While there are stereotypes that venture capitalists are out to crush dreams, it seems cannabis-focused VCs are helping company founders’ dreams come true.
Despite getting a bad reputation from time to time, they tend to think of themselves as constructive funding partners, says Emilie Paxhiafounding partner and manager of Poseidon Investment Management.
Paxhia conducted a conversation with leading cannabis executives at Benzinga Conference on the Cannabis Capital April 20 at the Fontainebleau Miami Beach.
Don’t settle when it comes to investors: Karson Humiston, Founder and CEO of the cannabis recruitment platform Vangstemphasized the importance of maintaining good personal relationships with business partners.
“It really is like a wedding“, she said, adding that” you are going to spend a lot of time with your partner as you build a business through ups and downs. “
Humiston said business founders should ask themselves what they’re looking for in funding partners, then go out and find them.
Vangst kicked off 2022 by securing $19 million in funding in a Series B funding round, led by Level One Fund with participation from previous investors.
Bringing in a wide range of investors is “part of our secret sauce,” said Humiston, one of the women who has dominated the space for years.
“There’s no shame” in relying on investors and advisors for advice, added Karson. “Knowing what you don’t know is important” for entrepreneurs.
Raise enough money to fuel growth: Luke AndersonCann co-founder, said companies need to be careful about taking money from people who will actively help fuel growth, promote the brand and bring in new capital.
“If someone you want to work with offers you more capital, take it,” he said.
Given the unpredictable nature of the cannabis industry, it is crucial to have a trusted partner who will step in and provide support in difficult times. Transparency builds trust between partners, which makes it easier to resolve issues, Anderson explained.
The cannabis-infused beverage company recently confirmed a $27 million Series A funding round from new institutional capital, existing investors like Imaginary companies doubling, and a list of famous new investors, including Nina Dobrev, Adam Devine, Zoey Deutch, Jordan Cooper, Sara Foster and Rosario Dawson.
However, conserving resources and not turning to growth at all costs is vital, Anderson continued.
“Growth is kind of overstated, and it’s not cheap either,” he said. “Your ability to choose good income over bad income is the most important element of the past two years.”
Scott Kenyon, CEO of Wurk said what was once bad income could become good income over time.
“It’s okay to stop doing one thing for a while and then come back to it when you or your organization is ready,” he added.
The cannabis-focused human capital management firm raised $11 million in a funding round in 2019. Last year, it closed a $3.5 million oversubscribed Series AA funding round , entirely made by existing investors.
Commenting on the search for non-endemic sources of income, Kenyon said that having the fundamentals is a prerequisite.
“It’s nice to have strikeouts, but let’s look for those home runs,” he said. “You’re not going to hit a home run if you’re not ready to retire. So don’t be afraid to retire.”
Photo: Courtesy of Towfiqu barbhuiya on Unsplash