Better Ways to Raise Funds for Your Cannabis Business

Cannabis Entrepreneur Summit Raising Capital

I was honored to participate on a panel at Green Flower Media’s “Cannabis Entrepreneur Summit” in May, a live event that was seen by over 10,000 viewers on the web over the course of two days. GFM is a leading cannabis-focused media company with a mission to educate about cannabis.  CES was the second event hosted by GFM, preceded by the “Cannabis Health Summit” earlier this year.

My panel, “Better Ways to Raise Funds for Your Cannabis Business,” was moderated by GFM’s CEO, Max Simon, and and also included Holly Alberti of Healthy Headie, a direct-to-consumer distribution and education platform, and Joel Milton of Baker Technologies, a software company.  My involvement with 420 Investor and New Cannabis Ventures has allowed me to see many aspects of capital raising, while Alberti and Baker have both raised capital successfully in their ancillary businesses.

Alberti went through the CanopyBoulder accelerator program and had success in pitching at ArcView. Using simple analogies allowed her to quickly explain her business model to potential investors. Holly suggests that raising capital in the cannabis industry is more challenging than other industries. One time-saving tip she offered is to qualify potential investors by inquiring about their history of investing in the cannabis industry.

Milton participated in the 500 Startups accelerator program.  He suggested using convertible notes, sticking to standard documentation and keeping the business model simple. He also cautioned against being overly optimistic about capital raising based on feedback from potential investors or going after the wrong types of investors. He should know, as he spoke individually to 184 investors for his last capital raise. Milton was able to raise about 2/3 of the total raised from institutional investors, but most institutional investors won’t participate in funding the cannabis industry yet. One tip that he offered is to bring in strategic investors at a lower price than other investors.

I pointed to the public markets being not quite ready for mainstream investing and actually serving as a barrier to successful capital raising.  I cautioned both investors and entrepreneurs to take a longer-term view.  Canada appears to offer a better investing environment than in the U.S. due to federal illegality. I pointed to the risk of raising too little capital and suggested using convertible notes or warrants to bring in future capital as milestones are met.

The discussion will give both investors and entrepreneurs insight into capital raising, including tips about pitches, structuring capital raises, picking the right type of investors and avoiding pitfalls.

 

You can purchase audio and video recordings of the entire event, which featured 18 speakers and 4 panels, for $197. For a limited time, you can save $50 by using the code “GFM50” and start building or scaling up your cannabis business today.

  • Unlimited access to watch the entire Cannabis Entrepreneur Summit online
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  • 10% of your purchase goes directly to great cannabis causes
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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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