10.25.2016
news

Eaze Gets $13 Million In Funding to Deliver More Weed

The door-to-door app has marketed itself as the hippest of weed startups.

Weed delivery service app Eaze just closed $13 million in new funding, thanks to Fresh VC, DCM Ventures, and Tusk Ventures, bringing the company’s total to $25 million in the bank.

Not bad for a little weed start-up in San Francisco.

CEO Keith McCarty, a guy who sold his chat service Yammer to Microsoft for $1.2 billion, wasn’t necessarily a fan of weed, but had watched the rise of too many on-demand economy companies (i.e. Uber and Instacart) not to want an in.

"I run the biggest marijuana delivery technology service in the world, and don’t use cannabis,” McCarty told the San Francisco Business Times.

Perhaps that’s because cannabis isn’t just about getting high and feeling good anymore. It’s about making money. And, apparently, there are some big chunks of money going around, if you’ve got a bright idea and a brilliant track record.

Eaze operates as a hip start-up in San Francisco’s Financial District with a stocked kitchen, a ping pong table, and a generous vacation and benefits package to all employees. At first glance, its website talks more about company culture than about delivering weed. It seems that weed companies who want serious cash, especially Eaze, employ a start-up work ethic and present an innovative plan for the future, because that’s what will get you paid.

Of course, Eaze has encountered plenty of hiccups along the way. The service can legally deliver only in San Francisco and L.A. right now, but the guys who provided this major cash deal, like a lot of other weed-friendly investors, are betting that the future of weed is legal.

So what does it take for a weed company to become a cash cow? First, it’s about having a really good product and ownership of the space. In this case, Eaze was the shining star that claimed the top, early spot in the California, app-driven weed-delivery services. And they’ve got the money and staff to navigate the ever-changing laws to make dank delivery happen for their customers. Second, it’s about finding the guys with the money who actually like weed's prospects.

DCM Ventures provided a significant amount of cash in this deal, and investor David Chao says that he started eating weed chocolate after a bad bout of a lung and stomach infection. His former “weed is real bad” views subsided, as a lot of people’s might after this election, and he decided that not only did he support and love cannabis, but there should be money behind it. It was Chao who convinced his partners to take a look into the weed biz in the first place.

“I think I was willing to be more open minded largely because of my own journey [with] usage of cannabis medically,” Chao told Fortune.

And while he’s a fan of weed, it took some convincing to his partners. Chao assured them that he’s paid to take risks, and that weed is still the next big thing that can’t be stopped. He thinks the next big cash wave and competition will be among weed brands themselves.

“There is going to be a Coca-Cola and a Pepsi emerging from this market,” Chao told Fortune

As weed continues to become de-stigmatized, and more people vote for legalization, there’s no stopping the guys with the money and the next wave of start-up companies that deal in cannabis, even if those weed businesses are built around passion for green dollars more so than green flowers.