Neal's Deals (Vol.28) - Narcan's advancements towards societal revival ??????

Hey everyone - Over the next few days Narcan, the first opioid overdose reversal medication approved for over-the-counter purchase , is being shipped to drugstores and grocery chains throughout the country. I recognize this is a more serious topic for the newsletter, but it is one worth analyzing given that the opioid crisis in the US has reached a breaking point where families, communities, and local economies are being destroyed more than ever. It is a long road ahead to mending the crisis, but hopefully the increased availability of Narcan can prevent many of these overdoses.??

In this iteration of Neal's Deals, we'll explore the current state of the epidemic, focusing on the potential impact of Narcan availability and its implications for the economy.

Background?information on the opioid crisis:?

According to the CDC , the number of people who died from a drug overdose in 2021 (107,000) was over six times the number in 1999. The problem has not gotten any better, as preliminary 2022 data suggests that 110,000 people died last year from overdoses. The majority of these deaths can be attributed to illegally manufactured fentanyl, which is a highly-addictive pain relief drug and anesthetic that is 100 times more potent than morphine and 50 times more potent than heroin. A tiny quantity of fentanyl is enough to be fatal. According to the Drug Enforcement Administration (DEA), the majority of illegal fentanyl flowing to the US comes from China and is smuggled through Mexico. Subsequently, the opioid is frequently combined with substances like cocaine and heroin, leading to an escalation in unforeseen fatalities.

Narcan explained:

Narcan, serves as a potent miracle antidote in cases of overdose. By swiftly binding to the brain's opioid receptors and displacing harmful opioids, Narcan effectively restores normal respiratory function, often leading to the rapid awakening of an individual who was previously unresponsive due to the overdose.?

Emergent BioSolutions has announced that shipments of the drug Narcan are en route to prominent retailers such as Walgreens, Walmart, Rite Aid, and CVS. Additionally, the drug might also be accessible for online purchase through certain businesses in the upcoming week. With the recent approval from the Food and Drug Administration for over-the-counter usage, Narcan's footprint is set to expand even further, encompassing convenience stores, airports, and potentially vending machines. It is important to remember that while Narcan should make a difference, addressing the underlying causes of opioid addiction and improving addiction treatment also remain essential to reducing overdose fatalities.

Economic implications:

I think you know where this is going. In 2020, which is the most recent statistic, the crisis cost our country $1.5 trillion . How you might ask? For many reasons, the first of which is labor force participation.?

According to the Brookings Institute , regions with higher prescription opioid exposure experienced declines in labor force participation, particularly among men. The opioid crisis also disproportionately affects specific occupations and industries, such as construction, extraction, food service, healthcare, and personal care as these industries often see significant rates of injuries that are treated with long-term drug use.?

Also think about the substantial costs related to drug enforcement, surveillance, treatment programs, and criminal justice proceedings. These encompass law enforcement efforts to combat illicit drug distribution, the investigation of overdose incidents, emergency medical responses, legal proceedings, incarceration, and rehabilitation services. The number is in the billions .

Beyond the money, there are countless communities that are being torn apart. A case in point is San Francisco's downtown area, which once thrived as a bustling district but has now deteriorated into a distressing environment due to the opioid epidemic. The historically significant hotels in the Tenderloin neighborhood, once a vibrant center of entertainment , have been repurposed into substandard Single-Room Occupancy accommodations for homeless individuals. The stark contrast between the current state and the neighborhood's prosperous past underscores the challenges the city is grappling with as it confronts the far-reaching consequences of drug addiction.

Unsure what the actual impact of Narcan will be, but as long as this crisis remains unresolved, businesses are likely to persist in leaving affected neighborhoods. Startup environments flourish in lively and dynamic urban settings, characterized by innovation, collaboration, and a robust sense of belonging — qualities that stand in stark contrast to the current situation in drug-affected communities.

Let's get to it:

Lex , a Los Angeles-based AI-powered writing tool, raised a $2.75 million seed round led by True Ventures.?

Why this is interesting: Lex is building an AI-based co-pilot that provides personalized feedback and comments on all written content. The platform has high utility, but I can already think of a handful of companies like Quilbot , Grammarly , and Copy.ai that all do something similar. For that reason, I am highly concerned about their moat and competitive edge right off the bat. When I evaluate AI investment opportunities, I like to think about how much of their solution can be fulfilled by using ChatGPT. If the answer is anywhere close to 50% or above, it is going to be hard to get comfortable with the long-term viability. Sorry, Lex, but you are in this category so I won't invest but will use you to help me write this newsletter ??

Pest Share , a Boise, Idaho-based startup, that provides an app that renters and landlords can use to address pest issues, raised a $4.5 million seed round co-led by MetaProp and Capital Eleven.

Why this is interesting: About 84% of households in the US deal with pests every year. But guess what? Only a measly 15% actually get regular pest control services. Most owners end up shelling out for pricey prevention services or trying DIY hacks. Pest troubles are a big reason why tenants move out and properties sit empty. With Pest Share, renters can now directly engage with local service vendors to address their bugging problems. Simultaneously, property managers are provided with a range of pest control alternatives to select from and offer to tenants. I'm especially intrigued by this distribution approach of working through property managers, as it offers a truly innovative way to address a common problem affecting a wide range of people. Anyways, If Pest Share decides to expand services to NYC, I hope they include a lantern fly killing service, as that would get everyone to sign up quickly (IYKYK).

Kiki , a New York-based subletting startup that matches listers with people looking to rent for up to six months, raised a $6 million seed round led by Blackbird Ventures.?

Why this is interesting: Subletting can be a real hassle. It's tough to discover trustworthy folks to take over your place for short stints. Currently, there's no easy way to find subletters, besides sharing on Instagram or scrolling through questionable Facebook groups. Now Kiki's tinder-like matching app makes the subletting process as easy as going on a date in 2023. They use an invite-only "friend of friends" system to make sure folks are legit and respectful. To join, users must link their Instagram as part of their "no weirdos" policy. To make sure all the logistics are managed, Kiki also has a dashboard feature where users can keep track of on-time payments, secure deposit holdings, and e-sign sublet agreements. Considering the company takes 10% of the sublet price for each transaction and tier-1 city sublets go for more than $2,000/month, Kiki needs about 5,000 transactions to become a million-dollar business. To get more comfortable with the opportunity, it would be interesting to see how many sublets occur in their target cities. Anyways, I will leave that to Blackbird Ventures to figure out.??

Deals in the Works:?If you want to learn more - feel free to reach out

1. Suite of tools that enable laundromats to offer D2C pickup and delivery
2. Speciality commercial pet insurance platform
3. Turn-key circular commerce solutions that allow retailers to offer product rentals, trials, and repairs for high value items
4. Platform helps renters earn cash back for rent positive behaviors that increase landlords net profits
5. Startup that allows anyone to create a Living Trust in minutes and for free

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Quote of the week:

"Success is a journey, not a destination. The doing is often more important than the outcome.”

-–Arthur Ashe ?? ??

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Happy US Open, and have a great weekend everyone!!