state of alert, sometimes called “Fight or Flight”. When your Autonomic nervous system (ANS) is in fight or flight, everything seems like a life or death situation. The proprietary combination of specific sounds and vibrations in the Sensate device reliably relaxes the Vagus Nerve, the main nerve in the ANS which becomes overstimulated during fight or flight. Sensate “unplugs” the Vagus nerve in a 10-minute session. No conscious effort is required by the user, there is nothing “to do”. Sensate “just works.” This reset, like the reset of a computer, allows your nervous system to come back online and handle more. After 7 years of therapy trying to figure out why I was in fight or flight, in 10 minutes of Sensate, I was out of it.
I met Anna Gundmundson, CEO of Sensate, two years ago when she was going through the ExpertDojo accelerator. At the time I had tried over two dozen products that claimed to “get you out of fight or flight.” Of course, being a nerd, I had a quantitative way to measure this, increase in Heart Rate Variability (HRV). A 10-minute session with Sensate gave me the best improvement in HRV of any product I had tried so far. The business model at the time was focused on selling individual devices and they had just completed a very successful Indigogo campaign. Concerned about long-term margins in a device-only business, I passed at the time while introducing them to UnLock Venture Partners where I am an LP and frequently co-invest. The partners at UnLock dug in, were impressed by the customer response, technology, and saw a path to a higher margin subscription business so they led the Seed round in 2020 (so I am a Sensate investor through Unlock). Sales took off during the pandemic as people sought new ways to combat stress and anxiety. The company ran out of inventory and had to rework the supply chain to meet demand.
About six months ago I gave one to my wife and two daughters (10 and 5). “Life-changing,” my wife says for herself and our children. Everyone is noticeably less stressed. We have since purchased over 20 for friends and family and referred many more. When UnLock partner [[Sanjay Reddy]] called last month saying they wanted me to join a very limited inside round, I called Anna immediately. She walked me through the impressive 2020 progress and the plan for 2021 which includes the addition of a premium software subscription in Q3 (YEA for higher lifetime value!). Sensate is currently a UK company and Anna is from Sweden, but has moved to Los Angeles to focus on US expansion and the company will transfer to a US company in Q3. Given the reduced product/market risk and the upside of the subscription model, I decided the time is right to invest in Sensate.
Why I am Investing
At Incisive Ventures, we focus on categories where we believe we have some kind of information or insight advantage. Stress and anxiety reduction is something I have been looking into for over a decade. Sensate is one of the few products to have bubbled to the top of the list. I have seen the product’s impact in my own life as well as the impressive market validation and investor validation from other smart investors. My network of health and wellness contacts built as CEO of Upgrade Labs is a perfect compliment for Sensate. I have already connected them to Dave Asprey (father of Biohacking, founder of Bulletproof), who is a big fan of the product and has driven substantial sales their way. Given my personal experience with the product, long-term relationship with CEO and investors, the traction in 2020, and the improved business model in 2021, I am excited to support Sensate.
Trends I am betting on
Self Care eats Healthcare. If you are healthy you don’t need healthcare. The healthcare system was built and all the incentives are designed to fix people when they break, not to keep them in good working order so they break less often or less severely. Traditionally self-care (fitness, nutrition, wellness, etc.) has taken a shrinking share of wallet to spend while healthcare share has exploded. Awareness of the ROI to self-care spending was growing before the pandemic and accelerated by orders of magnitude as people’s access to healthcare was cut off and they searched for ways to stay healthier during it. The trend of wallet spend shifting from healthcare to self-care was pulled forward. The pandemic brought new stress into our lives. And it also opened up space to reassess priorities and try new things. Especially anything you could do at home without a special facility or professional service provider. We were mostly cut off from “the professionals” so people had to figure out what they could do themselves and for many, this was very empowering. Spending on all sorts of self-care from home gyms to meditation apps to devices like Sensate exploded. I believe this sense of personal empowerment and the wallet share dedicated to self-care will continue to grow over time.
“Just works” wins. Most approaches to Mental Health generally and stress reduction specifically are very “active.” They require people to “do something.” Go to counseling, build new habits, breath a certain way, sit on a cushion for hours, exercise, etc. All of these approaches have very low success rates because they depend on willpower, time, and “doing it right.” While drugs are “passive” they come with many well-documented side effects including “zombie mode.” The body’s nervous system that produces the stress response has an on/off switch. What if you could just turn it “off”? Allow the body to unplug and reset to handle more stress later? That is what the Sensate does. Products that “just work” will be preferred to those that can fail from “user error.” With products like Sensate we are finally providing solutions around Mental Health that “just work” without the side effects of drugs, I am betting customers will prefer this category of solutions.
Why this deal is Incisive
Sensate ranks very highly in key areas of our Meta Themes.
Disruptive innovation. There is a huge unmet need for stress and anxiety management. Current products have a spotty record working for some people and not for others. Sometimes the innovation is that a product “just works”. Sensate has patented a combination of vibration and sound frequencies that are science-based but “just work” as far as the user is concerned. The high use rates for Sensate and massive customer referrals are unlike any other product in the category as far as I can tell.
Americans are lazy. One of my friends called Sensate “Lazy man’s meditation.” Anything which requires practice, or belief, or multiple sessions has friction between the customer and the desired outcome. The fact that Sensate “just works” without any physical or mental effort on my part removes all the friction between me and the outcome (calm). Sensate allows me to get what I want and be lazy at the same time.
Invest when I can be helpful. I have already been very helpful to the company introducing them to investors and influencers because of my personal experience with the product. I have seen the value of the product in my personal life and my family. We have the opportunity to invest in this round only because the current investors and CEO understand the value my network brings and have invited Incisive Ventures into this very limited opportunity.
Invest with other smart people. Unlock Venture Partners is currently my best performing Venture fund (out of 12). They have an impressive track record of investing early in game changing companies and adding value growing the businesses. Sanjay and I have worked closely with Anna to design the premium subscription product which will significantly improve margins in the business. I am also excited to continue to invest alongside ExpertDojo and TenOneTen.
