6 Times Investors Bet Big on Cannabis-Tech in the Past 6 Months
Selling elevated ideas and digital tools for modern cannabis consumers.
Nearly 100 reported investment deals went down for marijuana-space startups in 2015. Continuing that trend upward, industry watchdawgs’ predictions of a 2016 in which investors would rain seed-funding on a whole new class of weed-tech organizations are ringing true.
When it comes to locking down seed funding and closing venture deals in the legal weed game, risk can be high. Reward is usually in non-bankable cash, and the road to revenue and profitability can be hazy; less of a straight path than the route taken by an established company like Miracle-Gro moving into hydroponics, for instance.
Screenshot of marijuana startups listed on startup hub, AngelList/The KIND
Entrepreneurs with elevated ideas are asking: “Where da cash at?”
Venture capitalists and investment firms reply with: “How do you plan to make this money grow?”
Sometimes, the answer is simple: “By selling weed.” Or, better: “By simplifying the retail sale and purchase processes of cannabis.”
When you take a step back, exhale, and view the industry from above: An investment for one weed startup is a win for all weed startups. If some VC or angel investor, or major Silicon Valley fund, puts its money on the line by giving it to someone yammering on about cannabis; another someone will inject money into another marijuana-tech startup after that.
The following companies and funds have inked investment deals over the past six months; or are investing in cannabis brands, helping to captain the first flow of legal weed through the rocky shallows leading into the mainstream. Baker––the first tech firm listed––announced a closing of seed round funding just this week.
Product: Baker launched as an "order-ahead–app" that allows consumers to pre-order dispensary purchases. The product has evolved into a customer retention platform for dispensaries. It operates much like a loyalty-rewards system.
Backers: Michael Lazerow, Base Ventures, XG Ventures, 500 Startups, Poseidon Asset Management, others. ($1.6M)
In their own words: “[The cannabis-tech space] is a cool and new industry in the U.S. So investors all want to take a meeting, even investors from big Silicon Valley firms. But many say they can’t invest because of limited partner agreements. So you sort of have to safeguard your time.” (via TechCrunch)
Product: The startup aspires to service each stage of the cannabis supply chain with its Meadow Platform software, which facilitates deliveries and mobile menus, and ensures partner retailers are operating under full government compliance. Meadow MD connects new California medical marijuana patients with doctors.
Backers: Investors from Slow Ventures, Reddit’s CEO and founder Steve Huffman, Joe Montana’s investment fund Liquid 2 Ventures, and Justin Kan. ($2.1M) Y Combinator. ($120K)
In their own words: “As the green market is coming into the white market, we have an opportunity to end prohibition on cannabis. Tech really helps with that. There hasn’t yet been an existing market that has seen such a need for technology, and needs tools just to stay compliant. We’re right at the intersection of that.” (via The KIND)
Product: Weed-specific laboratory information management system (LIMS )that connects growers, distributors and lab-testing facilities.
Backers: Slow Ventures ($3M); Y Combinator ($120K)
In their own words: “Cannabis is not a commodity. It’s very variable, and no one knows what they’re buying." (via TechCrunch)
Product: Telehealth conferencing to connect medical marijuana patients to doctors. The company, founded by husband-and-wife Mark and Pamela Hadfield, also recently launched a Q&A resource where users post questions about the benefits of medical marijuana to be answered by medical professionals.
Backers: Independent investors; StartUp Health incubator
In their own words: "It’s a confusing marketplace, it’s so hard to find legitimate, trustworthy information. We want to engage [medical marijuana users], and connect them, and become that centralized resource for them." (via New Cannabis Ventures and TechCrunch)
Product: Marijuana-startup accelerator funding and launching startups in Colorado and California.
Backers: Arcview Group (partners); raised $2M for two classes of early stage weed startups in 2016.
In their own words: "In the rapidly growing cannabis industry, it takes a strong team of mentors, advisors and contacts to navigate successful launches." (via New Cannabis Ventures)
Dabado Vaporizers (Self-funded and profitable)
Product: Dabado doesn't just "touch the plant," the company, which was founded by two brothers, develops products that vaporize the plant's most concentrated derivative into an inhalable and delicious dab.
Backers Dabado founders and brothers Stephen and Nicholas Helfer reportedly invested $150,000 of their own money, made from previous startup ventures, to launch the company in February 2016. Dadabo expects to end 2016 with $3M in sales.
In their own words: "Concentrates are shaping the future of cannabis." (via Forbes)