Advanced software designed for the cannabis industry can automate reports to maintain compliance with regulations.

Automation can also keep cannabis business operations running smoothly and provide a seamless online customer experience.

Pyrotree Inc, a Los Angeles-based cannabis software company, provides an all-in-one service called WebJoint that operators can use to generate data on point of sale, inventory, distribution and more for required reporting to government agencies.

WebJoint recently announced closing a $1.5 million funding round led by RedTape Ventures. Since 2014, WebJoint has grown to nearly 200 retail clients, and is the only cannabis compliance software with an integrated website builder & eCommerce platform.

Dispensaries that use integrated technology to provide better service have an advantage, whether they’re using their website to alert patients about what’s in stock, or to manage delivery services and track a driver’s location at a given time.

WebJoint is poised to be a leading provider to businesses compliant with all city and state laws moving forward, according to a release.

Pyrotree Inc co-founders Christopher Dell’Olio and Hilart Abrahamian made a stir this year as 22-year-old entrepreneurs by raising millions for their company. They talked to Cashinbis about their all-in-one software, and plans for 2018.

How does WebJoint cannabis business software help dispensary operators manage compliance?

Dell’Olio: The need for compliance in Colorado and Nevada means getting down to the metric. What cannabis they’re harvesting, how much, where the product is going – is it going to an edible manufacturer? How many edibles are produced from it? It will be hard for anyone not familiar with regulations.

With our service, the state will be able to track where the product came from, and we can automatically report to the state so operators don’t have to worry about compliance reporting.

In California, everyone has a different way of doing things, but the state is implementing a standard way of operating for management and packaging. We give [dispensaries] the tools to manage their business, and a website as well. You need to have your own brand and website because the market is so saturated that you need to find a way to stay relevant moving forward.

For example with delivery services, you can use your website to dispatch orders and see where drivers are. We’re always looking to those kind of integrations.

Abrahamian: It’s important with delivery services to keep them compliant, and we’re one of the few services that has driver accounts. There are complications coming for delivery services with taxes, and with tax guidelines differing from city to city.

What’s attracting investors to WebJoint?

Abrahamian: It’s an all-in-one software – you can get your licenses set up, and then with WebJoint you don’t have to worry about what data you’re sending to the state.

Dell’Olio: We’re looking to work with investors who understand our vision. They understand the background of the industry and they’re ready to move forward.

What kind of features are dispensary operators requesting?

Dell’Olio: I’ve always had a passion for the cannabis industry since I was 18. Hilart and I started a web design company, and we had a dispensary in San Fernando valley telling us, “We need a website with inventory, point of sale, and patient information.” That’s when we started to realize there was a need for track and trace platforms.

Abrahamian: We were making websites using WordPress when we started. We didn’t know about track and trace or point of sale software. Business owners are asking to be able to sign patients up on the website, verify them, and let them place orders, but the software didn’t exist.

As we developed it, we took advice and criticism from clients – “Why can’t I manage my inventory?” The system is very comprehensive now, from point of sale to being able to generate financial reports.

What is the marketplace that you open up to WebJoint clients?

Abrahamian: With the marketplace, we’re finding the best products out there and featuring them in front of our customers.

Dell’Olio: We have three main categories: distribution and brands, integrations, and website themes. We have specialized WebJoint themes for websites and we’ve opened the gate for any designer to make WebJoint platform themes, sell their themes to dispensaries, and make commission.

What’s the story behind the spider in your logo?

Abrahamian: The spider in the logo is a play off “Web” in WebJoint and it represents that we’re the glue of the industry with our all-in-one software.

What’s ahead for 2018?

Dell’Olio: States that are growing rapidly will slow down once licensing cools off. I see other countries legalizing cannabis – three out of ten calls we’re getting now are from Canada. The seed-to-sale space is very populated. Software companies are getting hacked. Companies are trying to do it all and they’re messing it up, but we’re focusing on what we do best.

Abrahamian: For WebJoint, inventory management. We’re adding the ability to have inventory locations selected, like storage rooms.

Dell’Olio: We’re tracking inventory down to the gram – you can see how much a driver has on them and how much product came out in each location. It’s something the industry needs for delivery drivers.

Any plans to go global?

Dell’Olio: Our salesguy is talking to someone in the UK about how we can offer services. We have a global focus and we’re waiting to see what happens.

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There’s a global trend to prioritize research on cannabinoid medicines, and InMed Pharmaceuticals is leading the pack. By producing cannabinoids in a bacterial biosynthesis system, this pre-clinical stage biopharmaceutical company is developing therapies for multiple diseases, including Epidermolysis Bullosa, Glaucoma, and Pain.

InMed‘s pharmaceutical research is coupled with innovative drug delivery systems that have a futuristic feel – recently, the company announced success in creating topical eye drop that forms a “gel-like” lens over the eye, promoting extended absorption through the eye.

InMed’s commitment to treat the previously-thought-untreatable caught the attention of president and CEO Eric Adams, first as an investor, then as an executive.

“InMed takes medicinal marijuana (MMJ) to a completely new level, that of true pharmaceutical drug development. We don’t grow any plants, and you don’t smoke any of our products,” Adams said.

“We develop novel treatments, using many of the 90+ cannabinoids found in the plant, to treat serious diseases. This biotech approach will unlock a wide array of opportunities. Another differentiating factor between MMJ and biotech: the level of return to shareholders for biotech is significantly more than what you see in the MMJ space,” Adams said.

Prior to InMed, Adams had over 25 years as a biopharmaceutical executive, as CEO at enGene Inc. and in senior roles with QLT Inc. (Vancouver), Advanced Tissues Science Inc. (La Jolla), Abbott Laboratories (Chicago), and Fresenius AG (Germany). He’s also a previous Chairman of BIOTECanada’s Emerging Company Advisory Board.

Adams talked about the investment potential in the biopharmaceutical sector with Cashinbis.

What motivated you to personally invest in the cannabis industry?

I think what impressed me most with InMed is the diversity and depth of core assets in cannabinoids, which are a tremendous treasure trove of potential compounds to treat a wide array of diseases. It’s amazing that one class of compounds has such potential in treating a wide array of disease, including those which have a high unmet medical need. Its a rapidly growing sector; the US market for one cannabinoid in particular, CBD, is projected to be over $3 billion in the next few years.

I was also attracted to the company based on its lead compound, called INM-750, which is designed to treat a rare genetic disease called Epidermolysis bullosa (EB). Back when I was working for a company developing products for sever burn victims, I met a child with EB being treated in the burn ward (their wounds are similar to sever burns and thus were once treated in the burn wards), and it always stuck with me – the severity of the disease and that nothing can be done to treat the underlying disease, just the symptoms including wound healing, pain, itch, etc. InMed showed me there’s real promise for not only symptom management, but also some the potential for disease reversal in some patients using cannabinoids – that caught my eye as both an investor and as someone who wants to find novel treatment to treat these kind of conditions with very high unmet medical needs.

How can biotech expand our expectations for disease treatment?

The biotech industry in general is a game-changer.

GW Pharmaceutical, one of the leaders in the cannabis biotech industry, has one drug approved and they’re on the cusp of their second approved for various types of epilepsy. Zynerba has multiple Phase 2 trials either completed or underway. There’s a lot of headway being made and it’s an exciting space to be in right now.

Most people are familiar with THC as being the primary ingredient in cannabis responsible for psychoactivity. It is also known for its ability to affect several diseases, and this disease-fighting ability can be found across the cannabinoid family. Our focus at InMed is to use non-THC cannabinoids in products that can be applied topically to the skin or the eye, to treat at the site of the disease. We can thereby avoid systemic circulation (in the blood stream) of the drug and minimize side effects. A great example is pain: when it is localized to one part of the body, it’s best to treat it locally rather than putting something into the bloodstream, hoping the drug reached the site of pain. When you have more drug in the body than is needed, more things can go wrong and you see more side effects.

Any updates on InMed’s pipeline?

For our INM-750 [Epidermolysis Bullosa] program, we’re finalizing the formulation which will subsequently be used in advanced toxicology studies, and we anticipate filing an application for human trials in Q3-4 of 2018.

We continue to make progress with both the INM-085 for glaucoma program and the INM-405 for pain.

What are the benefits of biosynthesis over traditional extraction of cannabinoids?

Our biosynthesis program opens the gate to look at the use of minor cannabinoids in treating disease. There are over 90+ cannabinoids in the plant; however, in addition to THC and CBD, there are maybe three or four more that are borderline economical to extract from the plant. Beyond that, it is highly unlikely that it would be economical to extract them because there’s such low quantities.

Biosynthesis starts with DNA from the plant and instead of growing the cannabinoids in the plant, we grow them in bacteria. The bacteria (host) reads the instructions on the DNA and then has the ability to produce large quantities of the cannabinoids that have been. It’s a laboratory-based procedure, which means it’s very controlled and has significant cost benefits vs. extraction from the plant. InMed’s innovative process targets cost savings as well as enhanced production, purification and quality control compared to existing grow-harvest-extract-purify methods employed by other companies. Other benefits include: no herbicides or pesticides, it’s very quick (takes days to make a batch versus months to grow a crop), and you don’t have to grow thousands of acres of marijuana to get the quantities of cannabinoids desired. We are confident that we can produce any cannabinoid, even the rarest, at commercial scale in an economical fashion.

Why are new drug delivery methods important?

The issue with medical marijuana will remain: how do you effectively dose it to treat a specific symptom or disease? The important thing with any drug delivery is effective dosing – How do you monitor the amount of drug delivered in a puff of a cigarette? And, can you fully dose an effective amount without any psychoactivity?

It will be difficult for medical marijuana to reach the efficiency and safety levels you see with pharmaceuticals. We run exceptionally well controlled clinical trials and track data very closely. This is the type of information physicians need before writing a prescription – they need meaningful data and to see that regulatory agencies have reviewed and approved as safe and effective. This will position the cannabinoid pharmaceutical industry as a strong sector versus other medical marijuana sectors.

What will move cannabinoid medicine forward?

First and foremost, is having a team with the experience and track records of successful drug development, InMed is deep with experience in the biopharmaceutical sector. Also, as with any biotech company, accessing the capital required to conduct extensive testing and then making sure that the company’s assets are effectively deployed. We need to continue to invest in research and development to move the science forward. Also, the evolving regulations around the world will play an important role. From a regulation point-of-view, its the evolving understanding that cannabinoids, outside of THC, are non-psychoactive. They are important medicines that need to be studied in a meaningful way.

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Investor Insight: Aubree Arias, Orlando, FL

What makes a company in the cannabis sector investable? Given the rapid growth of the cannabis industry, many entrepreneurs and investors are asking that exact question, which is precisely why we tracked down Aubree Aries, CEO and Co-Founder of Greenleaf Joint Ventures. Aubree comes from a cannabis pedigree that few others can match in the industry and he offers a fresh take to investing in this emerging space. While many were getting college degrees, Aubree was working on White House, Joint Chief of Staff, satellite, and missile warning communication systems, as well as maintaining systems within the Pentagon and Washington D.C. area. He is experienced with start-up investments and operations, having done consulting for Medical Marijuana, Inc. and Hemp, Inc. over the last 6 years, working with his father, industry bigwig Bruce Perlowin, in the emerging cannabis industry. Aubree, the visionary and goal oriented architect behind Greenleaf Joint Ventures, recently took some time out to fill us, and you, in on what exactly Greenleaf is looking for in an investment.

How did your entrepreneurial journey begin?

I have always wanted to create catalysts for socially responsible, conscious, and passionate entrepreneurs. To create an ecosystem of businesses and leaders that would positively impact the world. I saw the cannabis industry as the keystone and first stage rocket to investing and building businesses in the health and sustainability movements. My father, Bruce Perlowin, created the first publicly traded company in the cannabis sector about 6 years ago; and we began having long conversations about the sector and businesses therein. I created various business models over that time, seen hundreds more, and invested in a precious few.  The opportunity the cannabis sector presents to make positive, impactful change for society from a social and economic paradigm has rarely presented itself in our history.

What was the motivating factor for you to invest in the cannabis industry?

The immense opportunity for what will become a new industrial revolution – a green revolution. An opportunity that could change the world for the better. Once CNBC created Marijuana, Inc., their most successful documentary to date and all the conversations I had with my father over the opportunities for both business and the benefits to the world that cannabis presented – it became my passion. I know that education and stigma removal are the biggest keys to unlocking this industry. To invest in, and work with, the most ethical leaders and companies entering the sector, who are all working to create a responsible, passionate, and compassionate ecosystem, is a once in a lifetime opportunity. The potential and responsibility that goes along with the emerging cannabis sector must be done with the interests of the greater good in mind. So I saw my opportunity to create the aforementioned catalysts by investing in and working with the best entrepreneurs, investors, and companies I could find in the sector.

The opportunity the cannabis sector presents to make positive, impactful change for society from a social and economic paradigm has rarely presented itself in our history.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest they overcome this problem?

I wrote a blog about this recently from an investor’s perspective. You can find that link right here.

As an entrepreneur if you understand your investor’s needs, desires and challenges, you should have a much higher likelihood of raising capital. One item I would add to this list is to get involved! Get involved with the business and investor oriented groups out there – network! This industry is evolving too fast to go it alone – the more leaders you connect to and collaborate with the better chances you have to raise capital and thrive.

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

Know your market, because this market moves at breakneck speeds! Understand that investors see many business ideas, so appreciate yours may not be unique. Be flexible on terms and open to constructive criticism (you’ll get a LOT – some of which may not be very constructive, but valuable nonetheless). Know your competition because we may already know them (do a SWOT on every one of them). Convince me/them that we are going to be making a solid investment and storyboard the path to success that your project provides for me. After all, we are investors looking to make returns.

How do you identify a company as a great opportunity?

Much of my thinking is dependent upon on my personal goals and strategy as an investor. Last year, we invested in primarily tech plays with a longer time horizon exit strategy (crowdfunding PaaS, 3D printing PaaS, business accelerator/incubator, and a few smaller tech plays). We ask ourselves, ‘Do we, as investors, mesh well with the entrepreneurs’ personalities and are convinced of their vision as they have it laid out?’ Sometimes its as simple as a great deal, like a PPM at $1 that leads to a 4X return opportunity in under a year.

This industry is evolving too fast to go it alone – the more leaders you connect to and collaborate with the better chances you have to raise capital and thrive.

Additionally, what stage company you are investing in impacts your opportunities and exit strategy tremendously. Fundamentals become very important as a company matures and they play a significant role in determining future success. A company with strong fundamentals has the ability to provide significant clarity to an investor, which in turn increases the comfort of the investor.

The focus of my new investment strategy is more complex now that I have a strong understanding of where the market is going. Although the personal aspect is the same (GREAT teams), the investment strategy is completely different. The best hedge funds are creating around 50% annualized returns for their investors. My personal belief is that my investment strategies can better their returns as it gains momentum over the next several years. It is fairly easy to identify these opportunities in the cannabis, health and sustainable sector.

What are the key ingredients in building a successful startup?

Team, idea, execution. A strong team can handle the majority of challenges that they face and have a network of advisors to guide them. Their idea has to have serious potential, solve a problem, and be competitive in the current regulatory market. Finally, creating realistic, actionable, but aggressive goals and EXECUTING on those goals. If I’m an investor – I’d like to see a team raising the capital they set out to raise in a specific time frame – that is an early stage goal that makes me very happy as an investor. First, you see the team has a business model that other investors also are interested in, and raising capital is generally fairly hard – so that is a first aggressive milestone entrepreneurs can meet.

A company with strong fundamentals has the ability to provide significant clarity to an investor, which in turn increases the comfort of the investor.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

Depending on the role of that founder (CEO/CFO/CTO/CIO/COO/CMO/MOO COW??) – either they are chewing their cud, or more likely moving from the vision and fund raising stage, to the execution stage in their given role(s). A CEO is always ensuring the company is well capitalized and executing on the grand vision; delegating tasks to appropriate team members/co-founders. In the early stage, you wear many hats. Perhaps the most important action, as you grow your company, is delegating those hats to individuals or teams that can perform the tasks necessary to meet the demands of their objectives.

Surround yourself and hire people smarter than you, those who have expertise in the roles you need filled. I see BIG mistakes with companies that try to do too much, with too few, or the wrong people doing jobs they are not skilled perform. The founder(s) must utilize tech and contractors to their fullest to help scale! Today’s small start-ups have advantages over those of the past with access to technology startup tools and high quality contractors/freelancers that previous generations did not. These allow small companies to perform and compete like medium sized businesses with years of experience.

Your idea is probably not unique, so focus on the amazing attributes that make it stand out from the crowd.

What is your new knowledge in regards to investing in the cannabis industry?

Cannabis is NOT tech. Even technology within the sector is not the same as outside. There have been very few “exits” seen in the industry via M&A or IPO, and they certainly aren’t at the returns seen by tech for the majority of investors. So what will be the returns we see as the industry matures? I think they will lie in the 4-10X range on average, but over a 3-7 year time horizon. Competition is insane – there are a half dozen start-ups all doing the same thing at the same time. As more money piles into the sector – new start-ups get to learn from all the previous companies doing the same thing, but are now doing it with more money, lessons learned from their competitors and typically with a more mature and experienced executive team (lots of executives from other industries are starting forays into this sector). The current leaders, however have name recognition, a solid understanding of our complex sector, and an obvious head start. The industry is maturing FAST.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

Your idea is probably not unique, so focus on the amazing attributes that make it stand out from the crowd. Have a strategy for banking issues – even if you are a technology company (opening 2-4 bank accounts is a good idea). Your valuations need to be realistic and expect massive market swings in the prices and economics of the rapidly evolving cannabis sector as a whole. A single congressional bill could change the entire industry almost overnight. The industry will be similar to alcohol for recreational, aspirin for medicinal, and Walmart (ie EVERYWHERE) for industrial. The emergence of this new cannabis industry was made possible by passionate and compassionate leaders, it’s one of the best reasons to be in this sector.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

Focusing on cannabis as a whole: industrial, medicinal and recreational will give you multiple verticals to achieve revenue streams to get to that billion-dollar valuation.

Obtaining that goal would require creating a strong, responsible and industry leading brand while at the same time exceeding current industry standards, so it is prepared for new laws and regulations. They would need to focus on building an amazing team that actively partners and collaborates with others in the industry, rather than one that boasts a competitive, ‘dog eat dog’ strategy. Focusing on cannabis as a whole: industrial, medicinal and recreational will give you multiple verticals to achieve revenue streams to get to that billion-dollar valuation. It is important to realize that cannabis is but one part of a much larger health and sustainability sector. Integrate yourself into those opportunities. Watch for M&A opportunities, if a company has not reached the billion-dollar mark by the time cannabis goes federally legal – one or more will immediately after.

What questions do you have when it comes to investing in the cannabis industry? What do you think makes a company investable. Join the conversation and comment below!

The post Creating the Catalysts and Ecosystem for the Green Revolution appeared first on .

Investor Insight: Lori Ferrara, Chicago, IL

She began her career by searching for an alternative; she wanted another option. Her husband was suffering and the only option he had was to take mounds of prescription medication and endure the included side effects. She was never one of those women you’d catch ‘going with the flow’ or running the same way that everyone else was. She was an entrepreneur and she was always seeking her own way among the crowd. Lori Ferrara is the founder of Alexava Holdings, and as an investor, she sees the unique potential for business professionals and creative innovators to grow in the cannabis industry. And it is in the interview below, where she’s as transparent as they come. She’s speaking to all of us and if you are looking to be a part of this industry… she has a few words of the wise for you.

How did your entrepreneurial journey begin?

My father was an entrepreneur and growing up around a family-run business peaked my interest very early on in my life. I worked in the television industry for many years and one day decided I was ready to find my own path by starting my own business.

My father was an entrepreneur and growing up around a family-run business peaked my interest very early on in my life.

What was the motivating factor for you to invest in the cannabis industry?

It was when my husband got diagnosed with Stage 4 cancer and I witnessed the sheer number of prescription drugs he was prescribed to take, along with their given side effects. It was mind boggling! I recently lost my Mom to dementia where I saw the same scenario. I couldn’t get her comfortable or pain-free without multiple drugs and side effects. I then had two friends diagnosed with cancer, but were fortunate enough to live in a state where medicinal marijuana was legal. I liked the fact that they had options other than traditional medicine to relieve their pain and suffering and it was at that point that I wanted to learn more, so I attended my first NCIA symposium in Chicago where I was introduced to the Arcview Group. After meeting many people of similar interests, I decided to join.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem? 

There are three things I always tell people when raising money:

1. Have a solid business plan. Just having a great product is not enough. Investors want to see how you are going to market your product and how you are going to overcome all the pitfalls every new business faces. The road is littered with great products that never made it.
2. Have your team in place and be prepared to introduce them to investors. Investors know it takes more than one person to be successful, so if you are surrounded by good people, let the investors get to know them as well.
3. Most importantly, many investors like to invest in people, not products; therefore, make sure you have your act together when trying to raise money. Being unsure of your plan or unable to answer questions is a sure way to scare them away.

What is your best advice to cannabis entrepreneurs when they pitch their project to you? 

Understand your business inside and out. Be willing to work at it full time. Be enthusiastic and have a proven track record even if it is in another line of work. Also, be willing to invest your own money. Don’t over value the company and be prepared to explain how you arrived at its current valuation. Know what sets you apart from your competition. Look for strategic partners who are willing to invest.

Can you share your thinking on how to identify a company as a great opportunity?

Without much history to rely on in this burgeoning industry, most opportunities are going to be considered high risk. I do tend to favor ancillary businesses that have products or services that market to growers or dispensaries. I also like other forms of ingesting cannabis other than smoking it.

What are the key ingredients in building a successful start-up?

A successful start-up begins with successful people. I don’t necessarily like to invest in a product, I prefer to invest in the person and the team behind the company. They must have enough capital to get started and a clear vision on how they will take their idea and turn it into a company.

A successful start-up begins with successful people.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

I believe the founder initially must be involved with every aspect of the company. They must not only understand sales and marketing, but the financial aspect as well. As the company grows, they can then focus on those areas that play into their strengths. Finally, as the company matures and continues to grow, they must be secure enough to bring on more experienced business people who can help take their business to the next level.

What is your new knowledge in regards to investing in the cannabis industry?

There are and will continue to be plenty of opportunities to invest in this industry; therefore, take your time! Do your due diligence and never get emotional about any company or product.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

I wish they knew this industry is no different than any other – It’s a business first and foremost! Yes, we have issues with access to capital through banks, but otherwise we’re no different. Also, as a new industry we still don’t have the proven medical research to validate the benefits of medical marijuana, so be patient with those who are skeptical.  I believe time will eventually prove what many of us already believe. And lastly, if you’re an entrepreneur, you need to know how important it is to be interesting and engaging and be prepared to show your potential investors what it is that is so unique and special about your company.

I wish they knew this industry is no different than any other – It’s a business first and foremost!

What needs to happen in order to create a billion-dollar company in the cannabis industry?

They need to have access to capital and banking. In order for that to happen federally insured banks will need to get involved. Also, we need medial cannabis laws passed in all 50 states and eventually, scientific research showing the clinical benefits.

The post Wise Words for Entrepreneurs in the Cannabis Industry appeared first on .

Investor Insight: Leslie Bocskor, Las Vegas, NV

Do you have an ‘Uncle Frank’ in your circle of advisors? Do have a solid realm of self-knowledge? Have you evaluated the longevity of your business model? These are the types of puzzling questions that Leslie Bocskor, Managing Partner of Electrum Partners, dives into answering for us. His fresh perspective on how to grow our businesses and our industry as a collective movement is something we have yet to see brought to the table. Seeing the legal cannabis industry through his eyes is an experience of its own and one that everyone remotely involved in the industry should take a moment in soaking up.

How did your entrepreneurial journey begin?

I’d say, it started when I was in middle school when I started to sell sandwiches. I made my own sandwiches at home and sell them at school, like buying wholesale and selling retail. So, my first entrepreneurial endeavor was in the ‘food and beverage’ industry when I was 5 years old.

What was the motivating factor for you to invest in the cannabis industry?

It’s the single biggest opportunity for entrepreneurs and investors that we’ll see over a span of lifetimes. Nothing like this has ever happened before and I don’t know if anything will happen like this again, on this scale, ever, in the history of mankind. That historic perspective, opportunity, and being there at the beginning and understanding it while being aligned with it is what really motivated me.

I also have to say that I do credit a particular person to my involvement in this industry, Joseph Brezny, who came to me in 2012 and he said, “Watch what’s going to be happening! There is going to be some incredible things happening in the legal cannabis industry.” And I told him, “Joe, we’re not really going to see any major traction with this…” and he said, “No. Just watch! Things are going to happen.” I thought he was just being an activist at heart and simply wanted these things to happen, but I soon realized he was right all along. It was all because of him that I ended up taking a much deeper dive into the industry. I have to thank him on a continuous basis because it was due to his ‘firing’ that inspired to be to involved at the level that I did. He got me to take that first look and after that, there was no going back!

There is going to be some incredible things happening in the legal cannabis industry.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Well, that’s a big question. The simple answer for that is this: You need to really evaluate the opportunity you’re presenting to your investors with a very objective eye. You can’t look at this with any type of softness in your vision. You have to be very critical of yourself! So first, you have to evaluate your team. Does your team have what it takes from an investor’s perspective? Not your own perspective, but from an investor’s perspective. If they evaluate your team, are they going to say, “These are people who have a track record of success. These are people who will be fiscally responsible with my money. These are people who will get me to liquidity at some point in the future, whether it is through profit or distributions, to a liquidity of some sort. Are these people the type who will pivot away from the most common exit strategy which is failure?” If your answer to that is ‘I don’t know’ then what you need to do first is expand your team to fill in those gaps.

They always say to bet on the jockey, not the horse. I’d rather bet on an A team with a D project, rather than betting on a B team with an A project because if the team isn’t good enough, they can pull failure from the mouth of victory easily; whereas a great team will be able to turn lemons into lemonade over and over again.

They always say to bet on the jockey, not the horse. I’d rather bet on an A team with a D project, rather than betting on a B team with an A project because if the team isn’t good enough, they can pull failure from the mouth of victory easily; whereas a great team will be able to turn lemons into lemonade over and over again.

Ok, back to raising money. Find the value and find out how to make it work. That’s the first thing! Secondly, know that it takes money to make money, it takes money to raise money. You’re going to need to hire the right accountants, the right attorneys, and you need to structure your package properly. If you’re going to pay to go to the doctor and see a doctor for yourself; If you’re going to pay an attorney to deal with things that important to you like closing a house or representing you in court; So why wouldn’t you pay professionals like an attorney, an accountant, an investment banker to represent you and structure your package in the best way possible?

The number of entrepreneurs that think that they should just get people to work for raising money on the cum, which is illegal by the way, is manifold. So, I’d say approach it professionally and invest in structuring your offering in the best way you can. The difference between an investor looking at it, liking it, and showing it to his advisors, is knowing that when those advisors look at it, they are going to say, “Wow! This is well done. This is well structured. This looks like an opportunity that is attracting my capital.” Being able to do that, with an objective view, is critical. So, I’d say first, the team and second, the offering. Make sure it’s done well and don’t cut corners. If you skimp and cut corners when you’re raising capital, you end up never raising the capital. You just end up spending time on the treadmill wanting the money, chasing the money, but never getting anywhere with it. Everyday you spend running on that treadmill is a day someone else is executing on your ideas and eating your lunch. So, the faster you execute on your business, that’s what you should be working on. If that means hiring the right professionals, putting the package together to be able to raise money, then that’s what you need to do!

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

Team, first. Idea, second. Value proposition, third. Intellectual property, barrier to entry, market competition, next. And exit strategy, last. I’d say hit those basic points. Make that distinct and easy to understand because that will make my life easier and we can get to the more meaningful conversations pretty quickly. I would say to be incredibly prepared with your due diligence. The more research you’ve done before you’ve spoken to me, the more likely our conversation is going to do well.

A prepared entrepreneur isn’t going to come to me and tell me that they’re making a new vaporizer and think it’ll be very great. They’ll come to me with reports of trends that show that people are becoming more interested in higher quality devices and that people are asking for things that are made in the United States, rather than in China. They show me the trends and that’s what they use to justify why they’re doing what they’re doing. So, do your research before you even start pitching to people and focus on the points I mentioned above as well.

Can you share your thinking on how to identify a company as a great opportunity?

Well, I can, but maybe I shouldn’t. I’m kidding. The great opportunities are ones where you can see first and foremost, that you have an all-star team in front of you. They have their operational excellence. They have their strategic vision. They have their financial oversight. They have their marketing and advertising knowledge all tied up. And then, a great opportunity is when a great team has an idea that could extend into being one of those disruptions – Something that can fundamentally change the way we do business on a massive scale. They have an idea that could go from being a $2 million dollar a year business to being a $2 billion dollar a year business. When you can see that particular path of going from A to B to C to D to Q to Z… then you’ve found yourself a great opportunity!

What are the key ingredients in building a successful start-up?

The first thing, and I say it again, is the team. It’s ALL about the team! Which gets you to another question: How does an entrepreneur build a great team? Entrepreneurs are usually jacks of all trades. They’re part salesmen, part operator, and they wear many hats. An entrepreneur is someone who starts their own idea and usually starts executing on their own. So, I’d say that one of the great skills in an entrepreneur that is a differentiating factor is self-knowledge – Know what you do well, but more than that, know what you don’t do well.

Know what you do well, but more than that, know what you don’t do well.

This is important because there is something we call ‘Entrepreneur-Syndrome’ which is, as your business starts to grow, your success becomes your weakness. As you start to grow, delegation becomes more and more important and so if you suffer from that syndrome, it won’t be a successful start-up. You have to delegate successfully and build a team that you can delegate tasks to and have faith that delegating to them is going to be better than doing it yourself. That is what makes the difference between someone who can build a small, good business and someone who build a large, great business! So, I’d say that at the core of a successful start-up would be an entrepreneur with great self-knowledge.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

That is a fantastic question and it’s not one that I normally get asked. Now, let me tell you why it is such a fantastic question. The role of the founder disappears as soon as the project is started. “Founder”, if you’ll notice, is not an operational title. It is entirely a honorific. So, let’s look at the operation. There’s the president, who’s the top executive; There’s the chief financial officer, who watches the money; There’s the chief operational officer, who is charge of operations; There’s the director of business, And there’s the director of marketing. All of those roles are very clear. What’s the founder’s job? There’s the board whose job it is to speak for the shareholders. The executives each have their own roles. The founder isn’t an operational role. It’s just a honorific for the person who helped start the project. How they transition from founder to being an operational part of the team is up in the air. They could be president, they could be on the board, or they don’t have to be an officer at all! They could just be the director of sales. It’s important that founders don’t let their ‘title’ get in the way of operational roles.

The role of the founder is to transition into a role that will be the right decision for the business as a whole. Become part of the operations, part of the board, or don’t become part of any of it! That’s how I see the role of founder evolving from seed to early growth to later-stage scaling. Specifically, it’s very important to remember that entrepreneurs understand that their role as founder doesn’t hold any operational value because it normally doesn’t.

What is your new knowledge in regards to investing in the cannabis industry?

That the dream I’ve always had of being able to easily have my investing and business decisions be value-based is now the way the rest of the industry operates. The people around you are focused. Let’s talk about Troy Dayton of ArcView Group. The thing I love about Troy so much is not just that he’s a great entrepreneur and executive, but it’s because he’s never ever lost sight of the fact that his primary driving force is the social justice issues and writing societal law is at the core of his being and his actions. And so, my new knowledge is really looking at someone like Troy and saying that this is how it can be done and this is how it should be done! We should never lose touch with our core values or our sense of culture. That is the first and most important thing. If we can do that, we won’t just be building the fastest growing industry, we will be building a new type of industry, one that is built on values and culture.

We should never lose touch with our core values or our sense of culture. That is the first and most important thing. If we can do that, we won’t just be building the fastest growing industry, we will be building a new type of industry, one that is built on values and culture.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

The one thing I wish they knew is that as our industry transitions from black market to white market, professionalism and hitting a higher standard than any other industry in the entire country is the most important thing to know. We can’t just operate as good as other people do; we can’t afford to cut corners. We have to do better than any other industry out there because we’re transitioning from the black market to the white market. I wish that every entrepreneur knew that their professional presentation and being a representative of this industry is making a difference and an impression. If they’re sloppy, they’re going to hurt the industry. If they’re crisp, they execute well, and they’re professional… then they’re going to be able to show how we’re working to create the highest standard of any other industry. You have to be exemplary to be in this industry.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

The answer to that seems simple, but it’s got a great answer. First, I’m going to start out by saying some names: Lycos, AltaVista, Excite, DogPile, Pathfinder, MetaFilter; those were all multiple hundred-million dollar companies and were primarily search engines of the late 90s. Where are they now? They’re all gone. None of them exist. Search engines we use now are Yahoo, Google, and even AskJeeves. The others are all gone. The important thing to know about building a billion dollar business in the cannabis industry is to think about the future and to start thinking about where you’re going to be in 3 years. What do you actually have to do to be able to survive the coming change as this industry goes from being collaborative competition to straight competition? That transition, when it comes, is going to be a shake-out and a lot of people aren’t going to make it. You definitely want to create a business that can last. So, it’s not about creating the billion dollar business, it’s about creating the billion dollar value. Luck doesn’t hurt either.

How do you decide between shutting down, keep funding, or selling your start-up?

Fail fast. Having been the guy who kept a business running far beyond what it should have been, I speak from experience. Knowing when to quit is very hard. Knowing when to change and let go and to pivot and to adapt is very difficult. I read a book called The Little Book That Saves your Assets and in it, it says that everyone needs to have an ‘Uncle Frank.’ And what they mean by that is that you always need that someone in your circle who is a trusted advisor that you go to and who gives you the straight, unvarnished opinion. The way you decide is by having that Uncle Frank who you really trust. If you’ve lost your perspective, go to those trusted advisors. Get their opinion. Put together a decision matrix. It’s better to fail at something and be done with it and to move onto something else, than it is to spend your years trying to make something work that just won’t.

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Investor Insight: John M. Torrens, Syracuse, NY

Are you searching for capital that you don’t really need? Do you believe that your business venture will succeed simply because it involves cannabis? Are you solving an actual problem? These are all questions that every entrepreneur in our industry should be asking themselves and the fantastic John M. Torrens of KC Ventures, is the gentleman who’s availed himself to get this important conversation started with all of us.

How did your entrepreneurial journey begin?

As a kid, I would go and buy packs of gum and firecrackers and sell them off in individual units; I would mow lawns, shovel driveways, and do other entrepreneurial stuff kids do. I started my professional career as a speech-language pathologist, but found that I didn’t enjoy working in an institutional setting, so I started my own small solo practice. Over the years I began hiring therapists in other disciplines, added contracts, and eventually grew it to 250 employees and 5 locations before selling it. Along the way, I was involved in other smaller companies and earned a Ph.D. in Business Administration in the process. After selling my company, I became an Entrepreneurship Professor in a top-ranked program and started making small investments here and there. Once legal cannabis started gaining traction I knew I had to be involved in a more meaningful way.

What was the motivating factor for you to invest in the cannabis industry?

Like many entrepreneurs and investors, it’s all about the opportunity combined with a passion for the product/service. The pace of regulatory change and continuous lack of federal policy leadership has created the most opportunity-rich environment I have ever experienced. I feel very fortunate to be alive in a time of such tremendous opportunity and can’t imagine sitting on the sidelines as a spectator. When I pitched a few close friends the idea of raising a fund to invest in legal cannabis, everyone was in! Now, I manage the fund and am having a lot of fun talking to and funding entrepreneurs in the cannabis industry. Sometimes it’s all I think about!

When I pitched a few close friends the idea of raising a fund to invest in legal cannabis, everyone was in!

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

My suggestion is to design a plan that can be executed without raising money. The single best form of capital is cash flow from your operations which, interestingly enough, is one of the best ways to attract outside capital. The research on new ventures shows that over half of new companies get all the cash they need to start from a combination of founder savings and cash flow from operations. Some of the largest companies you can think of were started with less than $2,000. They then grow to the point where raising money makes sense, but the harsh reality is that very early-stage, pre-revenue companies without any traction are simply not very attractive opportunities for many investors.

The single largest source of funding for young companies after founder savings, is credit cards, followed by friends and family. So, the best advice I can give is to figure out a way to bootstrap the hell out of your new venture and begin to generate cash flow from operations. Finally, keep in mind that the research shows that 80% of the fastest growing companies in the United States took no venture money at all. If you find you are having trouble accessing capital, I would recommend you re-evaluate the concept. It could be that lack of money is not the real problem.

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

For me, it’s never just about the big idea. If you start out by first talking about your product or service, you have already lost me. I don’t necessarily care what you are selling until you demonstrate to me that you are solving a problem for a real customer. I want to see that you :

1. Know your customers and the problem you can solve for them,
2. Can do it in a way that is appreciably better than the next best alternative,
3. Can deliver it at a price they are willing to pay.

If you can do that, then I am very interested. If you can proceed by demonstrating that you have developed a value-creating economic model, spoken to potential customers, and validated your concept and assembled a team that can execute on your critical success factors, then you have a winning pitch that will get you a more in-depth meeting with me.

Can you share your thinking on how to identify a company as a great opportunity?

Of course it’s never a sure thing and it’s not always easy to determine that during the diligence process. I am not a large VC fund manager, so I think my criteria are a bit different. If a company has some traction and a sales history (even a small one) and is selling all they can sell with their current resources, but are missing out on larger market potential due to under capitalization, then that is an attractive opportunity for me. Additionally, if I can add value through my background, contacts, connections, and experience, then that is helpful in my decision making as well.

Chemistry with the founder is exceptionally important to me. It could be a great opportunity, but if I don’t feel a connection with the founder, then I know it’s not something I should get involved with.

What are the key ingredients in building a successful start-up?

Start with the basics: Opportunity = Problem + Solution + Differentiation. You have to start with a sound concept that solves a problem in a way that is better than current alternatives. I am often surprised at how many entrepreneurs get so enamored with the idea that they think everything else will just fall into place. Beyond that, it’s assembling the best possible team and finding the grit and determination to do what you need to do to break even.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

It depends on the founder, but in general they will either need to commit to developing themselves as a professional CEO, or get out of the way and hire a professional CEO and let her take over. In my experience, the things that make a successful entrepreneur often don’t translate into effective professional management. Be honest with yourself about your abilities and weaknesses and keep the well being of the company in mind.

Be honest with yourself about your abilities and weaknesses and keep the well being of the company in mind.

What is your new knowledge in regards to investing in the cannabis industry?

On one hand, it’s just like investing in any other industry. On the other hand, it is way more fun and way cooler than any other industry I am aware of.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

Cannabis alone does not make a great opportunity. All the other pieces need to be in place as well.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

I suppose that is what I am trying to figure out. If anyone has this answer, private message me!

How do you decide between shutting down, keep funding, or selling your start-up?

Great question. I start by taking emotion out of it as much as I possibly can and remember my goals that were set at funding. Shutting down is, of course, the last resort, but making that decision too late can be costly. If I see potential in the concept, company, and team and feel optimistic about the macro trends that exert their influence on the company, then continued funding is a great option to consider. However, an honest evaluation of why I am at this decision point in the first place is critical. If the company has a strong balance sheet, favorable valuation, and a willing buyer, then selling becomes an attractive option. However, I think there is wisdom in holding a company for a longer period of time in order to create more value. Many investors want and need the liquidity event. The advantage of being a smaller, niche investor is that my horizon can be much farther in the distance. Building value over time in order to get a larger exit later, or a strong distribution stream, is preferable to me.

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Investor Insight: Alex Thiersch, Chicago, IL

He’s someone who sees this industry for what it is, a unique opportunity, and he’s right on track with being part of history in the making. Alex Thiersch of Salveo Capital is here to give us his insight on the industry; what it takes to succeed in the space, why you’ll never catch him ‘shutting down’ a company due to failure, why he advises entrepreneurs to make two business plans. Is your interest piqued yet?

How did your entrepreneurial journey begin?

When I opened my own law firm about 8 years ago, I was working for a large corporate firm and just knew I would never be satisfied if I stayed there. In many ways, entrepreneurship is a personality trait – either you have it or you don’t. For me, the idea of working for someone else just wasn’t palatable. Not only was I not satisfied, but I felt that I wasn’t able to act on my own ideas. And for me, there’s nothing worse than having an idea in my head and not having the ability to turn it into reality.

And for me, there’s nothing worse than having an idea in my head and not having the ability to turn it into reality.

What was the motivating factor for you to invest in the cannabis industry?

There’s obviously many reasons – compassion, opportunity, profit, etcetera, but for me, the most exciting opportunity is to be able to be a part of creating an industry. How many opportunities in your lifetime are there where you can literally create not only a business, but an actual industry? What is so appealing to me about cannabis is that a massive marketplace is being created before our very eyes and we have the ability to help shape it. This was something I simply couldn’t pass up on.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Raising money is, in and of itself, a business. Entrepreneurs need to have a separate business and marketing plan dedicated solely to raising money. When we start a business, we have two plans – one for the business itself and a separate one for how to fund it. Also, you need to have a compelling story. Investors invest in people, not business. We see profit and loss sheets all day long, but what I really want to see is the person behind the plan. If the personality is there, if the drive is there, and the ideas are there, that’s the total package.

Investors invest in people, not business. We see profit and loss sheets all day long, but what I really want to see is the person behind the plan. If the personality is there, if the drive is there, and the ideas are there, that’s the total package.

What are the key reasons why start-ups fail?

The biggest reason in my mind is poor planning. Companies always need more money than they think and they often don’t have the right personnel in place to control costs. Start-ups tend to skimp on marketing as well, which is a big mistake. Marketing and PR should be a significant portion of the budget.

Can you share your thinking on how to identify a company as a great opportunity?

Very difficult to do, but it starts with the people. New ideas are great, but there’s nothing wrong with investing in a company that is entering an established space. Competition is natural, so it’s not always necessary to have a new and great idea. What you need is drive, passion, and work ethic. I’d much rather invest in someone I believe in who is operating in a competitive market than someone I’m unsure of in an emerging market.

What are the key cultural differences between successful and mediocre start-ups?

There needs to be proper planning, organization, and funding. Lack of organization and planning can kill even the best idea. If the company has a clear plan, goals that they are held accountable for, and a strong work ethic, it has a much better chance of success.

When a company is dealing with internal issues due to disagreements between multi-partners, what role and procedures do you play to save your investment?

That’s a tough question because it depends on the company, the number of partners, the industry, and the business model. Generally speaking though, we have to look out for our investors, so we need to be dispassionate about internal quarrels. We always try to work through the issue, of course, but in the end the company has to thrive; So if changes need to be made we cannot hesitate to make them.

How do you build a sustainable competitive edge?

Again, tough question, and one that really doesn’t have a single answer. It’s important to always be self-aware, but also to be aware of your competition. For me, I never believe that I’ve reached perfection – there are always things that can be improved, and it’s that drive to improve that gives me the competitive edge. The improvement could either be internally – more time at home, more travel, etc. – or it could be economically related. Improvement can also be related to new ideas and new ventures. I don’t think a true entrepreneur is ever satisfied, no matter how successful they become. There’s always another mountain to climb.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

This is a tough, tough business. The term “green rush” is thrown around and, to an extent, is accurate, but this is not a land grab. There are far more failures than successes in this industry. You can’t go into this with one foot – If you’re going to be successful you’ve got to commit 100%.

You can’t go into this with one foot – If you’re going to be successful you’ve got to commit 100%.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

We’re a ways off from that, but it won’t be long. I think the biggest issue now is the federal blockade. To create a company of that size you need interstate commerce, which is currently forbidden under federal law. Federal regulations will ultimately decide the outcome for this issue.

How do you decide between shutting down, keep funding, or selling your start-up?

It’s an emotional and an economical decision and one that’s very difficult to make. You have to look at your past and determine if what you’re doing has value or if the idea itself is the problem or if it’s a planning or personnel issue. For me, “shutting down” is never an option. I may wind down a company or “sell” it for a nominal amount, but no one will ever see me shut a company down because it failed. Further, the building of a company, even if it ultimately fails, almost always leads to other opportunities.

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Investor Insight: Izzy Zalcberg, Chicago, IL

When you’re sitting across the table from an investor, you can’t help but feel that they have something that you don’t, and that’s a valid feeling; they have capital – a resource that often many startups need. But remember, everyone starts somewhere and with this week’s private investor, Izzy Zalcberg, Chairman of Panther Biotechnology, Inc. (OTC:PBYA), you’ll find what he believes to be the keys to success. And this is coming from someone who started with nothing and helped 2 companies grow that later sold at a hefty price tag of $1.2 Billion…

How did your entrepreneurial journey begin?

My parents are concentration camp survivors. I was born in Israel in 1948 and came to the United States in 1958. I put myself through the University of Illinois and started working as an option trader on the Chicago Board of Options Exchange and I started making a lot of money. Soon after, in 2009, I was diagnosed with cancer and underwent treatment for about 2 years. As a result of that, I decided that I really wanted to do something worthwhile with the money I had made in my career as a trader and I believed that the best way to do that was to invest in healthcare and even more specifically, healthcare surrounding cancer cures and alleviating the side effects that accompanied treatment.

What was the motivating factor for you to invest in the cannabis industry?

I believe that the cannabis industry is an emerging market that has unlimited upside. I also view the plant itself as an alternative to traditional medicine; I don’t see it as a replacement for modern medicine, but rather a choice, an alternative to traditional medicine. I view the cannabis industry as being in an area that will be highlighted for alternative treatments for healthcare in general. It is also an area that will develop as another sector of the entertainment and recreation industry, alongside travel and gambling. The only drawback on the upside of this industry is that there has to be a lot of legislation worked out first.

I view the cannabis industry as being in an area that will be highlighted for alternative treatments for healthcare in general.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

There are a lot of different ways to challenge the money issue. The first thing that I see that is available for a very bright idea is crowdfunding. Crowdfunding, to me, is what advertising used to do; you have the ability to put an idea out there and have people invest in that idea. Aside from crowdfunding, there are other options for entrepreneurs looking for capital. For example, you can apply for a grant in healthcare or you can gather a list of enterprising individuals who have made their own money like myself, people called Angel Investors, who are willing to give you money for your idea and are not necessarily seeking to make a profit off of it. Angel investors are looking to advance ideas, get their money paid back to them, and then take that money and put it into yet another great idea.

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

Make it concise; Have a mission statement, an exit strategy, what you’re going to be using the money for, what the investor will get for the return of their money, and don’t waste a lot of time with paraphernalia that doesn’t make sense. You can’t sell a concept to a smart investor with fluff; It has to be factual, to-the-point, and very brief. My suggestion is that you make it simple; A term I use for this is K.I.S.S., Keep it simple, stupid! Whenever you try to pitch an idea to an investor, assume that they have no understanding whatsoever of what you’re about to talk about. Make it simple as if you’re explaining it to a child; That kind of insight communicates volumes. If I don’t have to spend a lot of time trying to figure out what the communicator is saying, it’s much easier for me to decide whether I want to invest or not.

Can you share your thinking on how to identify a company as a great opportunity?

Yes! The first thing I take a look at is the management; that is the FIRST thing that I look at. I have a philosophy that poor management can destroy a great company and great management can turn around a mediocre or struggling company. A great management team is very difficult to obtain, but it should be TOP priority; it is key to a company’s success. A good management knows the game plan and can execute it. So, when I’m being pitched by a person who wants my money, I first interview them and evaluate if they have a good, mediocre, or poor management team. The second thing I try to negotiate in my head is whether I believe that this person cares as much about my money as they do about their success. The problem with a lot of managements today is that they’ll come to investors like myself who are well off and they don’t even think about the possibility of having to come back to us to ask for more money. If you have to come back to me for more money, you better have a good reason why your projections weren’t correct; the more often you come to me, the less money I want to give you. If you’re executing and exceeding your projections and execution, then you’ll get more money.

When I talk to a management and I ask them what they plan on doing… I expect a concise answer followed by high-performance and I expect that they won’t ask for a lot of money. I shy away from companies that have a lot of debt. When you have debt, what you’ve done is released and relinquished control of your own company. That’s the MAIN fault I see in startups of all industries. If you go to the bank for a loan and aren’t making payments, they get to take your car, your technology, and your home. You don’t want to put your company in someone else’s hands.

In my first conversation with a management, I encourage them to put in as much of their own money as they have as well as getting any friends or family members to invest as well. If people like you and they believe in your ability to achieve success, they’re the first ones you need to talk to. Taking on too much debt will kill you, even if it’s at a low interest rate.

What are the key ingredients in building a successful start-up?

The key components are these:

• Build a team who collectively believes in and is passionate about everything you believe in
• Curate a team that works together like a well-oiled machine
• Ensure that your entire team has similar ideas about the direction of the company
• Designate a person or persons of authority, so that there is no misunderstanding or conflict over decisions

My idea is always to put together a Triple-A team and move forward.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

The person that is there at your seed stage, should be the person who’s with you all the way through to the exit strategy. If you’re able to make me an investor and a lender and I like what you’re doing, meaning you’re executing on everything you told me, I’ll be there at Stage 1, Stage 2, Stage 3, and hopefully, the exit strategy as well. You want to make the person who is your funder, one of your best friends on a business-basis. When something is not going well, you should go to them; they’ve got their money on the line, just like you have your sweat and tears on the line. People like myself often have the experience and knowledge to help you face the challenges that come along with building a business and we are here to help.

What is your new knowledge in regards to investing in the cannabis industry?

It’s a very brand-new industry that is being torn by legislation; The federal government does not agree with the state governments and there are even state governments suing each other to prevent other states from doing something about it. That’s always the growing pain in a new industry. I believe that this will, in time, get figured out. It definitely won’t be tomorrow, but I believe it will be soon! We’re getting closer and closer to making the right decision and I could even see us making that big decision in the next 12 months!

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

There are always going to be those entrepreneurs that succeed and those that fail. I believe that the distinction between the two is the ability to execute. If you make a business plan that sets out to accomplish X, Y, Z… get X, Y, Z accomplished. I would also seek out people in other industries and gain knowledge from them about how they overcame some of the challenges that came their way. There is always a roadblock in every emerging industry; reality is, where are you going to be at X and where are you going to be at Z? And how do you navigate from X to Z? The journey is really what builds your character, not the destination. Learn from your mistakes, learn from the people who’ve already made the mistakes, and try not to make the same mistake twice. You can make new mistakes, but don’t make the same mistake twice.

I encourage everyone in this industry to gain a wealth of knowledge. Learn as much as you can about business in general, about the cannabis industry more specifically, and learn from people who’ve been successful in their ventures and study what they did to become successful. Carry that knowledge as part of the development of your own character. You have the power to develop your own choice and your own personality. Don’t underestimate the power of self-development; this is how you can distinguish yourself.

Lastly, success needs overtime commitment, but is only worthwhile if family and health are not damaged. Find balance; its an absolute requirement.

I encourage everyone in this industry to gain a wealth of knowledge.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

That’s a very very tough question to answer. I can tell you that to become a ‘whale’ in our industry, you’re going to have to capture the attention of the institutions. That individual can become a billion dollar enterprise. When you’re talking about companies like Amazon and Facebook,… you’re talking about companies that just recently surfaced in last 10 years that were driven to billion dollar valuations because the institutions kept throwing money at them. The cannabis industry is more of a niche market compared to that of social media or online shopping, so to become a billion dollar industry, you’re going to have to become a lot more creative than what they even did.

How do you decide between shutting down, keep funding, or selling your start-up?

There are points you’ll reach in your life when each one of those answers makes more sense. As I get older, I am always thinking about an exit strategy; I’m 66 years old and I want to make sure that in 4 or 5 years, I won’t be having to put full-time hours into developing the startups. That’s my stance at this point in my life. When you’re young, you can take more chances because you always have the opportunity to start again. Whatever point you are in life and resources is what will help you decide whether to shut down, grow, or exit. I don’t have a one-size-fits-all answer to that question because it will always be based on the individual.

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Investor Insight: Thomas Quigley, Tampa, FL

As he sat across from his doctor, listening closely as he was formally diagnosed with a late stage of cancer… he had thought that that was it; Thomas thought he was going to die. He wasn’t able to tolerate the proper medication and he was out of resources… until he discovered cannabis. Now, Thomas Quigley, CEO of Common Bond Collaborative, funds, mentors, and grows businesses in the cannabis industry to achieve success. Cannabis changed the direction of his life and now he’s stepping in and doing his part so that cannabis has the chance to save the lives of others.

How did your entrepreneurial journey begin?

I think I was born with an entrepreneurial spirit. When I was a kid I would put on a baseball uniform and go door-to-door collecting donations for my team… only; I didn’t play baseball (My mom made me return all my collections). From promoting warehouse parties in South Florida to starting, building, and exiting a $750M phone card company; working a 9 to 5 was never in my DNA.

What was the motivating factor for you to invest in the cannabis industry?

I exited Krush Communications, my telecommunications company, because I thought I was going to die. I was diagnosed with stage 4 liver disease and couldn’t take pain pills. Then, I had back surgery and they found a mass on my pancreas. Growing up, I never smoked weed. But at 45, I discovered cannabis and quickly learned the miraculous nature of this plant. The mass on my pancreas turned out to be scar tissue and through diet and exercise I was able to reverse my liver disease and my diabetes (yes I had that too). That left me with no job, a passion for cannabis, and sizable checkbook burning a hole in my pocket.

I discovered cannabis and quickly learned the miraculous nature of this plant.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Money isn’t what they really need. What they really need is what the money can buy them: Resources. $1M in funding will make you a successful business owner like a $5,000 guitar will make you Jimi Hendrix. Angel/Seed/Series A companies have a 90% fail rate. We started Common Bond Collaborative to flip that to a 90% success rate.

What we do is provide the services startups need now and pay later. We take equity, revenue shares, debt, and a number of creative solutions to help underfunded startups succeed. We become part of the company and get hands-on to ensure its success. It provides value for the company, security for the investors, drives innovation, and builds communities.

When it comes to raising capital, there has never been a better time to have a great business with the opportunity for backers to share in its success. Thanks to the success of the tech sector, there is more angel and VC money looking for the next Uber than ever before and now it’s looking at cannabis. Crowdfunding has also entered the cannabis space.

Who’s Common Bond Collaborative?

What are the key reasons why startups fail?

#1 would be not filling a market need. You need products and services people actually want, not that you simply provide. Lack of access to smart capital and mentors would come next, and followed by that, not building a strong team.

Can you share your thinking on how to identify a company as a great opportunity?

Sure. We select companies based on: Integrity, Passion, Experience, Knowledge, Skill, Leadership, Commitment, Vision, Realism and Coach-ability. Sound financials and market analysis are great, but every startup is different.

What are the key cultural differences between successful and mediocre startups?

Being coachable. Successful startups are built on a team. Unsuccessful startups have one or two people who think they can do everything themselves. I’ve taken that road and failed more than once before I succeeded. Embrace collaboration and mentorship. Build a solid team and always focus on creating value for your business, your customer, and your partners.

When a company is dealing with internal issues due to disagreements between multi-partners, what role and procedures do you play to save your investment?

We are in a unique position at Common Bond Collaborative because we are directly involved with the day-to-day operations in the companies we invest in. Mitigating disagreements is usually quelled by defined roles and responsibilities. But every situation is different.

How do you build a sustainable competitive edge?

Focus on value and be the best communicator in your space. This builds brand power which is the ultimate competitive differentiator.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

That putting “canna” on a business name does NOT make you unique, groundbreaking, or viable. Solve real problems facing the industry. Don’t try and “Cannify” businesses that have existed for ages.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

I don’t think there is any one thing that needs to happen. Any number of things will happen over the next few years that could accelerate cannabis sales. The loosening of banking regulations could lead to a feeding frenzy from the larger financial firms who have been waiting on the sidelines. That could set off a string of high value IPOs. Medical breakthroughs will attract the attention of the soon to be TRILLION dollar healthcare industry. Right now, we’re going to focus on building a few hundred $50M companies.

The loosening of banking regulations could lead to a feeding frenzy from the larger financial firms who have been waiting on the sidelines.

How do you decide between shutting down, keep funding, or selling your start-up?

Do you have a buyer? Find the balance between your passion and lifestyle. Then, make sure your numbers are real and can satisfy both of those things.

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Investor Insight: Fred Gross, New York, NY

Everyone faces challenges, but it’s how you face those challenges that makes the difference between you persevering and becoming successful or failing and buckling under the pressure. Fred Gross, founder of ManhattanCanna LLC, is one of those who made the right move, had the right perspective, and used positivity and the power of flexibility to power through and become the successful investor he is today! You learn something from every investor we highlight and we ensure that this peer into how Fred thinks, will open your mind that much more.

How did your entrepreneurial journey begin?

I began as an entrepreneur about 12 years ago when I became a hedge fund manager. After graduating from business school at NYU in December 2001, I was left in a rather troubling situation; I had an MBA degree in Finance and Economics and there was a job market implosion in NYC due to the 9/11 attacks 3 months earlier and all job prospects I had been exploring were put on “hold” because of it. I realized quite quickly that I was going to need to change my career path – a desk job as an associate in finance was not going to happen.

Using my previous experience as a sell-side foreign exchange derivatives trader, I decided to try my skill-set and strategies I had developed on the buy-side. It was not an easy adjustment but one that I am extremely proud of and that taught me the importance of “re-inventing” myself. By 2003, I was working for a volatility based hedge fund in Fort Lee, NJ as a proprietary trader. By 2005, I had developed and implemented a strategy that was focused on convexity and skew. In 2007, the strategy produced a return of over 300%. In 2008, the strategy produced a return of over 75%. In 2010, I launched my own fund, with three partners, called VS Capital Partners. After 2.5 successful years, the implementation of Dodd-Frank had devastating effects on the OTC derivatives market. As a firm we quickly recognized this, along with the investor base beginning to squeeze portfolio management fees. VS Capital Partners closed in December 2013 and it was time to re-invent yet again. This time in the exciting space of private equity cannabis.

I realized quite quickly that I was going to need to change my career path – a desk job as an associate in finance was not going to happen.

What was the motivating factor for you to invest in the cannabis industry?

In a world of uncertainty, record-breaking high equity prices, an extremely strong dollar, and very low interest rates; I see no space out there as exciting as this, in terms of exponential growth over the next 5 years.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Crowdfunding on CannaFundr!!! In all honesty, this is an extremely difficult challenge, especially in the cannabis industry. Hiring sales and marketing is expensive and getting accredited investors to invest at minimums of say $50-$100k is very challenging. CannaFundr gives investors the opportunity to get their “feet wet” and gives entrepreneurs the opportunity to tap into smaller amounts of investment capital without having to administer up to 100 investors.

What are the key reasons why startups fail?

The number one reason why most start-ups fail, in my view, is their inability to execute. Start-ups need to remain focused, lean, flexible, and need to stop being stubborn on offering terms and finding strategic partners as investors – not just investors who want to make money. I have seen so many fail by constantly changing their pitch, their strategy, hiring too quickly, not going after the right investor pool… the list goes on and on. There needs to be a goal, a strategy, and a team able to execute on that.

Can you share your thinking on how to identify a company as a great opportunity?

This is a difficult question, especially in the cannabis space where valuations tend to be quite high, no pun intended. I believe that there are two components to a great deal:

1. Who the people are that are involved? What is their pedigree? Who have they surrounded themselves with?
2. What is the valuation and does it make sense – I want to see companies that can scale – quickly and efficiently. SCALE is key for me as an investor.

When a company is dealing with internal issues due to disagreements between multi-partners, what role and procedures do you play to save your investment?

I personally like to “make the peace.” My typical strategy would be to speak to the various partners individually and then come up with a game plan in having a group meeting. I see too many investors throw fuel into the fire. I tend to have the opposite approach and make people see that owning a % of something great is ALWAYS better than owning a % of nothing.

How do you build a sustainable competitive edge?

It isn’t easy, especially with two young children. I believe that it is critical to have people around you that are knowledgeable, trustworthy, and give honest opinions. You are only as good as the people you surround yourself with. In the cannabis space I have surrounded myself with some of who I believe to be the best of the best.

In the cannabis space I have surrounded myself with some of who I believe to be the best of the best.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

You aren’t worth as much as you think you are and if you aren’t lenient on terms, you will not get the right strategic partners as investors. It is critical to form partnerships in this industry. We are all in this for the long haul and we all need each other as colleagues, mentors, and yes, even friends.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

A true billion-dollar company in this industry, right now, is going to be hard to recognize. Due to varying state laws, banking regulations, federal law, etcetera, it is going to have to be a company that has the resources to scale quickly using branding, licensing, and IP from state to state.

How do you decide between shutting down, keep funding, or selling your start-up?

The writing is usually on the wall. You have to look at the cash bleed and what the investor base is telling you. This is where strategic partners are so helpful. To keep funding a business that is failing is such an enormous mistake and too many entrepreneurs drink their own Kool-Aid and do so. Having the right partners in place, the right metrics, and knowing when to “stop out” is crucial.

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Investor Insight: Brian Sheng, New York, NY

If you’re the kid in class getting all the A’s, you quickly realize you have something to offer to those who aren’t. This is where entrepreneurship began for Brian Sheng of Fresh VC. From there, he experimented with an array of businesses and eventually came to find his strengths being utilized best in the art of venture capitalism! He has an eye for success and now dedicates his time to finding that in the growing companies of the cannabis industry. You won’t find one generic answer in our interview with him, he’s here to give it to us straight.

How did your entrepreneurial journey begin?

I dabbled in a lot of different businesses when I was younger. In high school, I started a small tutoring company just like any other kid who had good grades. I tried to play the import/export price arbitrage game and find popular products through niche subsidized sales channels and then sell them elsewhere for a huge markup. I also completed a few contracts advising international clients and came to find that my knowledge of both the Asian and U.S markets were very valuable.

What was the motivating factor for you to invest in the cannabis industry?

Market timing is a very important part of our investment decisions. If you asked someone a year ago: If they thought marijuana would become federally legal, their answer would’ve been very different from the answer they would have given 6 months ago versus the answer they’d give today; that’s because the cannabis industry is rapidly evolving and I think it will become federally legal (both medically and recreationally) in the U.S much faster than people think. In fact, the spending plan that was just passed last month includes a section that prohibits federal resource from being spent to crack down on state-legal dispensaries.

At our core, Fresh VC is still a technology venture firm, so we saw a great opportunity in Eaze as it sat at the intersection of technology-enabled service and cannabis. Aptible is another great company we invested in that’s a technology-enabled service and is also in the healthcare industry. Eaze does not actually touch the product, so it is definitely less risky than a direct cannabis investment. Finally, Keith McCarty (Eaze CEO) is a rock star and has a great understanding of the business.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

This is a problem that all entrepreneurs face, but even more so with an upstart industry like cannabis. I would say, do your research and figure out which professional investors are actively investing in this industry. This includes investors who specifically say they invest in the cannabis industry, as well as investors who have made a cannabis-related investment in the past 6-12 months. The other way is to raise money from friends and family for the first round and focus on having great early traction to convince opportunistic investors in the future.

This is a problem that all entrepreneurs face, but even more so with an upstart industry like cannabis.

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

My advice is to establish legitimacy and pitch professionally. I have received many emails and messages in the past couple of months regarding cannabis-related companies. The majority of pitches aren’t well thought out and use too many buzzwords. Many investors already have a negative bias towards cannabis-related startups so it definitely doesn’t help to have poorly written messages. It is also important to demonstrate a strong understanding of the legal risks involved and be open to talking about those. Investors will be impressed with founders who are thinking about the legal risks in the right way, especially with the cannabis industry.

Lastly, there are a lot of interesting lifestyle opportunities available in the cannabis industry. As venture capitalists, we are much more excited by a company that can display explosive growth potential rather than a company that can steadily generate $10M a year in revenue. There’s nothing wrong with creating a great lifestyle business, but venture capital isn’t the right source of funding for that kind of business.

Can you share your thinking on how to identify a company as a great opportunity?

Most investors would give a generic answer and say it’s a combination of market size, team, traction, and product. It’s generic because identifying a great early-stage opportunity is incredibly difficult. The founders are supposed to be way more knowledgeable in their field than myself, so I try to focus on the qualities of the team that stands out. I love to understand why founders are working on a problem, what their motivations are, and how they think my role as an investor can help them .

While most startup companies begin with a round table of partners discussing many good ideas, how the founder make those ideas happen is exponentially more important. When an executed idea flourishes, the founder gets the credit. Of course, this may sound unfair to the other partners, but when that idea fails, the founder is criticized for executing the directives. I personally determine my investment decision from my observation and facts I explore about the founder.

What are the key ingredients in building a successful start-up?

Lots of people smarter than me have written extensively about this topic. I’m actually a huge fan of Peter Thiel’s book ‘Zero to One.’ Having an extremely driven team, the right skill set, a good team dynamic, and a unique view of the problem they are solving are always good key ingredients.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

At the early stages, a founder’s resources are constrained and has to manage every part of the company. They are at once fundraisers, product developers, recruiters, salesman, and more. As the company grow, founders will need to manage more employees and make sure people in the company are aligned with the company vision. At later stages, it’s no longer time-efficient for founders to do everything.

Good traits in startup founders are often fatal to a later-stage company if they don’t adapt. The founders need to realize their roles will evolve and specialize. The larger a company gets, the more the founder will need to learn to manage and delegate and become a leader and not just a do-er.

What is your new knowledge in regards to investing in the cannabis industry?

I think it’s surprising that there are so few investors in the cannabis industry. When I talk to entrepreneurs in the space, it’s clear how excited they are about the new opportunities.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

We are looking for entrepreneurs looking to build a lasting successful enterprise. We are not looking for people simply following the herd and trying to make easy money. There’s nothing wrong with building successful lifestyle businesses, but we are looking for companies that have explosive growth potential.

We are looking for entrepreneurs looking to build a lasting successful enterprise.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

I think even keeping things the way they are, a billion dollar company in the cannabis industry can be created. It obviously becomes a lot easier as medical and recreational marijuana becomes legal in more states and it will also help out related industries.

How do you decide between shutting down, keep funding, or selling your start-up?

I think this is usually dictated by factors outside of a founder’s control (macro conditions, out of cash, threats from bigger competition, etc.) However, it could also be dependent on the team behind the startup. There are many examples of entrepreneurs who were on the brink of failure and they could’ve sold or shut down, but instead persevered and created lasting enterprises!

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Investor Insight: Emily & Morgan Paxhia, San Francisco, CA

Whoever tries to convince you that two isn’t better than one, hasn’t witnessed the power and drive that Poseidon Asset Management brings to the table. They’re an unstoppable team who were born into a strong family blood line of entrepreneurship. He’s sharp, a master of crunching the numbers, and thrives when business plans are in his hands. She’s articulate, a confident problem solver, and is constantly striving to extend their company’s outreach. Meet Morgan and Emily Paxhia who are here to tell us why passion and integrity is at the very core of their success in this industry!

How did your entrepreneurial journey begin?

Emily: I have always had an inclination to start something new. Working in corporations and for other small businesses were great learning experiences and there was much to be gained from that, but I always intuited that I would carve out a piece independently. Our father was a business owner and an entrepreneur of sorts and his spirit for tackling the challenges of running your own business really stayed with me. We knew that this industry was the right place to step out as entrepreneurs, as we understood that any entrepreneurial endeavor would require passion and dedication and we are both very passionate about cannabis. Morgan was the one who noted the need for a fund like ours for investors seeking to place capital in the industry, but who didn’t have time to do the necessary exhaustive due diligence to make confident decisions.

Morgan: Entrepreneurship runs through our family’s history. After college, my father started a business rehabbing performance and antique cars. They built that business and used the positive cash flow to fund their real estate business. By the time our parents passed away, they had amassed a collection of over 50 income producing properties around the Western New York region. I used to spend many hours with my parents, cleaning and painting our rental units. My first entrepreneurial journey began around age 12, which was also the same year our father passed away.

That summer, I partnered up with a friend of mine in a landscaping venture. He lived in a nice community where we literally would go house to house to cut and clean up yards, flower beds, etc. One particular hot summer day we were tasked with de-stumping an oak tree with nothing more than a hose, a couple shovels and an ax. We worked 8 to 12 hour days all summer long. That was my first taste of doing our own thing and growing a business.

That very year I started buying stocks, using some of my savings from the summer gig along with other funds I had saved. I used the Peter Lynch/Warren Buffett approach to investing, which was to buy recognizable names of businesses I could understand. After a summer of fueling up lawn mowers, I focused initially on Exxon.

My first entrepreneurial journey began around age 12, which was also the same year our father passed away.

What was the motivating factor for you to invest in the cannabis industry?

Emily: We lost both of our parents to cancer very early in our life. Watching anyone suffer from the effects of cancer and the egregious side-effects of the ‘treatments’ for cancer is like watching human torture. The ‘treatments’ actually ravage the body and make the person suffer even more. Our dad had really wanted to gain access to cannabis during this time for nausea, but didn’t because of the stigma against it. We know cannabis would have helped him – something that has made a permanent impact on us. Why should anyone not have access to a plant that can help to alleviate symptoms and suffering with very little to no side effects?

From a monetary aspect, we see there is a tremendous market that already exists around cannabis. It is rare that you have an opportunity to participate in a pivotal moment in business or society and this is one of those times. Cannabis represents a new form of holistic healing as well as an opportunity for responsible use for adults seeking alternative ways to relax. Meanwhile, hemp can present an entirely renewed area of agriculture and industry. We see many opportunities to invest in and around cannabis that will mainly improve society, create jobs, and offer untold health benefits.

Morgan: Investing is a natural interest as it has been my passion and profession for many years. I have worked in the investment management industry for some time and extending that passion to cannabis only made sense.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Emily: It would be beneficial to explore what has been done by entrepreneurs in the tech industry to raise money. The key issues often come out straight away. When approaching investors, it is nice to at least start with a clear email that is at least written in full sentences. A lot of emails we get are sent haphazardly or are tombs with no clear point or thesis. Be clear, succinct, and considerate of the investors’ time when reaching out and seeking investment. Provide the facts of the business, the goals, and the blueprint to achieve those goals. Also, know your target audience. For example, as a fund that invests entirely in the cannabis industry, we don’t need to be informed of all of the broad strokes background of the industry and why this is a worthwhile sector, it is likely we know that already. It would be more beneficial to take the time to focus on the specifics of the particular investment opportunity and company.

Morgan: Raising money is both an art and science. For many entrepreneurs, this is their first major sale for that particular venture. Investors are looking for strong management teams, tenacious drive, and a product/vision that is unmet in the market. Timing and valuation are also important aspects to consider.

There is incredible interest of people trying to capitalize on the Green Rush. So many first-time entrepreneurs struggle because they are not at the point when they should be seeking capital. In general, this is not the ‘dot com bubble’, where angels are willing to fund a concept; Investors are interested in businesses with more tangible progress. Revenue generation is great, but not necessary. However, it certainly helps to have some of the initial building blocks in place. If first-time entrepreneurs don’t know how to start a business, seek guidance first, not capital.

This is such a great time for first-time entrepreneurs in the cannabis industry. There are many ways to raise capital, refine the business plans, etc. For example, take a look at the The ArcView Group or CanopyBoulder as ways for entrepreneurs to get their businesses going. Network, network, network! There are many great people in this industry with tons of passion and business experience.

What are the key reasons why startups fail?

Emily: There are a myriad of reasons why startups fail. First of all, the intentions of the company and the founders have to be clear. If an entrepreneur cannot articulate why he/she has started this project and what he/she hopes to achieve, it will prove to be problematic whenever things get difficult. Also, the people involved in the project have to be crystal clear about their strengths, weaknesses, and where they need support. You have to be a little crazy to be an entrepreneur because, from a rational perspective, it is a wild undertaking; However, you have to be grounded and clear on what needs to happen to get the business to the next level. If unsure, an entrepreneur should have the ability to put the ego aside and seek mentorship or support. Finally, a key enemy to the success of a startup is pure fatigue. It is invigorating and exhausting to start a business and if you don’t have passion and the drive to keep going, it will likely just fade out of focus. Additionally, capital fatigue is a part of this as well; Knowing when to bootstrap and when to seek investors is critical and also very difficult.

Morgan: Failure is a part of life. Real entrepreneurs don’t fear failure, they embrace it. Learn, innovate, pivot. Those that have the stomach will make it, others get flushed out. It’s just part of the process.

Real entrepreneurs don’t fear failure, they embrace it.

Can you share your thinking on how to identify a company as a great opportunity?

Emily: We start by examining the people involved in the project. We talk with them and determine if we are aligned on the vision of the company and the steps needed to get it to the next level. We look at the evolving market and examine competition, the market demand, etc. We have a ‘boots on the ground approach’ too; We like to go and see the operation, understand where they are now, and what is going to be required for expansion. All the while, Morgan is digging through the numbers and financial models to stress test the potential of the company. With this industry, it is also key to understand local, state, and federal implications for the company, which is a moving target that requires a lot of consideration.

Morgan: This industry is still so new. There are no established brands yet, no clear defined markets. This is a people industry and that’s what we are seeking. We love entrepreneurs that are living their idea and willing to put in incredible amounts of time and effort. We have one entrepreneur that is so thoughtful about spending money wisely, it’s just amazing. We have seen their team at the end of events picking up their marketing materials off of tables. Not only are they saving easy money, but they are being environmentally conscious. How great is that!

What are the key cultural differences between successful and mediocre startups?

Emily: Passion and focus. There are a lot of people who are passionate about this industry and it is easy to get really excited about all of the potential avenues, but sometimes you have to be patient and pick a path to start. Yet, it is crucial to be aware of changing factors and to be adaptable in order to pivot if a key opportunity should arise. Mediocre startups are often all over the place, so they are diverting energy in too many directions or they are hyper-focused and attached to one solution or path, which might ultimately lead to a dead end.

Morgan: Emily is spot on here. Investors are generally savvy, driven individuals. They want to invest in people like themselves and they will easily move on if they get the feeling of mediocrity.

When a company is dealing with internal issues due to disagreements between multi-partners, what role and procedures do you play to save your investment?

Emily: When investing, it is good to know that you’re dealing with human beings who have emotions and egos. When these things start to happen, it is key to remember to sit down and calmly address them before it gets out of hand. If it gets too far down the path, it is harder to repair. When you address people and they feel heard, it often opens up the communication channels.

Morgan: This is a part of business. It is easy to let emotions take over when you are putting it all on the line. Communication is generally the route of all issues which is addressable. If there is a failure of trust, there could be more serious implications. Starting a business, investing in a business, parallels relationships. Spouses argue, but the real relationships will work it out. Emily studied psychology and her understanding of human behavior is invaluable with managing internal disagreements.

How do you build a sustainable competitive edge?

Emily: We work hard to really get to know the industry and the key players. We examine the market like any other alternative investment category and have hours of our own research documented that we use as a key resource. We work with our existing investments to see if there are synergies across those and aim to build strong relationships. Most of all, we are dedicated wholly to this endeavor and put our time and good intentions into growing the fund and the industry with integrity for a future of which we can all be proud. Some people are in this for a ‘get rich quick’ rush and we don’t believe that this approach is sustainable, nor will it truly help the progress and growth of the industry.

Morgan: This is an interesting time in the industry as there is a lot of first-mover advantage. In addition, this high octane industry is ripe with ‘me too’s’ or ‘wannabes’ that will just become market distractions. Real businesses are built in time, with dedication, innovation, and focus. From the cloud of dust, the real players will emerge. It’s too early to say who those will be, but we are certainly working hard to align ourselves with the right talent. It’s amazing to think back just one year ago at the companies in the sector and compare that with today. It is incredible to see the amount of people exit, enter, and remain in that short amount of time.

This is an interesting time in the industry as there is a lot of first-mover advantage.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

Emily: Sometimes it seems that entrepreneurs lose sight of the money, time and energy that investors are dedicating to their success. Investors are taking risks and are putting their money, time and efforts on the line for the entrepreneur, so it is nice to honor that by providing updates. When constructing a an investment offering, consider the stage of your company and the level of risk, as that will be a good way to start the process.

Morgan: Greed is the root of all evil. Entrepreneurs can get wrapped up in the exploding industry and all the potential money they can make. We get sick at the amount of money some entrepreneurs think their business is worth or how much they should get paid. Just because you see a stock trade up tens of millions of dollars, doesn’t mean that business or theirs is even worth a fraction of that.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

Emily: Agreed, federal legalization is essential to reach that size. Overall, sufficient market size and demand, a shift in consumer perceptions to be more open to the idea of cannabis, dedication on the part of the entrepreneur and the ability to grow without toxic financing and intelligent fund-raising. Branding is really just starting to take off in this industry and that will be critical to growing a billion-dollar company, as it is in any other industry.

Morgan: Federal legalization. I’ve seen several other investors say the same thing, and I agree. Plain and simple, it changes the risk dynamics, banking issues, interstate and international sales opportunities. Businesses are finding ways to grow, within the confines of the laws, to other states. However, it is tremendously expensive, inefficient, and ultimately not an option for many businesses. This all potentially changes with federal legalization.

Branding is really just starting to take off in this industry and that will be critical to growing a billion-dollar company, as it is in any other industry.

How do you decide between shutting down, keep funding, or selling your start-up?

Deciding to continue the relationship with an investment vs. shutting it down or selling is a nuanced decision, especially in such a nascent market. Morgan especially is constantly analyzing and reassessing our investments as we build our portfolio. Our fund is quite dynamic and we are always trying to build and balance what holdings we have at each moment. Therefore, the investment decisions also relate to what we have at the time.

Thank you Cashinbis for your the opportunity to share a bit more about Poseidon Asset Management. We are very passionate about the industry and excited about the road ahead!

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