Posted on 01/08/2015 11:46:12 AM PST by ConservingFreedom
In one epic journey four and a half years ago, stretching from Denver to Boulder, Colo., Privateer Holdings co-founder and CEO, Brendan Kennedy hit up 40 medical marijuana dispensaries in a single day. At the time, his unusual new business was just getting started.
Today, his private equity firm, which invests in legal marijuana-related startups, crossed another milestone with the announcement of its first institutional investor, Founders Fund—perhaps the first ever to invest in the cannabis industry, Kennedy says.
"This is a key milestone for us as a company, but it's also important for the industry as a whole," said Kennedy, 42, in a phone conversation yesterday. "A company in any industry would be thrilled to have their smart principals and partners back them. But in this particular industry, we're particularly proud."
Founders Fund's "multimillion dollar" contribution to the $75 million Series B round announced today will go towards adding new investments to the company's existing portfolio, which includes Tilray, a medical cannabis grower and packager in British Columbia; Marley Natural, a Jamaican cannabis grower and accessory provider launched by Bob Marley's family last year; and Leafly, a cannabis information startup with 4 million monthly users.
Just last month we wrote about the difficulties marijuana startups have traditionally had getting reputable backers to publicly invest in their companies. David Goldstein, co-founder of Palo Alto, Calif.-based Potbotics, whose company has raised $1.5 million venture capital from friends and family said, "There is absolutely a stigma. We find a lot of institutional investors definitely aren't ready to jump into these waters."
In fact, it took a very personal experience with the medical marijuana industry for Founders Fund partner, Geoff Lewis, and by extension, institutional investors generally speaking, to discover Privateer Holdings. A doctor had prescribed medical marijuana to treat symptoms of an illness that one of his friends was suffering. "He suggested a few strains, but she was using Leafly to test strains for different symptoms such as nausea," Lewis told me over the phone last night. "It opened up my mind to what can really happen."
In addition to the four states with legal recreational marijuana, (Colorado, Washington, Alaska and Oregon) 23 states and Washington D.C. now offer legal medical marijuana. Last August, the New York Times reported that the legal cannabis industry in the United States, would reach $2.6 billion by the end of the year and $10 billion by 2018.
"Privateer really stood out to us as the company today we believe has the best chance to make an enduring impact in this market," said Lewis. Founded in April 2011 the upstart private equity firm previously raised $22 million in venture capital. But due to institutional investors' reluctance to get involved the support came from a combination of a Series A fundraising from high net worth individuals and families, and a convertible bridge note, according to Kennedy.
In response to this reluctance, a cadre of specialty investors, including Emerald Ocean Capital, The ArcView Group, and even Privateer Holdings, cropped up to meet the demand, but today's news puts this marijuana startup in some pretty lofty company. Co-founded in 2005 by Peter Thiel, Founders Fund was an early investor in Facebook, and includes in its portfolio: Airbnb, SolarCity, Spotify, Stripe, Oculus VR, and Yammer.
"This gives other institutional investors permission to look at this space," said Kennedy. "There's a group of institutional investors who will wake up in a panic when they see this news because they'll realize they don't know anything about this industry."
And here is our resident drug pusher doing his thing again.
His fund will collapse once “grow your own” is legal. Just another investor dependent on government regulations.
I agree, but never bet against a regime affiliate or crony capitalist. They over-ride the basic way markets function.
I’m ambivalent on the topic.
But given the amount of dough it will provide to state legislatures to spend, it will be inevitable, like lotteries and casinos.
Legalizing pot legitimizes criminals and creates more hunger for money for addicts. Be careful about spending money in CO. A merchant in a small town might commit credit card fraud against you (already happened).
No, it drives them out of the market just as legalizing the drug alcohol drove criminals out of that market.
and creates more hunger for money for addicts.
Nonsense - unless hypertaxed it lowers retail prices and thus the level of hunger for money for addicts.
Be careful about spending money in CO. A merchant in a small town might commit credit card fraud against you (already happened).
And this happens only in CO?
If only dope fiends didn’t burn through all of their allowance money over the years, they could now be rich.
How many dozens of times have you watched that in your parent’s basement?
No doubt many dozens, since you have posted about that nearly 80 year old film more than once before.
These guys have a sense for gold. Looks like they expect the pot business to be at least as lucrative as alcohol.
Aha, so I am correct... you retreat to that ancient bit of film like a security blanket.
Good that it works for you.
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