This is your chance to invest in a cannabis startup…
Once only reserved for the wealthiest and most well-connected investors, everyone now has the shot to get in “early” with startup investing.
Even before a company goes public, you can get a piece of the action. You’ll have put your money in at one of the earliest stages, watching as the company grows, builds its customer base, and attracts attention across the country.
And as everyone else sits on the sidelines, wishing that they could have had a chance to invest, you can sit back and relax, knowing you already own shares of that hot startup.
Of course, because this is such a new opportunity, we know members of the National Institute for Cannabis Investors have a lot of questions about cannabis startup investing.
Now, we also realize that a lot of those questions revolve around how to get started and how to identify the best cannabis startups to invest in.
Throughout this guide, we’re going to show you three investing criteria to analyze a company.
That gives you a better idea of which firms deserve your hard-earned money.
How to Analyze a Company: 3 Startup Investing Criteria
With publicly traded companies, there are a lot of metrics you can look at to judge whether you should make an investment.
Return on Equity
50-Day Moving Average
Consensus Price Targets
With a young startup, you don’t have that information to analyze. It’s a little more challenging to do your due diligence, and that’s where experience in analyzing such deals is crucial.
Executive Director Don Yocham has been in the investing world for 25 years, building up his contact list, analyzing startups, and understanding the ins and outs of what makes a promising opportunity.
And in his 25 years of experience, he focuses on three things when evaluating a startup.
Area No. 1: Management
On two of the most popular crowdfunding sites, there is a section that gives background on key management.
That’s where you want to start first.
At the National Institute for Cannabis Investors, we believe that cannabis investing is truly a once-in-a-lifetime opportunity. We may never see anything like this ever again.
But because of that opportunity, you also have folks starting businesses who are just trying to make a quick buck.
They don’t care about building a business that will stand the test of time. They just want to make as much money as possible as quickly as possible and then move on to the next thing.
That’s why it’s important to weed out the winners from the wannabes.
So when you’re reviewing the credentials of a CEO, review this information closely:
- Experience in the cannabis industry.
- Experience running a company.
- Experience with successfully selling a company.
The first is to look at what experience this person might have in the cannabis space. Now, this can be a little tricky because this is a new industry and there have been barriers for some folks in starting a business due to the laws where they live.
But having some previous experience within the industry is a positive.
The CEOs who have operated within the space know all about the hurdles and obstacles and what it takes to get past them.
If the CEO doesn’t have experience running a cannabis business, it’s not a deal breaker. They can still have outside experience working with brands or in consumer-packaged goods that can translate to the cannabis industry.
But any good leader also needs an experienced team.
Check out the executive team and see what they’ve done before working at the startup.
Something we like to see is lawyers. They have experience navigating difficult laws and experience with mergers and acquisitions. They can be a great asset in getting a deal done.
Area No. 2: Branding
There isn’t an exact science when it comes to building a good brand. However, you know a good brand when you see it.
It resonates with you.
And when we’re talking about branding, we look for startups that know that building a brand is about much more than just slapping a label on something.
If a cannabis company is selling a product, the branding needs to be unique. The consumer needs to get a feel for what the company is all about. It needs to tell a story in less than five seconds.
Of course, it’s easier said than done.
In the web version of this guide, we have included two interviews with CEOs who know how to build brands.
The first is with the CEO of Mendi, Rachael Rapinoe.
Before starting Mendi, Rachael was a professional soccer player and she is the twin sister of Megan Rapinoe, who was named the Best FIFA Women’s Player in 2019.
In the interview with Don, you can tell Rachael knows her stuff when she talks about branding. She knows her market and she’s on a mission.
The same can be said of Trang Trinh, the CEO of TREC Brands.
TREC stands for Trust, Respect, Equality, and Compassion.
Trang knows exactly what her mission is each day, and she’s building an incredible brand.
Currently, TREC has 10 products across three brands and has authorized retailers in Ontario, Alberta, Saskatchewan, British Columbia, and Manitoba.
They also have exclusive access to some of the genetics from Strain Hunters, which is a company that travels the globe to find high-quality cannabis.
Area No. 3: Scalability
Last but not least, one of the things Don looks at is scalability.
That means, how big is this opportunity?
For example, if a small family hemp farm was raising money in Oregon and its products were in just a handful of dispensaries, the family that owns the farm can carve out a nice living, but that’s not going to net you a massive return.
In comparison, a pharmaceutical company using biosynthesis to make a cannabis-based medicine that treats epilepsy, that’s where you could make 10X on your original investment.
For example, GW Pharmaceuticals netted $296 million for its cannabis-based medicine – Epidiolex – in 2019. Epidiolex can be used to treat two rare forms of epilepsy.
So how many people do you think a company can reach, how many people do you think the company can sell its products to, and does the company have any chance to grow outside of its current market?
Those are all things to consider before making an investment.
So by now, you have a reference guide answering some of the most common questions new startup investors have and you know what it takes to evaluate an opportunity to invest in a startup.
You’re almost there!
The final step is to make an account on a crowdfunding platform.
And that’s all in the next section of this guide.
Setting Up an Account on Republic
Republic offers great opportunities when it comes to Reg CF investing.
It’s a very simple process to get going.
First, visit this page, which has more about Republic’s background and how the site operates.
Then, under the “How to start” section, you will see a tab that says “Become an investor.”
Click on that.
You will then see a tab that lets you sign up through Facebook, Twitter, or email. That choice is up to you.
If you select email, then it will ask you to fill out your first name, last name, email address, and to create a password.
From there, you will be prompted to read through a series of questions that make sure you understand the risks involved with startup investing. After that, you will be able to make a profile and start investing!
Setting Up an Account on StartEngine
StartEngine is another crowdfunding platform that is very easy to make an account for.
Just visit this page and look for the “Sign In” tab.
From there, it will give you the option to create a new account.
Enter your email address.
You will get an email to confirm your account.
Once you get that email, you can start to fill out the information required to open an account.
It’s as simple as that!
If you need any help along the way with setting up your account, you can contact StartEngine by calling 1-800-317-2200 or emailing its customer service department at email@example.com.
Now, for the final part of this guide – there’s been an incredible demand to learn more about the Cannabis Venture Syndicate, which is run by Don.
Private companies swarm to him, trying to get him to read their pitch decks. In fact, you should have seen him at the Benzinga Cannabis Capital Conference this year!
He had people lined up to talk to him, and he walked away with 15 deals to analyze.
This is where utilizing his expertise pays off.
He always recommends building your own network of deals, and Reg CFs are a great way to do that. Also, members of the Syndicate can also interact with each other in our private deal room.
But Don also brings our members access to cannabis startup deals you won’t see on Republic or StartEngine. These are companies that open up their funding round for a short window.
These are the companies you read about in the news that just completed a funding round, but you didn’t know how to get involved.
Don knows how.
Through this guide, you’ve learned that Reg CF investing puts even the smallest retail investors on an even playing field.
We’re talking about the ground-floor opportunities that used to only be open to folks who were well connected.
Like when, thanks to having an inside connection, a small high school with fewer than 2,000 students turned a $15,000 investment into $34 million in just a few years.
Or like how billionaire Peter Thiel, one of the co-founders of PayPal, was one of the first investors in Facebook and turned a $500,000 investment into more than $1 billion.
We wouldn’t say things were rigged against the small-time investor, but most were locked out of these opportunities.
New laws have made it easier for retail investors to buy shares in startups but with the Syndicate, Executive Director Don Yocham takes things one step further.
It’s not just Reg CF deals we bring to Syndicate members.
We also bring private deals you aren’t going to see on Republic or StartEngine.
Instead of you having to uncover these deals, he does all the hard work for you.
Hours of phone calls.
Poring over pitch decks.
Analyzing projections and trends.
This isn’t something that happens from 9 to 5. Every waking minute, Don is consumed with finding the right candidates for Syndicate members to invest in.
It doesn’t matter if he gets a call from the CEO of a startup at 3 a.m.
If he thinks it’s going to make his members 100 times their original investments, he’s going to take that call.
For you, each one of these deals that Don has fully vetted hits your inbox. For each deal, you’ll receive a Due Diligence Package where Don reviews the company’s management, operations, financials, the big opportunity, and much more.
You’ll also receive a Terms Sheet, which is a quick summary of the deal with the amount of shares being offered, the price of each share, and other relevant information pertaining to the deal.
You’ll also have access to the Deal Memo, which breaks down exactly why Don likes the investment and the risks involved.
On top of all that, Don opens the Cannabis Venture Mastermind for our members to ask questions and get answers.
Now, as you’ll recall, we talked about scalability. That’s how big an opportunity can be.
And currently, there’s a lot that has been cooking for Syndicate members.
- Deal No. 1 – One cannabis biotech just got the fast track to bring its drug to market. It’s already in Phase 2 trials for its leading drug candidate, which is a treatment for patients with systemic sclerosis. This was a market valued at $1.8 billion in 2018, which could grow to $3.8 billion by 2026.
- Deal No. 2 – The next deal in our pipeline is with a CBD-infused beverage company. This is going to be a huge market, which Don projects could be valued at $1.1 billion by 2022. There’s no clear winner out there right now in the CBD beverage space, so if this startup grabs just 10% of the market, it will have $100 million in sales. What’s impressive is that this company just inked a deal to get on the shelves of the second-largest grocery chain in the United States. Even more impressive is that every Oscar winner from 2020 received this beverage in a gift bag. This company knows how to get its name out there, and Don expects an acquisition is on the horizon. That could be a 5X return in a very short time!
- Deal No. 3 – We always tell our subscribers that Las Vegas is one of the most important cannabis markets in the country. That’s because Sin City is where most people will try their first legal cannabis product. When they go back home, they will be looking for that product. So to put it simply – Las Vegas is where you build a brand. That’s why this next deal has so much to offer. This company knows the importance of location, location, location. It already has some of the top-selling brands in Vegas, and it’s building a prime location that will be closer than any competitors to the Las Vegas Strip. Nevada already ranked fifth in the country for sales in 2019 with $750 million, and things are only going to ramp up from there – by 2024, the state is expecting $1.4 billion in revenue from cannabis sales.
And there’re more.
The fact is that this is a great time for cannabis startups to raise money. This is a time where the wannabes are being phased out, and the winners are earning the spotlight.
So to say the least, our pipeline of deals and opportunities is bursting.
After learning about all that the Syndicate has to offer and how easy Don makes it, bringing the deals right to your inbox, what most people do next is learn how they can join our group of like-minded investors who want in on a ground-floor opportunity that they have been missing out on for most of their lives.
We’re excited for your startup investing journey to begin, and we look forward to connecting with you on our network!
3 responses to “Reg CF Cannabis Startup Investing: Your Ground-Floor Opportunity”
April 14 2020