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Cannabis Businesses that Make Investors Excited

Posted by CanopyBoulder on Aug 29, 2019 11:31:31 AM

The cannabis industry changes fast and the trends and opportunities that come along with this nascent industry change right along with it. 

This is never more evident to us than during the times we accept applications for investment and admittance into our accelerator program - which we’re doing now

Each time we open applications, we have to take a look at what’s working in the industry and where the biggest opportunities lie for entrepreneurs. So, we thought it might be helpful to share some of the areas that we’re most excited about in the industry:

Get more information on the industry trends, what we look for and how to apply during our Q&A webinar Sept 13

  • Hemp/CBD products and brands - this is taking off in a big way since the passage of the Farm Bill in late 2018. And while there are TONS of brands entering the space, we think there is opportunity for a few to really rise above the rest - which we think will be done by having experienced teams, brand recognition and/or strong distribution networks. 
  • Hemp/CBD Intellectual Property - In general, investors like IP. In fact, most consumer product goods portfolios include IP with long lasting value for investors and we see hemp/CBD being no different. 
  • Data - As the industry matures, it’s important that we have visibility into what the trends and changes are. As well, we see a lot of opportunity for acquisition in this area as larger players get in on the game. 
  • AgTech - The price of wholesale cannabis continues to fall in most places, becoming more of a commodity. Add in issues around 280e, and this leaves cultivators with smaller and smaller margins. Reducing operating costs from things like water and energy is critical to the continued advancement of the industry and we think this industry is tolerant enough of new tech. e
  • Blockchain -  Use of blockchain technology to improve B2B and B2C operations in areas where the industry struggles most - cash transactions, dependence on banking, tracking seed to sale movement through the channels, etc. What we’re looking for is businesses with solutions that their customers *need* - not just cool application of new technology. 
  • Information and Education - We are not hiding in the shadows anymore. Instead, healthcare professionals are looking for more information on cannabis as an alternative to traditional healthcare. Companies that have figured out how to monetize this are needed.
  • B2G - Businesses that serve the governments to streamline regulation, visibility and enforcement are needed now more than ever. Big long term customers. 

While these are definitely areas that get us excited, there are a lot of other verticals that are needed and interesting to us. In fact, the majority of our decision making about they types of companies we invest in come from factors *outside* of the actual concept itself. 

So, what are those factors? Well...

  • TEAM, TEAM, TEAM - We like companies with more than one founder. Starting a company alone is cruel and unusual punishment.
  • Fundraised before - Remember how the previous point said “team” three times? Yeah, we weren’t kidding. We like teams with experienced founders who have proven they have what it takes to start a company, raise money and exit successfully. 
  • Traction - We want to know that the market wants to buy what you’re selling. And you know what proves that better than anything? Paying customers. However,  this is not to say that companies that are pre-revenue are excluded. We just need to know your market is sustainable and your businesses is serving needs, not wants.
  • Timing - This goes back to our first point of this article. A company that fits into the industry at the right time definitely gets us excited. 
  • Moat - We like businesses that have some space between them and competitors. Sometimes this looks like patents and IP and sometimes it’s just speed to market. Either way, we like companies that won’t get lost in the noise. 

These are just some of our thoughts and don’t represent the motivations and strategy of all accelerators and investors. But we hope this helps entrepreneurs and investors alike to think about what the best path forward is in the industry. 

 

Happy building friends. And don’t forget that we’re accepting applications for our winter 2020 accelerator cohort through October 25! 

More information & application

Topics: Entrepreneurship, Investing, cannabis companies, cannabis business, marijuana, cannabis investing, accelerator, startup, frontier markets, startups, investors, funding