It’s no secret that while the cannabis industry grows, it’s experiencing a lot of growing pains — many related to the changing legal status of cannabis.
Behind the scenes, the industry has to find a way to operate with its hands tied. Due to federal regulations around cannabis, many banks can’t service the industry, which makes payroll and taxes particularly challenging for both employees and employers.
That’s why we started Würk (Full disclosure: Würk is Foundersuite customer).
My co-founders and I wanted to find a way to help cannabis companies pay both their people and their taxes. It’s an HR platform that makes it seamless to onboard employees, administer benefits, create schedules and track time.
You might think of it like the Gusto for cannabis. Or as I like to say, Gusto is like a Würk for non-cannabis companies.
We’re solving a problem for the industry, and investors clearly see the potential: since 2016, we’ve raised $14 million. Here’s how we did it.
Remember, you can be the one to say, ‘no’
There’s a large and growing industry out there for Würk to tap into — but that’s not necessarily what I was focusing on when I first started the company.
When I joined CanopyBoulder in 2016, I went in with the purpose of acquiring customers as fast as I could. I was in this microenvironment in Colorado and had structured Würk to be a much more localized payroll provider.
We were going after a smaller market and our technology didn’t need to be as robust. I was planning for $10 million in revenue.
Through Canopy’s program, I realized that cannabis was the fastest-growing industry in the world — the same growth we’re experiencing here in the United States is also happening in other countries like Israel, Germany and Italy.
We could have attracted investors with our original business plan, but we decided that we had a much bigger opportunity to go after. There was an opportunity to build a global workforce management platform for the industry — so that's what we chose to do.
But we needed to have technology that could grow and scale to support bigger companies. We needed to have investors that could grow and scale to support a bigger business. We needed to attract the right customers. So we spent three months restructuring the business — and then we went out and raised money off of that new business model.
Later, we unexpectedly had to revise our plans again. We were raising our Series A and had multiple companies that put up offers, but we went with the bright shiny object — the biggest fund with the biggest name.
We got locked up for a month trying to figure out the details and then they tried to renegotiate the deal, which is a big no-no. We didn’t take the deal. We said no, we walked away, and we had to start the round over again, which was definitely challenging.
It’s hard to say no when you’re at that point in time — you just spent so much time getting there. But it was the right thing for the business and we wanted the right partners involved, so we went back to the table. (Arcadian stepped up to lead the round then, and it turned out really well).
An accelerator isn’t a magic bullet
Canopy really helped us realize the market opportunity. But the one piece of advice I’d give to anybody else going into an accelerator is that it’s really what you make it.
A lot of folks seem to think that an accelerator is there to build their business for them, to find customers and ambassadors. Really, though, it’s just one tool that you have access to now. You, as the entrepreneur, have to figure out how to best utilize that tool.
The first day that I moved into the accelerator, they had me in the back left corner. I negotiated my way up to be right in front of the door — that way, every single ambassador that walked in saw my face first, and I had the first chance to go up and talk to them.
It was small things like that throughout the three-month period that let me squeeze every inch of value out of that program. I made sure that people knew who I was and what my business was. I was there every single day, including Saturday and Sunday. I was the first person to come into the office in the mornings and the last to leave at night.
I learned a lot from the program for three months straight.
Share your bad news
Remaining transparent — even when you don’t want to tell the whole story — has served us well through all stages of fundraising.
Back when we were first raising money, we opened up our seed round to friends and family. It’s always great to give friends and family the opportunity to be a part of something that’s going to grow massively — but at the time, you have no idea if that’s actually going to be the case.
When I put together a pitch deck, the last slide listed 10 reasons not to invest in the company. I made sure every single person absorbed that so they understood the risks and could make an informed decision.
We took the same approach with investors and they liked that we were always very transparent about challenges.
We shared how we royally screwed up, and then we learned the lesson and moved forward.
The right investors also stepped up to help us out, while the other ones just felt appeased. Either way, we didn’t give our investors cause for concern.
I think a lot of people, especially early founders, are afraid to say that something that’s not perfect to investors — and that's a recipe for disaster.
Founders often forget that yes, investors are a source of capital, but they’re also folks who have been dealing with many other companies and have different experiences. So when you bring some of those problems to the table, a lot of these people have friends of friends that have dealt with a similar problem. As long as everyone's aligned on the same vision, they’re in a position to help — they should all be jumping in to help figure out problems and keep the business moving forward. Investors don't want your business to shut down.
Nathan Beckord is the CEO of Foundersuite.com, a software platform that has helped entrepreneurs raise over $1.2 billion in seed and venture capital since 2016. This article is based on an episode of Foundersuite’s How I Raised It podcast, a behind-the-scenes look at how startup founders have raised capital.