Exclusive Interview with The Arcview Group CEO Kim Kovacs
The ArcView Group is celebrating its 10-year anniversary in 2020. CEO Kim Kovacs spoke with New Cannabis Ventures about the platform’s recent shift to a more digital model and how it is creating a playbook for the new cannabis investor. The audio of the entire conversation is available at the end of this written summary.
ArcView Group Leaders
Kovacs was an ArcView member before she became its CEO in January. She was first exposed to cannabis when her mother-in-law, a cancer survivor, used it to transition off of opioids. Kovacs became interested in the cannabis industry and attended her first MJBizCon, where she met members of the ArcView team.
Over the course of her career investing in the technology and life sciences spaces, Kovacs has exited six startups. Intrigued by the potential intersection of these interests and cannabis, she became an ArcView member. Eventually, she started the cannabis company MyJane and sold it to a fellow member. With her experience as an angel investor and entrepreneur, ArcView approached her about the idea of leading the company.
Kovacs works closely with ArcView Founder and Chief Strategy Officer Troy Dayton. Her operational expertise and his creative vision work well together, according to Kovacs. Other important members of the team include Chief Marketing Officer Carolyn Matthies and the leaders of ArcView Ventures: Jeanne Sullivan and Jeffrey Finkle.
When Kovacs joined the company, ArcView was primarily known for its live events. It would hold investor events four to five times per year, bringing together a broad set of investors and companies. But, there was little happening between these large events. Kovacs helped move ArcView toward a strategy of delivering value every day. The company shifted its deal flow management and member engagement to a digital platform at the beginning of the year. With that shift happening right before the pandemic, ArcView has a model that fits well in a time characterized by the need for remote connection.
ArcView’s events, now digital, bring thought leaders to its members. Investors and companies are able to learn and collaborate through the ArcView platform.
With the pandemic ongoing, the timeline for returning to large in-person events is uncertain. But, Kovacs expects to see an appetite for smaller gatherings going forward. Rather than one-way interaction with a speaker at a two or three-day event, she anticipates people will want to interact at smaller, more social gatherings that provide greater opportunity for collaboration.
The shift to online engagement in the cannabis investment space opens to the door to more global opportunities, according to Kovacs. Investors are able to share information, collaborate on deal flow and put together different types of funds without having to fly to a specific meeting place.
ArcView Network Membership
In the past, ArcView had a one-size-fits-all approach to membership. Now, the ArcView network has different layers of membership options. For example, people curious about the cannabis industry but not fully prepared to become investors can opt for a discovery membership. This allows people to learn about the industry from investors through attending meetings and even touring cannabis operations.
ArcView Ventures represents another type of membership option. Here, members can participate in a collective fund model. ArcView Ventures members work together to evaluate investment options and to vote on which companies to include in a collective fund, where it expects to invest $50-250K per company.
ArcView also offers membership to cannabis companies. It has programs to help companies understand and attract investors.
Ultimately, ArcView serves to match the right investors with the right companies. Through its deal maker platform, it analyzes investor interests to introduce them to companies that match their investment thesis, according to Kovacs.
Cannabis Community Connection
Over the course of its 10-year history, ArcView has had thousands of members make connections and invest in the cannabis space. More than $300 million has been raised through the network for hundreds of companies in the cannabis space, according to Kovacs. Most of that funding has been in the form of seed and Series A rounds.
Beyond the amount of capital deployed, ArcView has facilitated connections between its members. For example, a couple of people who met at an ArcView event are now putting together a SPAC with a focus on the hemp space, according to Kovacs. The platform serves as a meeting point for people across the industry.
ArcView has done in-depth market research reports with BDSA (formerly BDS Analytics), but the company is shifting its approach to research as the company pivots to a more digital model. It is planning to release research more often and in more bite-size pieces. Ultimately, ArcView wants its members to be able to understand how that data impacts their investment theses.
Kovacs is excited about hemp as a global opportunity, driven in part by recent market research done by ArcView. She sees potential beyond CBD in areas like material science. She is also bullish on the regulated cannabis space, which has thrived after being largely deemed essential during the pandemic. There is the potential for brand loyalty to develop, more touchless technology to emerge and new market segments, like beverages, to gain ground over the next six months to a year, according to Kovacs.
ArcView Founders Dayton and Steve DeAngelo always intended for social justice and social equity to be cornerstones of the platform. The platform participates in advocacy efforts in a few different ways. ArcView has a mentorship program, and it offers free membership to investors who promote and fund diverse companies. Additionally, ArcView is working on an special purpose vehicle (SPV) with a few different organizations with the intent of supporting diverse businesses.
Cannabis Investment Playbook
The platform is in the process of creating a cannabis investor playbook that will outline the metrics vital to understanding potential investments. Important metrics will change depending on the piece of the industry in question. For example, investors will need to understand how to consider the patent portfolio of a cannabis company involved in life sciences.
Investment Landscape Outlook
Over the next six months, Kovacs expects capital to remain tight in the cannabis industry. Companies looking for investment will need to demonstrate capital efficiency and understand how to turn investment dollars into revenue.
From an investor perspective, Kovacs cautions that near-term exits are unlikely. Rather, investors should plan for five to seven years. Finally, she sees the potential for collaboration across the industry as cannabis opportunities continue to arise.
To learn more, visit The Arcview Group website. Listen to the entire interview: