Passion for the plant is a common denominator among the new groundswell of North American cannabis entrepreneurs, but that doesn't always translate into the ability to communicate a solid business plan to investors. Fortunately, business accelerators tailored toward cannabis entrepreneurs are stepping up to help fund, train and mentor startup companies that need the support of industry players with experience.
Gateway, an Oakland-based cannabis business accelerator, has received 50 applications to join its first class since its launch in late November. In exchange for 6% equity stake in participating companies, startups get an upfront investment of $30,000 and four months of mentorship in a shared space with other up-and-coming industry players.
"It's about matching up people with great ideas with the capital they need to get off the ground," Ben Larson tells Civilized. Larson founded Gateway with business partner Carter Laren.
According to Larson, "When I first got introduced to the cannabis space I was coaching entrepreneurs for a pitch event. What I saw in them was similar to what I'd seen before working with tech entrepreneurs: passion, and creativity for the domain, but a lack of business sense. That's where accelerators and incubators come into play."
At Canopy the mentee becomes the mentor
MJ Freeway co-founder and CanopyBoulder mentor Amy Poinsett, third from the left: 'I share our experience in the cannabis industry - speaking to classes, telling our story, and talking about what we learned through being a startup.'
CanopyBoulder is similarly looking to fill that gap. It's dedicated to helping companies developing ancillary products in the cannabis industry - the ones that don't actually touch the plant, like data analytics, market research, sales, and consumption devices. CanopyBoulder provides up to $70,000 in direct investment, intensive bootcamp, and a solid base of industry knowledge in return for a 6 - 9.5% equity stake. The mentorship-based program runs for 16 weeks in Boulder, Colorado, and San Francisco, and San Diego in California.
In 2010, Amy Poinsett and Jessica Billingsley launched MJ Freeway, a seed-to-sale platform which helps canna-businesses handle cultivation management, inventory control, and point-of-sale transactions. In 2015, Poinsett joined CanopyBoulder as a mentor, sharing insights and experience with new entrepreneurs.
"Canopy has been great in offering some really flexible structure for its mentors," Poinsett tells Civilized. "Some dig deep into working with a particular company to develop their deck and pitch; Jessica and I share our experience in the cannabis industry - speaking to classes, telling our story, and talking about what we learned through being a startup." In every class, she says, new businesses are "excited, enthusiastic, and chomping at the bit."
There are plenty of investors for innovative businesses
She says businesses like Healthy Headie, which offers in-home, Mary Kay-like sales parties for folks new to cannabis, exemplify the kind of innovative spirits the programs hope to foster. As far as the future of the industry, she predicts an even greater potential for innovation and growth as federal policies change.
"I've been in the industry for six years and I still feel like we're at the ground level," Poinsett tells Civilized. "The opportunities are wide open."
Ben Larson of Gateway says in such a new, and traditionally stigmatized, industry, there's even more of a need for entrepreneurs to differentiate themselves with exceptional planning, marketing, and business acumen.
"Investors go into pitch events, and they get turned off, in many cases," says Larson. "They say, 'Yeah, I went, and industry just isn't ready. it's too nascent.' I say 'No, people just need the structure.'"
"There's a lot of investor interest - more money than there are good entrepreneurs to invest it in."
"Our main vision [with the business accelerator] is to carry the industry to the mainstream," says Larson. "If entrepreneurs aren't just good cannabis business owners, but world-class leaders and role models, they'll gain the confidence of investors."