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Ep 366 – How To Use Equity Crowdfunding To Launch Your Cannabis Business

davina kaonohi element apothec

While not the most traditional path, equity crowdfunding can be a great way for cannabis brands to raise capital – but only if know what you’re doing. Here to walk us through how she’s successfully crowdfunding her CBD wellness brand is co-founder and CEO of Element Apothec Davina Kaonohi. 

Learn more at https://elementapothec.com

Key Takeaways:

[1:05] Davina’s background in e-commerce and how she came to start Element Apothec

[5:49] How Davina took inspiration from her aunt’s homemade tinctures to formulate Element’s CBD products

[7:48] Why Davina turned to equity crowdfunding and how she’s successfully targeting investors

[11:36] Equity crowdfunding vs traditional crowdfunding

[13:38] How to create a killer marketing campaign through storytelling

[17:54] Element’s efforts to bring transparency to CBD and do away with sketchy “proprietary blends”

[24:04] Davina’s goals to grow Element’s product selection and expand the company over the next few years

[26:02] Where Davina sees the CBD skincare space heading over the next 3-5 years

Click Here to Read Full Transcript

Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannaninsider.com that's C-A-N-N-Ainsider dot com. Now here's your program.

Sinead Green: While not the most traditional path, crowdfunding can be a great alternative for cannabis brands looking to raise capital, but only if you know what you're doing. Here to walk us through how she successfully crowdfunding her new CBD wellness brand is co-founder and CEO of element Apothec Davina Kaonohi. Davina, thank you so much for joining us today.

Davina Kaonohi: Yes, thank you so much for having me. I'm really excited to have this conversation.

Sinead: Absolutely. I'm so excited to have you here and hear what you guys have in the works at Element Apothec. First off, can you give us a sense of geography where are you joining us from today?

Davina: I'm in Los Angeles, quite warm and sunny today.

Sinead: Oh, nice. Davina, thank you so much, again, for joining us and before we dive into element, I know this is a new space for you. You only really got into cannabis about a couple of years ago at this point, even though you've been using it and it's a big part of your family for a long time now. First off, I wanted to talk to you a little bit about your background, can you tell us what you were doing before element and why you decided to start the company?

Davina: Before launching Element Apothec I was doing strategic consulting for startups, mostly in the e-commerce space, and helping them set up their leadership team, their operational and strategic business goals. I just loved it because you could come in early and really help to drive the direction of the business and help them really think about big decisions that they were making in terms of the growth going forward.

I also had touched on helping a niece of mine build a social media app, which was quite a fun experience to be involved with. Then leading into Element Apothec, I think for me, it really was that I liked what I was doing, and I felt like I could make an impact, but I still hadn't figured out my why of exactly when I woke up in the morning what really drove and motivated me. Recently, doing Element Apothec has showed me that that's what it was, but I was at this turning point in my career trying to figure out what was next for me.

At the same time, my great aunt had come to me with these amazing products that she had created. I can tell the story in a little bit more about that and asked me to help build a website and I did that for her, but she still didn't really know what to do with it and basically handed over the business to me. I was really passionate about CBD and cannabis and wellness and living a clean lifestyle and alternative remedies. It just really made sense that that was the direction that I went. That led to the launch of Element Apothec.

Sinead: Wow. That's something really fascinating about your story is what you just touched on with your aunt there. You officially launched the company in December 2020. Is that correct?

Davina: Yes, right in the middle of the pandemic.

Sinead: Great timing, of course. Really, you guys you're so new, but Element really has been in the works now for about a decade if I'm not mistaken and it actually started with your aunt formulating her own tinctures. Can you tell us a little bit about that and the family collaboration aspect at Element?

Davina: We say we're a new company but we're almost a decade in the making, and because my great aunt was initially diagnosed with medical conditions and autoimmune diseases and the medications that the doctors prescribed to her she actually was allergic to some of the preservatives or many of the preservatives and those medications. Her prognosis with that wasn't good.

They gave her a couple of years to live and most of that would probably be bedridden, not with a good quality of life. A sister of mine-- I have two sisters-- is a grower and had some high CBD ratio plants and so she gave her some flour and said, "Hey, there's this great recipe. It's almost like a Rick Simpson oil you can make that and I've seen it help people that have used that before," and then gave her her first plants to start growing. She set up a little grow cabinet in her living room for her. She started creating tinctures. She started putting the oil that she was making in lotions and bath soaks and everything bomb. She didn't really realize that it would help her as much as it did. It did end up making a huge difference in her life to the fact that she was able to get out of bed, she started using her extra time to learn about essential oils and other plant-based remedies.

People also took note of her health continuing to increase and the lifestyle that she was now leading that she wasn't expected to and would come and say, "Hey, can you make me this? Can you make me that?" Over these 8, almost I guess like 10 years now she's created over 40 custom formulations because people would come and say I have this, I have that, can you make me this and every ingredient was never used for a scent or for a texture it was used to basically serve a very specific purpose of being able to help whatever the person might be-- To support whatever they might be experiencing.

Sinead: Wow, that's just such an amazing story. I know you from there, you took her formulations and you've got a medical advisory team now, but you took them to a formulist and had them take a look at the best ratios and all of that. Can you tell us a little bit about the next steps you took from her formulations, the OG formulations, and how you really dialed them into what is now Element Apothec?

Davina: The next step that happened after my great aunt came to me and she basically said, "I want my products to go from the kitchen to the world," and so that's my mission. With that said, I also understood that we were asking people to put products in and on their bodies and I wanted to make sure even though she had the experience and had been creating these products that from the medical science perspective, that they really were safe, that the ratios were right, that we really were going to have highly effective products.

We brought on our Chief Medical Advisor who's an integrative medical doctor and triple certified gastrointestinal doctor, who specializes in gut health and microbiome brought in Dr. Swathi Varanasi, she came on as a co-founder and Chief Scientific Officer who's an integrative pharmacist and a cannabis medical provider. We really looked at the products that we were creating and then we added on our integrative dermatologist and said, okay, let's look at these ratios that have been created, the ingredients that are here.

We want to make sure that they're as safe and effective as possible. We also looked to some of the other minor cannabinoids because there's just becoming so much incredible research on the values of incorporating those in higher levels than just your typical full spectrum or broad-spectrum oil. From that, that was the final formulations that we ended up launching with Element Apothec.

Sinead: Absolutely. Very cool. Just thinking about the timeline here, you dialed in on the formulations. Obviously, the next step there is you think about how am I going to fund this business so that's where you turn to crowdfunding, which I find so cool because we aren't seeing a lot of CBD companies do that just yet. It is it's a great alternative but it is tricky and it requires, as you know, some killer marketing and it's no walk in the park. Can you tell us just a little bit about that whole process and your logic behind it?

Davina: Yes, so in launching the brand we didn't want to just be a home-based business, which is fine and I think amazing if that's the path that you took, but we wanted to go big with the brand and really get our products into as many people's hands as possible. With that, there's a lot of money that's involved to make that happen, the cost of the manufacturing and the packaging and all of your marketing and thinking about what would be the best way to raise that money and also a very competitive space because we did have conversations with some investors early on.

Although they were interested, they wanted to see a little bit more traction before they were willing to write the checks that we felt that we needed. We looked at alternative options of what could get us the money we need right now to launch the brand, start getting some early traction, build the company up in terms of the value proposition and then be able to go back out later and raise additional money. We looked at the ideas and ways that people were doing that and equity crowdfunding came up.

There's two types of crowdfunding. There's crowdfunding where you can sell a product or pre-sell a product and people in exchange give you money for that or there's equity crowdfunding, which is what we did, where people are actually owning a piece of the company in exchange for their investment, and we had some perks or people got some free products and stuff for different levels. It seemed like a really viable option and not only were you getting the attention of micro investors, but at the same time, you were also building awareness of your products and your brand, so you're getting this, it's like a double opportunity almost with it.

We had friends and family that were interested as well and participating and wanted to help. We thought, what a great way for them to get involved, invest a little bit of money into the company, and own a piece of the company, and join us along our journey as we build this brand. We looked at different platforms or some-- We ended up working with Wefunder with their start engine and Republic and we felt really fortunate, especially in the competitive space that we were selected to be one of the companies that they worked with. Yes, it's just been an amazing, crazy roller coaster ride of fundraising, but it's been quite exciting as well.

Sinead: Yes. Wow. Okay. I alluded to this earlier, you just reached this huge milestone, you're currently sitting at just over $100,000, and you've got a goal of $500,000. Is that correct?

Davina: Yes. We are now about 119. We've had some investments come in since we last talked, which has been great. The Wefunder campaign will be ending, but we'll be continuing to fundraise through just a traditional convertible note now that we've been able to hit these milestones, the interest of other investors has piqued and some other opportunities that we've had. Yes, so we'll continue along this fundraising journey for a while, I imagine.

Sinead: Absolutely. Yes. I do want to dive into equity crowdfunding a little bit more here because most of our listeners are probably more familiar with platforms like Kickstarter, where you-- For the project to go through, it has to be fully funded, so this is a very different format where you've got this goal, but it seems like you're able to work with the funds and it's a lot-- In some ways, a lot more flexible. Can you tell us a little bit about how that works and what you are using the capital for and what you plan to use it for as you reach that big 500,000 number there?

Davina: Yes. The way that equity crowdfunding works, like I mentioned, which is different is that you're actually giving equity in exchange for the investment just as you would if you were raising Series A and raising $5 million, but it's on a much smaller scale. Each of the platforms do have specific requirements like on Wefunder to get funded to actually be able to hit the first milestone is a 50K mark. They do have some opportunities for some companies to come in at a lower level recently, but when we started with them, that was you had to hit at least 50K, and then once you hit 50K, you can start taking your first withdrawals from that which helped us to fund our initial inventory run, our marketing, all of our packaging.

As we continue to grow and expand and look to raise more money, we're looking at launching additional product lines, deep investing into marketing, bringing on a sales team, just expanding all of the things that we're doing now as well with education and focused on building a community and establishing more of a presence online. That's really what we'll continue to use the money that we currently have raised and use the additional money as it comes in from other investments.

Sinead: Okay, that makes total sense. Very interesting. Going off of that, I wanted to talk to you about the marketing side, you guys obviously have got amazing products, but even amazing products don't sell themselves, especially when it comes to crowdfunding. What did you do to really develop your marketing campaign there and what advice would you have when it comes to really hitting that nail on the head with marketing and really finding your target audience?

Davina: Yes. It's interesting with crowdfunding, especially in the cannabis CBD space, because a lot of times companies depend on Facebook and Instagram advertising to get a big kick on their marketing strategy. Unfortunately, we had some troubles with that, and Facebook and Instagram would deny our ads even when they would go to Wefunder or to other landing pages, so we had to get really creative. We'd looked to do-- We did some ads on programmatic which were open to us.

We've focused heavily on building our email list so we could focus on reaching out to people that way. I did a lot on LinkedIn of just personally connecting with people and I'm spending-- I'd dedicate an hour, two hours every day just to outreach and sharing our campaign and letting people know what we were doing. It just involved a little bit more than maybe what a traditional company raising on an equity crowdfunding platform might have to do, but at the same time, as we were making all those connections and conversations, we also were building brand awareness and getting people interested in the products, so I don't know, it was a great-- I think, overall great experience, but yes, the marketing and thinking about it, because you'd look at these equity crowdfunding platforms, and you'll see companies raising a lot of money, you're like, "Oh, it's easy, we'll just launch on there, and everybody's going to start investing all their money in our company." Then you realize that's not the case.

There's marketing firms that are specifically set up just to help with managing that and posting on, like I said, on social media channels. Going into it for us was like, "Okay, this is going to take some work, and it's going to take a little bit more work than we thought." They do have their own investor networks, and a lot of these platforms will share when you first launch and different milestones that you hit, so you do have access to other people that you might not otherwise have had, but definitely, it depends a lot on the company itself to provide that marketing to get the word out there about your campaign.

Sinead: Absolutely. Okay. Yes, that makes sense. I feel like at this point too, like you said, there are so many obstacles when it comes to digital marketing and advertising in the CBD world, and hopefully, we'll see some changes there in the next few years, but I feel like CBD brands, they just have to make more of an effort with their storytelling than I think in other industries. Would you agree with that?

Davina: Yes. The story really is everything that we are as a brand, and why we're so passionate about even the way that we continue to operate. It was very intentional from the beginning that that is our core, and that's something that we can't ever forget. We were very purposeful of making sure that we're not just another CBD brand, we're not just hopping on the CBD bandwagon, or looking at a catalog and picking products, which is great, and I think it gives people quick access into the industry. For us, we wanted to show who we were and what we stood for and doing that through the story I think helps people recognize that, "Okay, there's something a little bit different about this brand and how they started and their medical team and the passion that we put behind having clean, safe products," and I'm passionate about the ocean and the environment, and so we built sustainability into it. All of the things that we do I think really is because of this story, and so we'll continue to market and lean into that as we expand also.

Sinead: That's great. Something that, like you said, that really differentiates you, that element from so many other CBD brands out there right now, it's just that dedication to transparency and to your quality. You really are trying to lead the charge away from additives, and as you've mentioned, preservatives, not hiding behind proprietary blends, as I've seen on your website. I see that messaging across the CBD world all the time. It's amazing how often I see that word 'proprietary'. Can you tell us a little bit about how the CBD world and even the skincare world falls short on transparency in the ingredients that we're currently using?

Davina: Yes. To talk about first, why because I think that's also why we're so against it is, a lot of companies, a lot of the ingredients that people use are not great. We even in hunting for manufacturers had a difficult time finding manufacturers that were willing to work with us to test products and create products that have shelf life stability without using some really well-known preservative that we just aren't comfortable using in our products, and so they can hide behind proprietary ingredients. Also if you have under a certain percentage, you don't even have to list that ingredient on your label, which is just horrifying to me that that happens.

The reason for that is because I think if it's in such low quantity, it's not going to really have an impact on you, but you have to think about how much ingredients we put on our bodies and in our bodies every single day, and the accumulation of those benefits over time, there's no way that that's good for us. In thinking about the products that we created and why when my great aunt first started, she needed those products to be clean, safe, and preservative-free, and also ourselves being conscious consumers, I always look at the ingredients. I'm the one who tells friends like, "Hey, do you realize what you're putting in your hair on your lips," or, "You should really check out that company and make sure that the products are safe," and so for us, we felt like people deserve to know everything that's in the product.

They deserve to know at a higher level why we use these ingredients. We partnered with a company called clear for me, they're actually behind Ultra's clean beauty movement that powers our ingredient list and database. People can see what the ingredient is studied for and researched and why companies might use it because we felt like people really deserve to know this information and we don't need to hide behind any proprietary ingredients or any mislabeling because they should know exactly what they're putting in and on their body and be able to make informed decisions about the products that they buy.

Sinead: Absolutely. Yes. Something I've read recently which is so shocking is the number of ingredients and chemicals in the US that we use that are banned in most other countries. I think there are something like 1,400 different ingredients that we use here in the US.

Davina: Yes.

Sinead: Yes, like Canada and the EU just absolutely forbid these ingredients.

Davina: Yes. It's something we're so passionate about. Of course, we have to hold ourselves accountable, but we have something called our never, ever promise which is our commitment that we will never use any of those band ingredients in any of the products we create and that's abiding by European, Canadian, Japanese standards because again our health and wellness matters. If we're putting things in our body that are banned other places, we might want to think about why we're actually using them here.

Sinead: Yes. I would agree. I certainly don't want to put something on my body that is banned in most other countries. Gosh, it's really crazy and something you mentioned earlier was how difficult it was to find a manufacturer that would work with you to find alternative preservatives and work with you on sourcing really high ingredients. If I'm not mistaken that alone took you almost a year to find a manufacturer that would do that. Is that right?

Davina: Yes. It took us a while to go through that process. We would start going down a path with somebody and then they kept trying to push us to their products that they already had and we're like, "No, that's not what we want. Onto the next manufacturer," and through that process, because especially if you're working with someone and you're testing out the products and working on the formulations, it's weeks of time that you're spending with each person of going through that. We did spend a lot of time doing that, but I am happy that we did that because, again, we didn't want to sacrifice or take the easy path. One manufacturer came to us and said, "If you don't use this preservative, then we're just not going to work with you. It's too much work."

We're like okay. That was after several weeks of conversations with them. You do the work and you put in whether it's for manufacturing or focus on your packaging of finding packaging that's going to be sustainable for you or ingredient sourcing. That was another thing with a lot of the manufacturers, is they have their established relationships with ingredient providers who are very specific about using eco cert and organic ingredients, really clean products. Obviously, that also takes work for them to go out and find these suppliers that have these specific ingredients that we were using.

Some of them also said, no, it's too much work. We don't want to do that, but that's okay. More power to them and we're fortunate to find one and we're actually in conversations with a couple more as we're looking to expand some of our product lines as well. I think there's a little bit of a shift happening where people understand that conscious consumerism is really becoming valuable and companies are looking for really good manufacturers to partner with.

Sinead: Absolutely. Yes. It's so great to see companies like yours helping to spur on that conscious consumerism in the CBD space. That's amazing. You mentioned some expansion goals. Can you share a little bit about that with us or is it still under wraps?

Davina: There's a couple things. We have a new tincture we're launching just in a couple weeks, which I'm excited to share that is called Be Well. We believe that everyone deserves to be well and it's amazing. It has CBD, CBG, and CBN at pretty high ratios. As well as turmeric, and, lemon and lime, it's just a great nightly tincture to take. I love it. Every night I take it, I sleep so well and wake up feeling great in the morning. There's some other expansion opportunities. We have had some people come to us because of the medical advisor and expertise that we have with formula products that are looking to add CBD. We have a cosmetic formulator and a macho company which is really cool. We'll be working with them to help them create products that'll be powered by Element Apothec.

That's pretty exciting and then in terms of other expansion, we're just also really focused on education. It's a huge part of Dr. Swathes mission and so we're launching an education platform which is a CBD health and wellness certificate for all of our customers and our brand strategic partners to just have more information about CBD and cannabis and our EndoCannabinoid system and understanding better products and how to buy them and what to look for. It's amazing all of the things that are ahead for us.

Sinead: Yes. I'm so excited to see what you guys have in store over the next few years and speaking of, where the cannabis industry as a whole is heading. Like you just said, I feel like that estimation just continues to grow year after year. Where do you see cannabis skincare specifically heading and where do you see maybe consumer preferences and the different products there heading over the next three to five years?

Davina: Yes. There was just a report that came out with incredible numbers in terms of the growth for CBD beauty and skincare products. I think as people start to understand the benefits and looking at CBD or CBD as ingredients, we're a body care wellness company. We're not just a CBD company and as that changes in people look to the benefits of having CBD or CBG or CBN as an ingredient in the product especially when you look at skincare, it has amazing anti-inflammatory benefits and anti-aging. So many of the things that people are concerned with with skin and some of the medical skin conditions that it can support, that people will be looking to have the best product that works and the best product that works may have the ingredients of CBD, CBG, other cannabinoids in it.

I definitely see a lot of growth and it's just really bringing the awareness again, the education of why would I want that ingredient in my product? How is that gonna help me for skincare because I think a lot of people still think about ingesting it and are skeptical to put the product. We were at an event in Chicago and we were giving out samples of the lotion and letting people try it and one woman's like, "Does it have that stuff in there?" I'm like, "What's that stuff?" She goes, "That THC or CBD stuff," and I said, "Yes, let me tell you about it. It's an amazing ingredient," and she was like, "No, I don't want to learn. I don't want to understand it," but another woman asked about it and she goes. "I'm afraid, is it going to do anything to my skin?"

I said, "No, actually it's going to benefit it, and here's how it's going to benefit. The values for it's amazing for nourishing and supporting, providing relief and has a skin regenerative properties," and she goes, "Okay, I'll try it," but I put it on her hand, she was still really nervous about it. You could tell, she kept looking at her hands, like something is going to happen, but she came back an hour later and she ended up buying our lotion. She said that her hands just felt so great. She couldn't stop thinking about maybe why this ingredient made the lotion feel better than other ingredients that she had been using. As we all work together to educate, I think the skin care's really going to be an incredible opportunity for people to get in and build products around that.

Sinead: Definitely. Yes. I really couldn't agree more. I feel like skincare is going to be such a great bridge for the CBD and cannabis industry. Just make it more accessible and normalize it and really broaden the public interest around it. That's great. Davina, I want to wrap up with a few, fun personal development questions because I know CBD is a big part of your life, but it's not the only part. I'd love to ask you few questions. First one, is there a book that's had a big impact on your life or way of thinking that you could share with listeners?

Davina: Yes. I'm a huge fan of Brene Brown and I constantly go back and reread like Daring Greatly I think I must have read like 20 times whilst I'm here, listened to it because I think the idea of being vulnerable and putting yourself out there, there's daring to lead. I just think it's something that's much more needed for everyone to drop their shells, to look at their past and to accept it and to live life with courage and vulnerability. That's something I am really thoughtful about. Another book that I recently read is called Give and Take. It's the idea, something we talked about about even partnering with competitors but the idea in the business world of being a giving person or giving company instead of trying to hold all of your IP or proprietary stuff or not sharing and how those returns come back to you in multiples. It's something that I think about all the time as we're building the business, but personally, I'm a huge Brene Brown fan.

Sinead: Interesting. I'll have to check that out and add it. I ask this question every interview and I've got quite a reading list going here so I'm going to have to add that to it. That's awesome. Next question, what is your favorite music at the moment? Do you have a band or maybe even just a whole music genre that you're really into at the moment?

Davina: You know, it's funny because I always go back to Hawaiian music. I love alternative music and classic rock but I love Hawaiian music. I think it just takes me back to my days visiting my dad when we were young in Hawaii. It's what inspires me when I need inspiration and what calms me down when things are stressful. There's a particular artist called Keali'l Reichel. I used to also do Polynesian dancing when I was younger [unintelligible [00:31:33] It brings back so many emotions and memories that I tend to go back to that all the time.

Sinead: I definitely get that. I've never been to Hawaii but I'm dying to go. It looks just so beautiful over there. It's definitely been on my bucket list for a long time so definitely hope to get over there in the near future. That's great. Davina, wrapping up. One question I have for you, I know Element is still very new and you really only launched last December, but you've been working towards this for some time now. I wondered if you could go back and give yourself one piece of advice when you were first starting Element Apothec, what would you tell yourself?

Davina: I think just to start sooner. There's goods and bad, but we were so focused on coming out of the gate with everything so polished and done. We were a pending B corp and then got [unintelligible [00:32:31] certification, we wanted this, we wanted everyone to really trust and believe us, which I think we could have done along the journey with people. Maybe launched quicker with one or two products and just started that process. That's where I go back and think all the time because we launched, we kind of missed the holiday season. We were like, "We should have just launched with the first couple products," and we could have gone along this journey as it happened instead of trying to have everything so fine-tuned before. Maybe that would be probably what I would think.

Also, understanding of just having patience about how long it takes to actually build a CPG business because we thought we were going to launch these products and we're so different than so many other companies out there and we know these have helped hundreds of people. My aunt's sold these products, so we're going to sell like thousands in day one. Well, it takes a lot more time to build brand awareness and to get people used to your products, especially in a competitive space. Also, just having a little bit more awareness of the amount of time and money that it would take to actually launch the brand and being able to better plan that from the beginning is definitely something for anybody new that's getting into this space or launching a business I would definitely think about.

Sinead: That's great. That's some really great actionable advice for our listeners who are just up and getting going and maybe experiencing a few of the same challenges you experienced. Thank you so much for that. Davina, thank you so much for coming on. This has been such a fascinating interview. Really, I've so enjoyed talking to you and can't wait to see what you do at Element Apothec over the next few years.

Davina: Thank you so much. I enjoyed the conversation. It was great talking to you. I just love being able to tell our story. It's just amazing when you have that opportunity, so thank you.

[music]

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedback@cannainsider.com. We'd love to hear from you.

Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers, or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial adviser before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening. Look for another CannaInsider episode soon. Take care. Bye-bye.

[music]

[00:35:56] [END OF AUDIO]

Ep 365 – How To Win VC Funding For Your Cannabis Startup

ross o'brien bonaventure

What types of businesses are cannabis venture capitalists willing to fund? Here to answer that question is Ross O’Brien of Bonaventure Equity.

Learn more at https://www.bvequity.com

Key Takeaways:

[00:57] An inside look at Bonaventure Equity, a boutique venture capital firm focused on early-stage investments in the cannabis space

[1:54] Ross’ background and how he came to start Bonaventure

[5:35] The two-step process Ross follows when choosing which companies to invest in

[9:22] Ross’ portfolio of investments in cannabis to date, from research and development to health tech

[11:55] Attributes that Ross looks for in a company founder

[13:43] Ross’ advice to entrepreneurs looking to raise capital

[23:13] Common mistakes people make when putting together a pitch deck and how to avoid them

[25:58] Exciting developments in the cannabis healthcare space and where Ross sees it heading over the next 3-5 years

Click Here to Read Full Transcript

Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com that's C-A-N-N-Ainsider dot com. Now here's your program. Today we're going to learn what type of businesses cannabis venture investors are willing to fund and why. I'm pleased to welcome Ross O'Brien from Bonaventure equity to the show. Ross, welcome to CannaInsider.

Ross O'Brien: Hey, Matt, great to be here. Thank you very much for having me.

Matthew: Give us a sense of geography. Where are you in the world today?

Ross: Well, interestingly enough, you've caught me on a road trip on my motorcycle four days in about 900 miles. I'm in Wilmington, North Carolina, but I currently make my home in West Palm Beach, Florida.

Matthew: Okay. What is Bonaventure Equity at a high level?

Ross: Bonaventure Equity, I founded the company about seven years ago really focusing on working with family offices, high net worth investors that I had been involved with, prior to starting the company myself. We started out really as a funnel sponsor putting together interesting transactions in a broad range of sectors, mostly focused on healthcare. Over the last few years that really transitioned to an exclusive focus on cannabis. A couple of years ago, we decided to start investing exclusively in cannabis businesses, we put our first venture fund together. We currently have eight portfolio companies in that first fund.

We are on to our second fund right now currently raising 50 million for some follow ons in the next set of companies that we're going to invest in.

Matthew: Great. Ross, can you share a bit about your background and journey and how you got into the cannabis space and started Bonaventure?

Ross: Sure. Cannabis had been something I've been intrigued with, and quite interested in for some time as an investment thesis, and also something that was a part of my personal life. For years had been looking at what is happening on the regulatory side, such that it seems to me that this was going to be just a massive business opportunity at some point, and I think that everybody would agree that's what's now happening. The challenge was, I worked at a family office, I was responsible for all their self-directed venture capital, private equity, real estate investing.

The challenge was, is every time we tried to look at the space, there were a couple of hurdles, one being, it was so early on from a legalization standpoint, that there just wasn't enough line of sight to what the markets will be looking like and how they'll be regulated. We were struggling with seeing complementary entrepreneurs in the cannabis spaces probably five years ago, that were the same level of sophistication that we find in other sectors that we're investing in, like I said, like healthcare, for example.

We kept taking a pass and then a couple of years ago, about to the end of 2018, the beginning of 2019, we were really seeing some interesting opportunities and put together a group of investors with myself, and we set about really trying to understand a strategy for cannabis that was best suited to us and how we invest. We are early-stage investors, meaning that we invest in a series C or series A typically. Typically investing one to three million at any first initial round. We looked at close to maybe 400 companies, or certainly over 300 to 400 companies, before we wrote our first check.

What we decided to do was a go slow to go fast strategy. One of the things Matt that really concerned us was this green rush mentality. Having invested in and been involved in entrepreneurship for my entire career, as an entrepreneur, as an investor, as an advisor, and having a whole string of failures along the way, this is a very difficult thing to do in any segment, let alone one that's as nascent as cannabis. What that means Matt, is we put together a platform before we started deploying capital. We were hosting a series of events that have been postponed after the pandemic happened in 2020. Those were really great.

We were hosting in the San Diego, New York, Dallas, Miami area, and really bringing together the best and brightest in the space and convening a lot of thought leadership. I wrote a book, the book is called Cannabis Capital. It's the first book on venture capital for cannabis and that actually took a very interesting turn as we were developing that, that I can speak to if you'd like about how it's actually formed our investment thesis. It's really a playbook for entrepreneurs, to help them be more successful and having the conversations with investors like us. Really helping them understand, the dynamics of raising capital and the fundamentals, et cetera.

Then we have an operational piece to our platform as well, where our companies can leverage our back office and finance team to scale up with them. It wasn't just putting together capital, it was really understanding the landscape and where we wanted to invest to achieve the venture returns that we're seeking.

Matthew: Now that you have a sketch of the landscape you've made, I think you said eight investments, how do you go about it? You've described a little bit of your organizational procedure and process. If you were to just to give us another just a quick sketch of how you do that, how do you actually say these are the ones that are going to get a yes and these are ones going to get a no, and here's why?

Ross: Sure. I'll take it in two steps. First is what is our investment thesis and what do we look for then secondarily, then how do we focus in on a specific business and the founder, so I'll take it in those two chunks. The first being the investment thesis, as we invest, as I said, early stage, meaning that we are looking for companies that will generate venture returns. One of the things that I certainly noticed in this space is there's a lot of new investors putting together funds, and that haven't had historical investment in venture prior to the space. They tend to be all over the map. We really focused in and said, 'No, this is, this is venture."

What I mean by that is, we need to get a 10x cash on cash return on any investment that we make, meaning that if we put a million dollars in a company, we have to have a line of sight to getting 10 out through some an exit. We are not particularly enthusiastic about the public markets. We're really looking for companies that will be ideal acquisition targets. What that means is many of the investment strategies that we see in cannabis don't fit that profile, for example, cultivation. You need way more than a million to 2 million to put together a cultivation business to start with.

Secondly, it's agriculture, it's a commodity, and you can see as we're seeing in the market, now, there's a lot of price compression, and that will continue to go that direction. A lot of these companies, when they reach a certain size and certain scale, they have a lot of the upside value baked into the valuation today. This is what we see in a lot of the public markets, that the companies are being valued on the future potential of the business today, as opposed to valuing what the company is worth today and then benefiting from that arbitrage for that upside. Does that make sense, Matt?

Because we're looking for where that value curve is going to occur from an early stage to a later stage as opposed to pricing in now, that later stage state.

Matthew: Yes, that makes total sense. You mentioned a little bit earlier working with family offices and so forth in the past, what is the posture towards cannabis investing right now with family offices?

Ross: The family offices have largely been filling the gap where you don't have a lot of incumbents venture being able to participate yet. A lot of the existing venture funds are prohibited from investing in the space because it's still federally illegal and their agreements with their limited partners prohibit them from certain sectors, meaning that there's a gap in accessible capital, being cannabis first and sector second, in terms of our strategy allows us to be in a position to fill that gap.

The family offices have been incredibly active, there's still a lot of stigma in certain groups and certain categories, but they have a ton of capital, very sophisticated investors, and have largely stepped in to where in a more established market, you would have a lot more venture players or funds that are driving certain elements of the sector.

Matthew: Okay. You mentioned you had made eight investments. Can you talk about those a little bit, your portfolio [crosstalk] and any highlights you want to make?

Ross: Yes, absolutely. Maybe what I'll do is go back to the second part of the question on what we look for in entrepreneurs, because I think that'll paint the brush for some of the companies that a couple of companies that we're working with, first and foremost. Now, so, really what we're looking for are dynamic founders. We'd like to have some veteran entrepreneurial experience, whereby we tend to have the most success with entrepreneurs who have gone through a couple of business cycles prior to the business that they're working on. Really look for great culture builders, innovators. We don't really see disruption as being one of the-- which is a more traditional venture characteristic, because we think that legalization is the disruption that's happening. For us, we really want to see collaborative founders that are going to be able to build something for the long term. Within our portfolio right now, there are a few really interesting highlights. We're really focusing in now in the second fund of the overlap of healthcare and cannabis. We think that's the single greatest opportunity from an investment, an early-stage investment standpoint. We think a lot of the other spaces, whether it's brands, or retail, or dispensaries, and things are getting pretty mature very quickly.

For us, this is the most exciting, and I think, New Frontier, which is because of legalization that healthcare is going to be entirely transformed. With that, we have a company in our portfolio, that was the first to map the genome of the cannabis plant with two PhD female founders that are just fantastic. We have a company that's doing a handheld spectrometer potency testing device with a really experienced engineering background founder. We have a company that's developing the first synthetic CBD compound with a female founder who has built and sold biotech companies before. Those are some highlights of the things that we get really excited about.

Matthew: Okay. You mentioned when you looked at a founding team that you'd like to see some success in the past. Is there any other kind of things you'd look for, or say, hey, this makes me more interested because the founder has these attributes?

Ross: Yes. It's an interesting question because I think one of the characteristics that tend to be highlighted the most in our process, so we do a lot of work with the founders in understanding personality profiles, and personality traits, and qualitative, quantitative, cognitive abilities. We do the same with ourselves. We look for compatibility between us and the founders because it is typically a long-term relationship. One of those key examples during the early stages of getting to establish, getting to know somebody in their team is really looking for a collaborative personality or collaborative approach to challenges.

It's not necessarily that I'm looking for founders that have all the answers, or even the right answers. I'm looking more for what thinking went into those answers and if the answers need to be challenged, or otherwise changed directionally. Is there enough rapport between us and the founder that we can have the hard conversations and make adjustments and be open to that kind of feedback? That usually shows up if somebody is very defensive, or reluctant to hear constructive criticism, even early on in the presentations, that'll be a red flag for us.

Matthew: Okay. There's a lot of listeners that are either now raising capital, or they're planning on starting a business, and they're going to raise capital, how do you think they should kind of orient their thinking, so they put their best foot forward and have success in that endeavor?

Ross: Yes. This was actually the impetus for writing the book. Canvas Capital started as really a textbook to help entrepreneurs have a little more sophistication around their fundraising, how to have conversations around valuation, to understand what due diligence is, and how to develop term sheets and corporate governance, and just all these sort of blocking and tackling elements that you see with a lot more experience in sort of other sectors. That was one of the things that we really wanted to focus on because there was such a lack of fidelity in the conversation I found between founders and investors in the space.

One of the big challenges, Matt, is that I think we're doing ourselves a disservice to talk about cannabis as if it's an industry. Everybody talks about the cannabis industry. As we're doing the research for the book, it really became apparent to us and this was one of the things that we established in the book is that cannabis is not an industry, it's an economy. It's a global macroeconomy. It's here to stay. It's not a trend. As with any macroeconomy, it has sub-sectors and industries within that are being developed. This broad stroke cannabis industry, I don't think is robust enough to really give people the comprehension of what legalization really means.

We have a challenge, that if anybody can identify a sector that otherwise hasn't been impacted by cannabis, please let me know. It's my belief, and so far, I'm batting 1000 that every industry and every incumbent industry, and every company boardroom, cannabis has reached at this point. What that means is that is this ubiquitous landscape. Now, when we get into the cannabis economy, and the sectors that we focus on, it really occurred that there was a lot of tension between investors and founders out there. There tended to be the sort of legacy advocacy-based cannabis insiders that had been in the space for some time saying, the finance, people don't understand us, or the business people don't understand us.

Then on the other side, and when I was interviewing investors for the book and talking to other people in the space, you'd get the inverse of that, right, where people would say, these cannabis people don't understand business. I was trying to find a way to take some tension out of that wedge really that was between the two parties. Where does this translate to advice to entrepreneurs, as you asked is have some humility about going into the process, and recognize that just because it's a cannabis business doesn't mean that the rules of business don't apply.

I see a lot of companies and founders try to be overly creative in trying to put structures together and wanting to do funky sort of debt structures, instead of raising equity, and all this kind of stuff, where it's really about building a great business for the long-term. If you have a plan, and a team in place, and the resources to do that, it shouldn't matter that it's cannabis. It shouldn't matter that it's a great organization that happens to be able to benefit from cannabis legalization in this new economy that's developing. I think it's just having that perspective. When you're reaching out to investors understand that it's not about convincing them that your view of the world is right. It's about understanding what their view of the world is, and helping them understand why your business fits that, right. We get a lot of-- one of the things that, like I said, is a big turnoff is entrepreneurs who get very defensive, well, you just don't understand it, or this is cannabis, you don't get it.

Well, most investors in the space have a lot of experience. Certainly, when you're talking about family offices earlier, and most of the families that I've worked with over the years have generated their wealth through entrepreneurship. You've got to give them some benefit of having some rationale for exploring the opportunities in the way that so that they do.

Everything's a negotiation. Right from the beginning, you're starting to develop a relationship, and building rapport, and understanding how to interact with those people through the process. It can be a very long process for finding fund investors like ourselves, or it can be a very quick process with angel investors if you've got the right people that are looking for the opportunity that you're presenting,

Matthew: Let's jump into one of your investments, Revolutionary clinics. Can you talk about that? What attracted you to them and what they do?

Ross: Yes. I don't know if you saw this but Revolutionary has made the Inc 5000 list this year. It's the number four fastest-growing company in America.

Matthew: Wow.

Ross: They're just very impressive operationally, very impressive in the way in which they establish themselves in their community. Great team, great leadership. I happen to know the founder and have a personal relationship there, which was how we got involved. We're not actively involved like we are with some of the other earlier companies. As far as their business model goes, we just really thought they were the gold standard space and would be an important so relationship to work with and we couldn't be happier about how things are going.

Matthew: Great. Is there another portfolio investment you want to talk about at all?

Ross: Yes. The three I talked about earlier would be the ones that were-- which is Leaf. I don't know if I should mention by name, but LeafWorks and the two PhD founders, which is mapping the genome. The other company is tCheck. tCheck is the handheld spectrometer device for potency testing. Great story. Peichen Chang, the founder is an engineer by background and he had a personal relationship with somebody that was managing their Parkinson's symptoms by baking edibles for themselves and couldn't find the right tools in order to get the dosages right. It was a real problem and the company's doing great. The product is very well-recognized.

We look at that as something that is going to be just an essential tool for people that are developing their own dosages for themselves in home and then the other company that I mentioned as well that's building this and they're developing rather the synthetic compound for CBD is [unintelligible [00:21:08] a very exciting company out of California team of biotech entrepreneurs that have been there before. The thesis there is that as with aspirin that originated from naturally occurring plant-based compounds, the way to actually scale and have consistent quality and produce that scale is to create it synthetically and then scale it up.

Matthew: For your book, Cannabis Capital, you wrote it. Everything you put in there, you feel like is valuable, but is there any feedback you get that's like, "Hey, this was really helpful to me," this aspect where you hear that feedback consistently about any certain areas of the book?

Ross: One of the best compliments, and if anybody finds any grammatical errors in there, I'll blame the publisher on that, but one of the most interesting compliments and I don't think it was intended to be a compliment when I got this feedback was that it was that the advice on building a business, managing a business, and raising capital could have been applicable to any business and it wasn't specific to cannabis. That's entirely the point. The cannabis economy is the thought leadership that was developed in there and it is the first place to publish on this concept. When we get into the term sheets and structuring transactions, there's a lot of nuance for cannabis businesses there. Then the case studies that run throughout the book are all cannabis-based businesses. The whole point is that the fundamentals of business don't change and the fundamentals of understanding how to manage a balance sheet should be applicable to any type of business. I think this individual was looking for something that was more nuanced or specific to cannabis and said all this could apply to any business and that's exactly the point, is those best practices exist in the world and we should carry them forward into this sector as well.

Matthew: Interesting. You mentioned before it's a real turnoff when someone's a founder is just not flexible at all, but what else can they make sure they steer clear of like in terms of maybe their slide deck having a problem? What's a good slide deck look like when they come to you and how is it clear and digestible versus one that's just not digestible?

Ross: I think that's a great question. It is something obviously that we see day in and day out is going through decks. My advice to your listeners out there would be the strategy for creating a slide deck should be based on putting big foundational items in place first and then moving the narrative forward from there. For example, I always like to see the team and the people in the backgrounds very early on in the first one or two slides because the credibility of those individuals and the people that we're speaking to will inform the whole rest of the presentation. I also tend to see an overemphasis on market and market numbers and addressable market.

If we're having a conversation about whether or not cannabis is going to be a large marketplace, you're not having the right conversation. We believe in that completely such that we're on our second fund now to invest in that strategy. We don't necessarily need to be convinced of the big numbers multiplied by other big numbers. What we really want to see is, is there a thoughtful go-to-market strategy that identifies clearly what the channel to market are and how to go manage those channels to market successfully? An overemphasis on market and market sizing and ideas is generally something we want to move on quickly, pass quickly.

I would say that if you can't explain your business in 20 minutes, you probably don't have a clear understanding of your business. We sometimes get into these presentations that an hour, an hour and a half later people are saying, "Oh, well, I haven't told you about this yet or I haven't told you about that yet." That to me is indicative of we just want to do everything and do everything great and we're going to do a million different things at once. We really just want to see a lot more focus and discipline around the hypothesis with business.

Matthew: What trend in the cannabis space do you feel like is underappreciated but you believe is going to be huge in the next three to five years?

Ross: It's healthcare for sure for us and our focus is they're--

Matthew: Dig in there. Tell us why.

Ross: A few things. One, we're only just at the front end of the research and discovery that's happening now around getting access to this plant legally. It's really exciting what is being developed and look, nobody's debating whether or not cannabis is good for treating the symptoms of Parkinson's. We had the FDA-approved Epidiolex which have a huge $7-plus billion exit which is for treating epilepsy and people have known for generations that cannabis can be applicable for sleep aid or for inflammation or for anxiety or depression, and glaucoma and all these.

The application that the plant can have for all these different pain management and different symptoms and underlying morbidities is to my mind, we're just scratching the surface on that and barely started that cycle. We also see I think the FDA is going to be more malleable and the government institutions are going to be more malleable than ever going forward. We're seeing government now trying to move at the pace of business as opposed to the pace of policy. I think that will open up for a lot more rapid comparatively processes to get FDA approvals and things like that, which we think are necessary.

We believe more regulation is required. We don't think that the objective should be to have zero regulation. We think the objective should be to have sensible regulation that can help bring the highest quality products to the market. With that, we definitely see this transformation on the healthcare side. It's difficult to find these things out, but we estimate there's somewhere around 40 or 50 applications or in-process to the FDA applications being developed for new therapies based on cannabis, and to our reservation, that should be more like 400 to 500 at a minimum at this stage. We think that's just wide open space.

Matthew: There's a lot of investors, entrepreneurs, and others moving from the West Coast to Texas and Florida. You mentioned you're in West Palm Beach. Are you a native there or did you relocate from somewhere else?

Ross: Yes. I'm a bit of a nomad. I'm from Canada originally. Calgary, Alberta is where I was born. First moved to Michigan in the US, then did a dozen or so years in Manhattan, and then just spent the last 10 years in Florida. We're actually moving our headquarters to Raleigh, North Carolina in the coming months as well. For us, it's less about being in a legal state. Recreational use is not really something that is driving our investment activity. We're looking for where are the centers of highly scientific innovation going to be happening. We don't think that the individual state regulations play into that that much. We invest all over the country. Most of our companies are on the west coast now, but yes, there is a huge migration right now to some of these areas and we see certainly in the sub-Florida area, the Miami region up to West Palm, but we will continue to have a presence there. There's a lot of uptick and venture activity, which is just exciting for everyone.

Matthew: Ross, I want to turn to some personal development questions. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Ross: Well, I'm a voracious reader, so there's a lot of them. I actually just wrote a blog article on the five books that I recommend for entrepreneurs to read, and then re-read. There's a lot of great books, business books, obviously, and self-development books. One of the things that occurred to me was after decades of experience, the context can take on new meaning, and depth, and color, and those are really really great books. For example, the book The Hard Thing About Hard Things by Horowitz, that book took on a much more powerful narrative for me after I had gone through some cycles of being on boards, and managing boards, and having boards, for example, at the board level, senior C-suite level. Also, one of my all-time favorites is Good to Great, which is a lot of people's all-time favorites. Some of the concepts in that really became applicable only in the last few years of my career versus when I first was exposed to that book. On the personal development side, I'm a really big fan of Tim Ferriss. I like Tools of Titans and his anthologies are really, really terrific. I love his expression that success leaves clues. I'm always going back and re-reading even just short anecdotes that he's collected from other successful people. One of the personal development people that I didn't really acknowledge until later in my career, I just ignored, was Tony Robbins and Awaken the Giant Within was actually a really transformative book for me when I visited it a few years ago in the later stages of my career.

Matthew: What is your favorite unhealthy comfort food?

Ross: [laughs] I love food, I love to eat. I would say I probably eat more high-end steak than any normal person should. I enjoy a lot of the good steakhouses, but to take that even a step further, I'd say my favorite meal of all time would probably be Beef Wellington. How can you get anything more delicious than steak wrapped in pastry?

Matthew: Nice. Well, Ross, as we close, how can listeners find out more about Bonaventure Equity, and the work you're doing, and connect online with you?

Ross: Great. Well, thanks very much, this is great. Anybody can find us at bvequity.com, B as in boy, V as in Victor, equity.com. We also have the Cannabis Capital podcast, which is cannabiscapitalpodcast.com. The Book Cannabis Capital is available on Amazon and wherever fine books are sold. My personal blog and website is rossobrienbc.com.

Matthew: Ross, well, thanks so much for coming on, really appreciate it. Good luck with all of your investments in 2021 and beyond.

Ross: Great, would love to come back and give you some updates. It's going to be an exciting few years ahead.

[music]

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guest to you. Learn more at canabisinsider.com/iTunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out through Free Report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider? Simply send us an email at feedack@cannainsider.com, we'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments.

Promotional consideration may be provided by select guests, advertisers or companies featured on CannaInsider. Lastly, the host or guest on CannaInsider may or may not invest in the company's entrepreneur's profile to the show. Please, consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.

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[00:35:41] [END OF AUDIO]

Ep 364 – New High Potency Pre-Rolls Are Taking Off in California

scott sundvor space coyote

After earning a spot on the Forbes 30 Under 30 list in 2018, Scott Sundvor left a decorated career in the medical device industry to start a new venture in cannabis. In just three years, Space Coyote has become one of the top extract-infused pre-roll brands in all of California. Hear how he did it in this episode of CannaInsider.

Learn more at https://www.spacecoyote.org

Key Takeaways:

[1:02] An inside look at Space Coyote, one of the best-selling high potency preroll brands in California

[1:46] Scott’s background in the medical device industry and how he came to start Space Coyote

[12:32] Differences between Space Coyote’s high potency infused pre-rolls and other pre-rolls on the market

[16:15] What customers are saying about Space Coyote

[17:26] How the company has developed strong brand loyalty through experiential events

[21:26] The pros and cons of a fully remote cannabis brand and how that influences work culture and performance

[25:27] Why Scott believes cannabis is an “infinite game”

[28:41] Space Coyote’s efforts in sustainability and the best packaging options for cannabis brands right now

[34:12] Space Coyote’s goals for the next few years, including a sativa preservation project and plans to expand to the east coast

Click Here to Read Full Transcript

Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode, where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now here's your program.

Sinead Green: Today's guest is a serial entrepreneur, accomplished inventor, and Forbes 30 Under 30, who left a decorated career in the medical device industry to start his own cannabis brand. In just two years, this company is now one of California's top pre-roll brands carried in over 250 dispensaries across the state. I'm pleased to welcome Scott Sundvor of Space Coyote to the show. Scott, thank you so much for joining us today.

Scott Sundvor: Thank you so much for having me. It's great to be here.

Sinead: Give us a sense of geography. Where are you in the world today?

Scott: Today I am in Laguna Beach, California, so Southern California.

Sinead: Awesome, cool. What is Space Coyote on a high level? Can you give us an overview of the company?

Scott: Yes, Space Coyote sells-- we sell primarily infused joints, so high-quality, high-potency joints that are infused with the best extracts on the market, hash, live resin, diamonds, all infused, but really, we think of ourselves not just as a product company. We really are creating a brand that people can get behind. What comes along with that is creating this-- more of a dream of what California cannabis can be and the lifestyle that you can live being both an entrepreneur, but really in just anything that people want to do and how cannabis can be a part of that.

Sinead: Very cool. I know there's a really cool story behind the name Space Coyote, which I want to get to in a second here, but first, Scott, I want to backtrack a little bit. You only really got into the cannabis space a couple of years ago at this point. Can you share a little bit about your background and what led you to start Space Coyote?

Scott: Yes, my background before Space Coyote was in the medical device space as you mentioned. I got my engineering degree from MIT. About a year after graduating, I started a company called Nima that created the world's first portable sensors for people that had a food allergy. If you had a gluten allergy or peanut allergy, you could use our product to test your food on the spot and make sure that those allergens weren't present. It really just made eating for people who had food intolerances or food allergies a lot safer. The reason I came to that company was because I myself have suffered with a lot of gut issues through my life.

I have Crohn's disease, which is an autoimmune gut disease. Because of that also, I actually found cannabis was very medicinally helpful for me when I was in college. I ate some pot brownies that my roommate made one night, and I had been recreationally using for a while at that point. I just love the plant in general, but the first time I had those pot brownies, the next day my gut felt incredible.

After having a few more pot brownies over the course of the next week or two, I realized that there was a direct correlation between how my gut felt and how much cannabis I was consuming. When I was making the decision to leave my last company, and I was thinking about what to do next, I think there's a small percentage of people in the world that are crazy enough to be entrepreneurs multiple times in a row. I knew that I wanted to start something else.

My co-founder in Space Coyote, Libby, she was the creative director of Eaze at the time, who was-- at the time, they were the largest cannabis delivery company in California, I believe in America. Being able to just see what she was experiencing there, how quick the growth was, and knowing that I had this manufacturing and supply chain background that-- we weren't directly a medical device but we worked under a lot of the same scrutiny that medical devices do and very complex supply chain across three different continents, and taking that experience and applying it to cannabis where the entire supply chain has to operate within one state.

I mean an infused joint has maybe five different components in it, including the packaging versus the product that I was building that had several hundred components. I just thought that first of all cannabis was something that I loved and had helped me a lot both recreationally and medicinally. There was just a ton of opportunity at that time in the industry. I think there still is. The background that I had combined with the background that Libby had just was the perfect fit to get into the industry at that time.

Sinead: Very cool. Yes, just to paint a picture for listeners, you started at Nima when you were only 22, which then was named one of Time Magazine’s best inventions in 2015. You were then named Forbes 30 Under 30 at 27. You've gone on now to launch Space Coyote, which has seen great success over the last couple of years. Can you tell us a little bit about your experiences over the last decade and how you now apply those at Space Coyote?

Scott: Yes, definitely. I think that I look at it in two ways. One is from the management and the leadership side, and the other is from just understanding how products are built and how to successfully launch and scale a business. With my first company, I was very young when I went in. I mean I'm intelligent, I've always worked very hard to do my best in whatever role I'm at.

As part of my first company, that meant reading as many leadership books as I could, getting mentorship where I could. I ended up hiring an executive coach, which was extremely helpful, but the second time around, now with Space Coyote, I'm already seeing so many situations where I'm such a better leader, I'm such a better manager.

I treat my employees better. I understand them better, I have more empathy. That has been extremely helpful in building an organization that functions really well and I'm really grateful for having that experience when I was so young. I mean, most people-- I think the average age of a first-time entrepreneur is 28, something like that.

I had that experience much younger and I'm really, really grateful for that, but also with that company, we built extremely complex hardware that had chemistry built into it, we had a software development team built an app. Over the course of that company I managed-- I think the only department in the company that I never managed at Nima was finance.

I managed our sales and marketing team. I managed our engineering team, I managed our operations team. I got all this experience of just how to, first of all, build a product with a complex, a very complex supply chain and then how to commercialize that, how to launch a product and how to get other people on board and even the fundraising process how to bring cash in.

Being able to take all of that experience and then apply it to this industry has really just been so valuable because cannabis is definitely a complex industry. It's more difficult than your standard CPG or that type of thing, but I hear a lot of people in the industry, even investors talking about how difficult cannabis is.

Coming from basically a medical device to this, my perspective has always been like, yes, there's some challenges here but this is easy compared to what I was used to. I'm very grateful to have that education both from college, but then especially from my first company of really being put through the wringer.

Of course, there are still things that come up with Space Coyote that are very difficult and take a lot of manpower and brainpower to solve the issues but I feel like I'd just set up so much better having had that first-time founder experience with Nima before coming into Space Coyote.

Sinead: Very cool. It sounds like you really have the full gamut of experience when it comes to the inner workings of a company. Like you said, I feel like there are actually a good bit of overlap between cannabis and the medical device field in terms of regulations and compliance. I'm sure you-

Scott: Oh, definitely.

Sinead: - yes, really put through the wringer there and it's helped you a lot here clearly, that's awesome. Scott, getting back to-- I alluded to the story about the name Space Coyote earlier. Can you tell us a little bit about the experience that sparked the inspiration for that name?

Scott: Yes. It was a great weekend. It actually happened to be the day after my final day at Nima. I decided to leave that company, and my co-founder was taking overrunning everything. The company was in great hands. I left Nima had my last day there, which was very bittersweet, and the next day actually happened to be my birthday. I gathered a group of about 25 of my friends, we all went down to Joshua Tree. We're in the desert. It also happened that that weekend there was a new moon and a meteor shower, so no moonlight and just all these meteors. I brewed a big batch of mushroom tea, enough to feed everyone. We all drank some mushroom tea and then it was pitch black outside. You could see the Milky Way and you could see all these stars.

We were traipsing about the desert and climbing up on top of boulders. I've never had an experience where I so completely felt that we literally are on a rock just flying through space. It was just with how dark the sky was and you could see all these stars and every few seconds there were meteors flying through. Then we started hearing some coyotes yapping and one of my friends goes, “Oh, my God, we're space coyotes.”

Immediately then-- we kept saying that for the rest of the weekend and actually one of our taglines, at Space Coyotes, is Get Glazed. That actually came from a typo. We had created a Facebook event that invited all my friends to this. Libby had actually set this up, who's my cofounder. She had made a typo that instead of saying Scott star gazing birthday, it was Scott star glazing birthday. Get Glazed stuck, Space Coyote stuck. At that time, we didn't yet have a plan for exactly what cannabis company we were going to launch.

We knew that that was something that we were interested in and over the course of the next three to six months, we did the market research that we wanted to, thought about what type of products we wanted to introduce to the market. The whole time we knew that we had a name, the name was perfect. It was Space Coyote, guaranteed. We just had to create a product that really fits that Space Coyote, Get Glazed vibe that we had created in the desert that night.

Sinead: Man, what a serendipitous story. So many brands toil over-- they maybe have their product ready to go, but they then have to spend months and months toiling over a name. That's just amazing that you guys just happen to come up with that over a fun weekend. That's a great name, too. Very memorable.

Scott: Thank you.

Sinead: That's awesome. So cool. Getting into Space Coyote, can you tell me a little bit more about how you guys came up with your product? I know it's an infused pre-roll. How is it different from other infused pre-rolls on the market and how do you guys go about sourcing your flour and crafting each pre-roll that you now sell?

Scott: For us, it was a very research-based approach. We knew that we wanted to make something that one was a product that we wanted to use ourselves. Really, I believe that in order to really be able to stay committed while you're being an entrepreneur and a founder and to feel comfortable and excited to sell something, that has to be something that you would use yourself, that you would want yourself. That was the first criteria, it had to be something that we wanted to use ourselves.

Also, we wanted to create a product that we knew that we were going to be able to sell easily and that wasn't going to have a ton of competition right off the bat, that was more unique than just your everyday cannabis product. With Libby's background coming from Eaze, she had just observed the course of the market over the past couple of years before that. She knew that really one of the biggest things that customers look for is that price to THC ratio. They want as much THC for the lowest price as they can get. We really do see that dominate in the market.

It's honestly something that I dislike because I think that there's a ton of cannabis that is incredible, that is low THC and just the terpene content is what makes it really amazing. The metric that most customers look at is THC. We didn't want to fight an uphill battle. We wanted to make something that spoke to the way that customers are making purchasing decisions today. We looked at a few different things. We settled on infused pre-rolls partially because we were already rolling those ourselves. One of my favorite things to do at that time was to get some high CBD flour and roll a joint with some sativa indica hash mixed in. We just thought that that was an incredible product.

There were a couple of infused joints on the market at the time when we launched but they were all done in a different way than what we did where they basically painted their joints with distillate and then rolled them kief to create the infusion. From our perspective, that just is not a high-quality product. Distillate is the cheapest, lowest quality type of extract you can get. Kief can be high quality, a lot of times it's not. When the extract is on the outside of the joint, then a lot of it ends up just burning up or the smoke gets in your eyes instead of your lungs.

We wanted to do an infused joint where we were actually using high-quality flour. We have never used trimmer [unintelligible [00:15:41] in our joints and we never will. We always use very high-quality extracts. The first thing that we did was collaborate with a hash brand. We've now also done collaborations with live resin brands. We've done collaborations on diamonds.

That's because we want to show our customers that we're putting the best quality ingredients into our product. If they see Nasha Hash or field live resin or GIL diamonds in there, they know that that is a high-quality extract, and so they can trust that we're providing a high-quality product to them.

Sinead: That's awesome. For your various products, obviously, you've got a wide selection at this point, but what would you say when you get customer feedback, what are some adjectives that they give you for their experience smoking these pre-rolls?

Scott: That's been one of the great things about the way that we've built our product in that we just wanted it to be a high quality and we didn't even really think about how big of an impact this would have. Every time we give someone one of our joints, the reaction we get almost every time is, “This is the best joint I've ever smoked,” or just like, “Holy shit, this thing is potent,” or like, “Oh, wow. I smoke a lot and this got me super high.” We joke that, which it's not even a joke, it's real one Space Coyote can get 10 people high and it's going to be the best experience that you have.

In the early days, that was really helpful because we were this no-name brand that came out and would struggle to get meetings with buyers. All we had to do was get them to try our joints. If they tried our joints and they said, “Hey, you're right, this is a great joint. Let's bring into the store.”

Sinead: Oh, that's awesome. At Space Coyote, you guys seem to have just incredible brand loyalty among customers. Clearly, it's partly to do with just the quality of the product. They keep coming back for more. What efforts have you really made over the last couple of years to really secure that brand loyalty with customers?

Scott: That's a great question. I'm going to answer this from a macro perspective first and then get into the details a little bit, but the way that we've always looked at our company and at the cannabis market as a whole is that at some point brands are going to become very valuable. That's because flour will get commoditized.

It has actually taken longer than we thought it would, but it looks like this year there is for the first time in California, there's an oversupply of flour, meaning that flour is finally getting commoditized. When flour is commoditized, when anyone more or less can get access to the same type of quality, then the only thing that really differentiates different companies is one, the uniqueness of their product, and two, the strength of their brand.

From day one, we knew that we didn't want to just build a product company. We wanted to build a brand. With that, the first thing that we did when we launched was we created an experiential event. This was, of course, before COVID when everyone could sit in a room and smoke joints together. There were no issues. We threw these series of events that really our goal was to make people feel what it was like to be a Space Coyote.

I mentioned it earlier, but really being a Space Coyote and the Space Coyote brand, it's about this idea of living the dream, or you could call it living the California dream or living your best life and being able to do that through both cannabis, but also what you love. Whether that's being an artist or you're, say, a tech job or whatever, but just living the best life that you can.

Part of that is the way that you recreate and using cannabis or working remotely or living somewhere beautiful. At these events that we would throw, there would always be art involved, typically music. Our first one was a live record listening party. We have a friend who's a DJ, who-- he tells stories along with every song that he plays. We would do a sativa set in the beginning where the songs are a little more energetic, and then we do an indica set afterwards, that we would pair it with the sativa and indica joints. We did a couple of events like that with music. Another one with an extremely talented musician from New York. It was truly the most psychedelic experience I've ever had with weed.

When we launched our first diamonds-infused joints, and he played-- with the indica set, he played this, just this set of music that it transported you to the bottom of the ocean, and then to the deepest, most green forest and then up into the sky.

Sinead: Oh, my Gosh.

Scott: It was so incredible. We've always tried to do things like that. Now we've built a Space Coyote bus that is touring the state and going to different dispensaries where people can hang out in the bus and smoke a joint there and just feel this Space Coyote vibe.

Libby and I also do a livestream on Facebook every week that typically gets between, 30,000 to-- we had a couple go viral that went up to over a million views, but really just sharing the way that we live our lives and the way that we've built the company and built this work-life balance and mental health for our employees and, yes, really just this California cannabis dream, and that's what we want to share with people and that's the brand that we're creating.

Sinead: Okay, very cool. If I'm not mistaken, Scott, is Space Coyote is totally remote company at this point?

Scott: We are, yes.

Sinead: Can you tell us a little bit about that aspect of the company, and maybe the pros and cons of being remote and how that influences the work culture and performance at Space Coyote?

Scott: Definitely. This was something that we talked a lot about when we founded the company, and even with our first set of investors, we told them directly, “Before you invest, we want you to know that we will make business decisions that put employee health and happiness above profits. We want you to know that and be okay with that before you put money into the company.” The response that we actually got back from our investors was, “Great. We actually think that that's going to end up making you more profitable.”

I think that that is completely true. Really, a lot of it came from, again, my experience with my last company, and just learning things that went well and things that didn't. This was the situation. The reason I ended up leaving my last company was actually for health reasons. When I started that company, my co-founder and I talked about, we said, "We want a culture where we are the hardest working company, and everyone is putting in 110%. That's going to be the culture that we have.”

That's very Silicon Valley, MIT, tech mentality. I was really proud of that, to begin with, but after being at the company for five years and running it in that way, I was building this company to try to help make other people healthy and my own personal health was completely deteriorating. I actually ended up having to take two medical leaves of absence from my company, because my Crohn's disease got so bad, I lost 30 pounds in a month at one point.

Sinead: Oh, God.

Scott: My doctors were saying that the only choice I had was to remove my colon. When that happened, I really had to take a step back and say, "Wow, okay, where have you gone wrong? Why has your health gotten to such a bad place that you literally cannot go to the office, you can't work, you have to take a medical leave?"

When I did really take a step back and focused on that, then I realized that this mentality of we're going to be the hardest working and putting in 110% all the time, that might work if you look at things in a sprint, or in this finite game perspective, and this is a concept that we can talk about more too. We're playing an infinite game here. We're playing a game where the goal is to stay in the game for as long as possible and to build a long-term successful company, not a company that executes and "wins" in two or three years.

If we wanted to do that with Space Coyote, I knew that we had to prioritize health and happiness above everything else because if we have a team that is healthy, and happy and focusing not just on their physical health, but also their mental health, that's how we're going to get the best performance out of employees. If you work 60, 70 hour weeks, but only 30 of those hours are productive, then you should only be working 30 or 40 hours and then resting the rest of the time because then you'll be really productive when you're actually working. That type of mentality has really worked well for us.

I think because of that, our employees are really grateful. I've had employees multiple times, say things like, "You're the best boss I've ever had,” or, “I've never worked for a company that actually cared about my health before," and things like that, which to me is like that's part of being an entrepreneur, is to build the best environment possible. It's not just to make money with the products that you sell.

Sinead: Absolutely. I love your entire model and the work culture that you've really fostered at Space Coyote, it seems like such a fun place to work, and something you said a few minutes ago about, “this is an infinite game.” I really agree with you there on that and something else that you have done at Space Coyote that really ties into that is, instead of jumping in the rat race and trying to compete with your competitors, you partner with them and bolster each other up to profit together and find success together. Can you tell us a little bit about those efforts and maybe one or two of your favorite partnerships today?

Scott: Yes, definitely. I'll explain the concept of the infinite gamer versus finite game a little bit for any of your listeners that aren't familiar with that but it's a concept that Simon Sinek talks about a lot. An infinite game is one where the goal of the game is to stay in the game as long as possible. Players can come in or out. There's no fixed rules and really, if you look at it life is an infinite game and business should be an infinite game.

Whereas a finite game is more of like a soccer game, where there's set rules, the players are defined, people can't come in and out, and somebody wins at the end. I think the way that most companies today, especially in America, look at business is in this finite game mentality. The issue is that companies aren't built to last two years, or five years or seven years, a company should be built to last indefinitely.

If we want to have that perspective, that means that in the infinite game that we're playing, we're not trying to win, we're not trying to just beat our competitor, we're not trying to have someone else lose, we're trying to for ourselves, and also for the good of the industry, we want as many companies and as many people to be successful as possible. That is part of what we did from the beginning was collaborating with extract brands, which, for example, our first collaboration was with Nasha on their hash, that's one of my favorite collaborations.

That was the first one that we did. We still work really closely with Baron and his team over there. Today, Nasha has their own infused pre-roll on the market. That's not something that we're upset about at all because it's good for his business and we have our market share, and our market share is still growing. There's room for more than one of us, there's room for many players.

We really want to help build up the industry as a whole. I think the more the industry as a whole is successful, the more individual companies can be successful and the best way to do that is to collaborate with other companies.

Sinead: That's great. I love what you said there. There's really a piece of the pie for everyone. I think the cannabis industry is becoming more and more collaborative. I love to see companies like yours that are really leading the charge there so that's awesome.

Jumping into another key initiative at Space Coyote, you make a lot of efforts towards being a sustainable company and really trying to pick the best packaging options and reducing your carbon footprint at Space Coyote. Actually, you commissioned a full review of packing options when you first started Space Coyote and you tried to take a look at their environmental impacts, you actually discovered that compostable plastics came out of the bottom, which I found pretty surprising when I read that.

What do you use instead of Space Coyote and how are you guys working to make your packaging even more sustainable?

Scott: That whole situation was a total mindfuck because I was expecting compostable plastics as well to be the best option. What we learned was that it was in fact the worst and this is a case-- We hired a friend who is an environmental consultant. She was equally surprised as us. I think it was just as difficult mentally for her when she delivered the findings to us, but really, when it comes down to it and as we've thought about this, and this is one of the other reasons why it's a bit of a mind, is that as a company that produces products, there is no way that you can't make a negative impact on the environment. That's something that I personally just had to sit with for a bit and just think about. There's no way that we're not at least going to make some negative impact. What's the best thing to do then? Do we shut down the business or what?

One of the people that I really respect as a businessman and the way that they've set up what they do is Yvon Chouinard, who's the founder of Patagonia. He talks about this a bit too. His perspective is that it's a company's responsibility to make as little impact as possible.

It's impossible to make zero impact. What can you do to make as little impact as possible? With this packaging review, what we found was really, the best thing that you can do is to reuse things. Anything that you produce, whether it's compostable plastic or normal plastic or glass or aluminum, the best thing that you can do is to reuse things.

That's why our five packs are in these aluminum tins that happen to be the perfect size to fit your credit cards in, or you can store your jewelry in there or condoms or medicine or whatever. We really encourage people to reuse our packaging as much as possible. The environmental study that we commissioned actually found that as far as greenhouse gas, emissions on the watershed, energy usage, that type of thing, plastic is actually one of the best options.

I am a huge lover of the ocean. I've lived near the ocean, my entire life. The way that I de-stress is by going swimming or going surfing and just spending time on the beach whenever I can. Whenever I see plastic on the beach, which is literally every time I go to the beach, it pains me. I spend part of, or I try to spend part of every month in Hawaii.

That was my home for the past couple years. I've had to rescue sea turtles from fishing line and I've pulled so much trash off the beach. Using plastic is just something that I want to get away from as much as possible. Our joint tubes have been plastic.

We kept them that way for a while because we really wanted to think about what we could do that was better. It's difficult to find an aluminum tube that is child-resistant and actually preserves the integrity of the product well through air [unintelligible [00:32:53]. We're actually moving to glass tubes very soon, which have their pros and cons.

They're a lot heavier than plastic. The energy usage to ship them is higher. From my perspective, the ocean, it's the largest thing on the planet. If we destroy the ocean, we're going to destroy the whole planet. Whatever we can do to help prevent that plastic getting into the ocean, I think is positive. We've looked at using plastic that was recycled and harvested out of the ocean, which I still would like to do at some point in the future.

That isn't at scale yet where it can make sense for a company like ours, but I think that there's a lot of options that can be good, but really when it comes to on to it, we just look at how can we make the smallest impact possible? How can we encourage people to reuse? What else can we do as a company beyond just the packaging decisions that we make to try to encourage others also to make as little impact on the environment as possible?

Sinead: That's great. How mind-blowing that compostable plastic is at the bottom there. I really did love seeing that you guys are moving to glass, which I know, like you said, has its pros and cons, but that's awesome that you guys are moving in that direction. If I'm not mistaken, you're now at in 250 dispensaries across California. What go do you have now at Space Coyote over the next few years? Do you have any big plans coming up listeners should know about?

Scott: Two big things. The first is we're launching a new project very soon, at the end of this month, that's called the Sativa Preservation Society. This is a project that is really near and dear to our hearts. It's an idea that Libby and I talked about from day one and we're just now being able to make it a reality. In the cannabis market today, you can buy sativas and you can buy indicas, but really everything that you buy is a hybrid. It's really difficult to find and pure sativas.

That's because the sativa growing cycle is much longer than the indica growing cycle. Typically, yields are a little bit lower. It might take sativas 14 weeks to flower, whereas it takes indicas eight weeks to flower. For a farmer it's just, it's difficult to make the same amount of money on something that takes almost twice as long.

Everything's become hybridized. That means that whenever you're smoking sativa, and for people that like those more energetic effects, what you can get on the market today is just not the same as what was available from the original genetics. We've been able to partner up with an incredible cultivator [unintelligible [00:35:44] impossible. We have exclusive access.

As far as I know, this is the first time these specific screens have ever made it to the legal market in any state. We're starting with three of the original haze strains that were brought over from the Netherlands by Nebel. They're the strains, that popular strains that you've heard of today like super silver hazes or Jack Herer or strains like that, blue dream.

These all originated from these haze strains.

They look funky. They have a smell that you probably have never smelled before in cannabis. It's like this and [unintelligible [00:36:32] scentsy just interesting smell, and the high, it's legitimately drinking two cups of coffee. It's just so cool. This weed, one of the strains is called Cuban Black Haze. It was known as the piff in New York for a while. People used to pay like $800 an ounce for this stuff in the black market because it's so unique.

We now have it at scale. We'll be presenting it to the California market at the end of this month. The high is just so incredible. I'm so excited to get that out there. That really speaks to what I was talking about earlier in that anyone can be a product company, but not anyone can build a unique brand.

Part of the way that we do that is by creating unique products. Even our infused joints, when we came out with them at first, we did them differently than the other infused joints, because we thought it was a better quality way to do it. With the Sativa Preservation Society, these are strains and genetics that nobody has, and is just so unique.

It's not your latest wedding cake or ice cream cake or gelato cross that is absolutely everywhere. This shit is unique and awesome. We're really excited about that. The other thing that we'll be looking to do very soon is to take our California brand and start bringing that across the country. We've seen a lot of the MSOs are taking more of the east to west approach.

What I think is really going to end up winning, winning is more from the finite game perspective, but what is going to be successful in the, I really do believe is California brands coming to other parts of America, because that's what people think of when they think of weed. They think California, they think smoking on the beach, they think about a brand like Space Coyote if they haven't even heard Space Coyote before.

We just really believe that we're setting ourselves up to be the perfect brand to bring back to the East Coast or to places like Arizona or the Midwest and to really sell that California dream and the joint. We're really excited to get that started. That's great, man. A lot of big things ahead.

Sinead: I'm really excited for you guys and excited to see you, like you said, expand across the country into the East Coast. Scott, pivoting into some personal development questions here, before we wrap up the show first question here is, is there a book that's had a big impact on you and maybe like your life philosophy that you'd like to share with listeners?

Scott: There is, yes. It's actually required reading for any new employees that join Space Coyote and it’s the book written by the founder of Patagonia, Yvon Chouinard, it's called Let My People Go Surfing. I read that book in between leaving Nima and before starting Space Coyote. It really had a profound impact on the way that I think about not just business, but also life, and really, this perspective of do as little harm as possible and treat your employees right, and prioritize health and happiness. It's really an incredible little story. It tells both his story of how he started Patagonia and the ethos that went into that. I think they had the first on-premise childcare of any major company in America. Then that ended up becoming standard in a bunch of companies. They've done a lot of things like that that really just prioritize their employees first. We can see today they're an insanely valuable company, have grown a ton. That really stems from their ethos and the way they do business. That book has had a really big impact on me.

The other book that I recommend to anyone who wants to be an entrepreneur is The Hard Thing About Hard Things by Ben Horowitz. That is the most real business or entrepreneurship book that I've ever read. I think a lot of books, they give these concepts and these theories and all this stuff, but that book it's really just a set of stories from the battle trenches written by Ben Horowitz.

It's just a lot of really good lessons for any company, for any founder, you're going to have times when things are really difficult and you might be afraid of going out of business or you have to deal with some really difficult employee issues or that type of thing. That stuff can be really stressful and he has a lot of very good advice in there that is very empathetic with what any founder will go through.

Sinead: Ma, I'm going to have to put those on my reading list. I had actually listened to the Patagonia's How I Built This interview. I don't know, have you listened to that one?

Scott: I have not. I'm going to have to check it out.

Sinead: Oh, man. I highly recommend it. It's funny, when I was researching Space Coyote, I saw so many parallels and I wondered if you had taken maybe some inspiration from him.

Scott: Yes, 100%.

Sinead: That's awesome. So cool. Moving into our next question here Scott, you touched on this earlier, but you've talked about your personal connection between cannabis and music and how those two things are intertwined for you and they really enhance each other. What's a band or maybe a concert that you've been to where you found that especially true?

Scott: Oh, man, all of them. For me, the combination of cannabis and music is just so incredible. I think one of one of my favorite experiences was with a band called Kikagaku Moyo. I'll look up the spelling so your listeners can find that.

Sinead: Yes, that'd be good.

Scott: It's spelled K-I-K-A-G-A-K-U and the next word Moyo, M-O-Y-O. They are a Japanese psychedelic rock band. You can find their stuff on Spotify. It's good, but seeing them live is just one of the most incredible experiences. They have a guy who plays an electric sitar and they're all barefoot on stage and they have that long, perfectly straight Japanese psychedelic rocker hair. They're such a blast from the past, which I often joke with my friends that it's like, I feel like I was born or should have been born in the ‘60s. They just put on such a great show.

I remember the first time I saw them was in San Francisco. It was actually shortly after launching Space Coyote. Libby and I and a couple friends smoked the Space Coyote before going in and watching the show. It was just one of the best musical experiences I've ever had. Now they're starting to gain a little more name recognition. I think they're on tour in California this summer. I highly recommend people to find them and go smoke a Space Coyote and listen to some Japanese psychedelic rock. That has definitely been one of my favorite experiences.

Sinead: Awesome. Man, that sounds so cool. I'll have to check them out. Scott, wrapping up here, how can listeners find you online and connect with you at Space Coyote and how can they maybe try a few of your products if they're in the California area?

Scott: The best way to find me is on Instagram @scottsundvor S-C-O-T-T-S-U-N-D-V-O-R. They can find Space Coyote on Instagram as well @spacecoyoteofficial. Our website is a great place, especially because we will be launching a direct-to-consumer site within the next week or two. People can go to our website, spacecoyote.org, and order. If they're in California, in most of the major metropolitan areas, they'll be able to order directly from our site delivered right to their door, typically within the next 24 hours. That's at spacecoyote.org.

Sinead: Awesome. All right, Scott. Thank you so much for coming on the show. We really appreciate hearing from you. I really wish you the best of luck with everything coming up for Space Coyote over the next year.

Scott: Thank you so much. This was great being here, really enjoyed the questions and talking with you.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/iTunes.

What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends. Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback@cannainsider.com. We'd love to hear from you. Please do not take any information from CannaInsider or its guests as medical advice.

Contact your licensed physician before taking cannabis or using it for medical treatments. Promotional consideration may be provided by select guests, advertisers or companies featured in CannaInsider. Lastly, the host or guests on CannaInsider may or may not invest in the companies entrepreneurs profiled on the show.

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Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye

Ep 363 – Cannabis Is About To See An Influx of Capital, Here’s What You Need To Know

scott berman jordan tritt panther group

With more states legalizing recreational cannabis and federal legalization on the horizon, the industry is gearing up for an influx of capital. Here to help us stay ahead of the curve is Jordan Tritt and Scott Berman of The Panther Group.

Learn more at https://thepanthergroup.co

Key Takeaways:

[00:56] An inside look at The Panther Group, a venture capital consulting firm for growth-stage cannabis companies

[1:42] Scott and Jordan’s backgrounds in cannabis and how they came to start The Panther Group

[3:08] How cannabis investing is changing and the different factors driving those changes

[5:25] When we might see federal legalization in the US and how to prepare in advance

[6:48] How the SAFE Banking Act could impact cannabis investing over the next few years

[8:06] The characteristics Scott and Jordan look for when considering investing in a company

[10:22] The most promising sectors in cannabis right now

[12:32] The Panther Group’s data-driven digital advertising approach

[15:44] The biggest pain points in digital advertising for cannabis companies and how to navigate them

[21:39] Interesting new gaps emerging in the cannabis marketplace right now

[27:05] Scott and Jordan’s tips on how to develop a successful pitch

[28:54] What investors should look for in a pitch deck and where to spot red flags

Click Here to Read Full Transcript

Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A-insider dot com. Now, here's your program.

Sinead Green: With more states legalizing recreational cannabis and federal legalization on the horizon, the industry is gearing up for an influx of capital. Here to help us stay ahead of the curve is Jordan Tritt and Scott Berman of the Panther Group. Scott and Jordan, thank you so much for joining us today.

Scott Berman: Thank you.

Jordan Tritt: Thank you so much, Sinead, for having us.

Sinead: It's great to have you on. The two of you are in separate states at the moment. Can you give us a sense of geography? Where are you in the world today?

Jordan: Yes, this is Jordan Tritt and I'm based in Atlanta, Georgia.

Scott: This is Scott, and I'm based in Philadelphia.

Sinead: Great, okay. What is the Panther Group on a high level?

Jordan: Yes. Panther Group is a venture capital advisory firm, started in 2020. Originally, Scott and I have been investors in the space since 2014. We've invested in about 40 companies alongside our partners. In early 2020, we saw an opportunity to provide more services to portfolio companies and other potential clients in the space. We look for fast-growing companies, typically in the Series C through Series B stage. We provide capital, business and strategic advisory, and data-driven lead gen in digital advertising services.

Sinead: Great. Can the two of you share a little bit about your background? What led you to start the Panther Group? Scott, maybe we'll start with you on this one.

Scott: Sure. My background is digital advertising. My previous company I co-founded was a digital ad company that did political and healthcare targeting online, using data-driven programmatic media mostly. I got into it through politics, through supporting the Marijuana Policy Project. That led me to the Panther Opportunity Fund, which Jordan mentioned. Then as we got going in the Panther Fund, we just naturally formed the Panther Group, based on our individual experiences and the collective group that we've put together.

Sinead: Okay, great. Jordan, how about you? What's your backstory like?

Jordan: My background is in accounting and finance. I've worked for a number of startups, over about a 10-year career, raising about 30 million in debt and equity for software and hardware companies. I joined Panther Opportunity Fund in 2017 with my dad, and then Scott, and a couple of other partners joined shortly thereafter. I've been running the Panther Opportunity Fund for the last four years day-to-day, evaluating companies, helping raise capital from investors, and then serving on the boards of different portfolio companies helping them grow.

Sinead: Okay, great. Can you give us a snapshot of the cannabis investing landscape right now, how things progressed in cannabis investing, and what's driving that change?

Jordan: Yes, like I said, we've been in the space for a while. We joke, but it's not a joke that six months in cannabis is like two years in the real world. We've seen a lot of those trends go in terms of- 2018, a lot of companies going public. More recently, we've seen the SPAC trend. We've seen a number of different things happen in the space that have influenced the investing landscape, as Scott I'm sure will talk about at some point. There's really just never been a better time in terms of investing in cannabis. Companies are the largest, we have the most-- More and more states are expanding all the time. Politically, there are a number of things happening. There's just a lot of excitement.

Also, the reality is that real estate and stocks have performed extremely well. Hopefully, they'll continue, but there are always real investors who recognize the opportunities to take some chips off the table, and put it into other exciting growing spaces. We feel like cannabis, as much as ever, is prime for a lot of new capital to come in. Particularly at the Panther Group, we spend a lot of time uncovering interesting pockets of capital and liquidity for our portfolio companies.

Scott: I just want to add to that. I think politics, it always comes back to that. In the last six months, actually, there's been a lot of movement in many different states, and when things open up politically, then more capital comes in. These markets need money to develop. There's a lot of investors coming out to the East Coast that have been out there in Oregon and Washington and California for years. They've done very well and now they're setting their sights on new markets. That really is changing the investing landscape, and providing a really unique opportunity now to get in while it's still relatively early.

Sinead: Absolutely. Going off that, what are your thoughts right now on the federal legalization timeline? How do you think things are going to pan out over the next few years in regards to that?

Scott: Well, I'm very optimistic when it comes to politics, more so than most. I also understand that in politics, some things take a very long time and then they take a short time. We've seen this happen with many other issues in our country that have not really been right, and they've been fixed over time. What we've seen as far as federal legalization goes, we still need one to two more election cycles. Every two years, things change a lot in our world. I think in '22 and '24, we're going to have a new Congress and maybe a new White House, and that's when I think we have a very good shot of getting federal legalization.

However, also, what's happening is that the states are changing so rapidly and coming online, that a large majority of the country already has access to legal cannabis. That could make the federal changes happen quicker. That's what I'm banking on, and speaking of banking, there's a lot going on with that as well. I think politics sometimes is not seen by everybody every day, and then all of a sudden, there's a bill on the floor, and things can change quickly.

Sinead: That's great. You just mentioned banking, what thoughts do you have on the Safe Banking Act? How do you think that could influence cannabis over the next couple of years?

Scott: Well, I think it's going to have a seismic impact. There's a lot of trouble right now when you're operating on any level in the cannabis space. Banking is difficult. There's also a lot less liquidity available to companies that are trying to borrow money to build their cannabis business. It's actually an opportunity for us as venture investors to get in with some of these companies when they can't typically go to a bank and take out a loan. They also can directly pay suppliers and payroll and everything else that a normal business does. It's just more complicated. There certainly are many solutions today, but there's still a lot of cash and there's a lot of security issues.

There's just a lot of things that would make it easier. For example, companies that operate in multiple states frequently have to have separate entities and banking relationships in each state where they operate. That's a problem for them as well. I think from a bottom-line profitability standpoint and security and compliance standpoint, a lot of things are going to get better after the banking bill goes through.

Sinead: Okay, great. Getting back to the Panther Group, you mentioned earlier, since you guys started, you've got about 40 investments to your name. What characteristics does a company need to pique your interest? What are maybe one or two investments that have really stood out to you over the years that you're most excited about?

Jordan: Yes, that's a great question. We've had two funds. In the funds, we've had investment theses that have guided a lot of what we look for in companies. Some of those criteria we look for is a really strong management team, especially one that's coachable. At Panther Group, like I mentioned, we're involved in a number of different areas. We find that entrepreneurs who are open to feedback and open to expertise in different areas tend to perform the best. An openness and willingness to receive support and help from other people is one thing. We're looking for leaders in particular spaces.

Within the 35 or 40 companies that we've invested in, that's been across more than 20 sectors, including obviously, a heavy concentration in ancillary companies and also a fair amount of plant-touching companies. We're looking for some of those leaders within particular sectors in cannabis. Like I said, we're typically in the Series C through Series B stage. We get involved with companies that have revenue, ideally at least a million in revenue, and that have a clear exit plan over the next, realistically, five to eight years. Those are some of the criteria. We also look for companies that can expand and have applications outside of cannabis.

We've had some companies that have done really well expanding beyond cannabis because one of the exciting and interesting things about the cannabis plant is it's a very high-valued crop. A lot of technology has been developed that can be justified when it comes to the impact it can have on producing a better crop, a safer crop, et cetera. Some of that technology is now pouring over into other industries, which is really exciting.

Sinead: Great. Going into that, at the Panther Group that you have invested in a lot of companies across multiple sectors in the industry, what maybe two sectors do you find yourself most gravitating towards right now, and what do you think is maybe an up-and-coming sector at the moment?

Scott: I think it's interesting, the vertically integrated operations in limited licensed states, or new-ish states, states that are coming on and that are really underserved at this moment, that's a really exciting thing for us, so we're looking at several [unintelligible [00:11:01] opportunities. Maine, Massachusetts, Michigan, these are not fully developed markets, and there's a lot of opportunity with the right location and a vertically integrated situation. I think that's really interesting for us.

We're always interested in technology. Certainly, data, any company that's collecting data on cannabis consumers and deploying it certainly is interesting to us. It's a tough question because we see a lot of opportunity in the lab sector actually. There's a lot of states that start to build grow capacity, and they don't have enough labs, or they don't have quality labs. There's opportunities for rollups in the lab side of things. I would say that those, going forward, they're all going to still be relevant for a couple of years to come for sure until these markets are fully served like the Western markets.

One other thing I'll just add is there's a lot of opportunity on brands, on the brand side of things. We're so early in the branding of cannabis products. There's only one brand, maybe Cookies, and there's few others that are really going to multiple- many markets right now. I think that over the next couple of years, investing in a brand that's doing well like on the West Coast and bringing it to the East Coast is an example of where we see a lot of opportunity and rolling brands together.

Sinead: Okay, great. I want to shift gears here to the digital advertising side of the Panther Group because you guys are not only a venture capital firm, but you also do digital advertising. I've read you have a very data-driven approach. Can you tell us about that and what you do for brands on that front?

Scott: Sure. We work with first and third-party data, sometimes from the brand itself. Taking their customer data, onboarding it and matching it to cookies and device IDs and cable boxes, and we do a [unintelligible [00:13:05] media to first-party data sets. Then we also look in the third-party data world to target people with different demographics; age, geo, gender, what type of car they drive, what type of community they live in. We look at all these signals and we apply them into programmatic media channels, and we work-- As the Panther Group, we're agnostic as far as who we use. We work with a lot of different folks, and the idea is we're going to understand who's buying edibles in Northern California and who's buying flower in So-Cal, and really trying to focus in on these audiences and then geo-fence.

There's a lot of data that goes into geo-targeting. Where are the stores? Where are the stores that carry your brand? How can we find people and open up new markets? We want to sell more and drive more traffic in this store where people ask for your brand or their website, but we also want to open up and sell into new places. There's a lot of data coming in from the beginning and a lot on the other side, on the metric side, we can measure a lot.

Jordan: Just to add to that, what we're able to do, and we're seeing a lot of interest in now, is co-brand or co-advertising between brands and retailers. This is something that's exciting for a few reasons. One is brands have been struggling for a long time to get that first-party data and understand who is actually buying their products because a lot of times they just put it on the shelves of retailers, and that information is captured by point-of-sale companies.

There really aren't good-- There aren't solutions out there right now looking to solve that challenge which is how do we bring together the brands, the retailers, the point-of-sale data, analyze that, and then work together to drive traffic into the store featuring particular brands, et cetera. This is one of those things where everyone wins. That's what we look for as opportunities where we can-- Because we're connectors and we have lots of conversations across different types of companies, we're able to bring together otherwise disparate conversations or companies that wouldn't otherwise come together, but we're able to connect them and bring tools to make it all work.

Sinead: Okay, great. Cannabis right now, the digital advertising, things are a little tricky with the Google and Facebook off the table obviously. What are the biggest pain points brands are facing right now? How does digital advertising-- How is it different in our industry than it is in most other industries at the moment?

Scott: The first big problem obviously is Google and Facebook account for about 60% to 70% of most small business advertising in this country, and they are off-limits almost to all cannabis advertising. Some CBD might be possible now. That's the biggest challenge. They've made easy of the years for the average small business structure without a big marketing team to do that. Without that, there's a big challenge on how do you drive traffic to your website without those two tools. That's number one.

Number two is really, I believe, a lot of brands don't fully understand who's buying their product. Part of it is because of the rapid growth in this industry and the brands are starting to be in the 50 or 100 stores, and they're selling out and they're barely keeping up with the demand. They really don't have a handle on who's buying what, where, and when. That's a big problem too is really selling more to the same people or selling more to that same store.

Now, what we're trying to do is help them corral this data, understand their audiences, and then find look-alikes, and sell more to the same people. Retargeting is a very popular tactic, and most of these folks have never tried this before on their website. That right there can help a vendor, a brand really get more brand awareness.

Sinead: Okay, great. Going off that, what thoughts do you have for how things will change for digital advertising in the industry when we do see federal legalization and the industry is no longer segmented by state?

Scott: I think you'll certainly see a lot of the bigger players open up the advertising and there will be a lot more inventory available. That'll definitely happen, but I also think there'll still be restrictions somewhat. You really can't do alcohol ads a lot on-- Google AdWords is really not for that either. There's definitely-- It's going to be nuances here and there, but I think more of the big players will open themselves up to digital ads for cannabis.

I also just wanted to add one other thing too though is you're going to see that there's going to be a crossover between mainstream-- Let's face it. Cannabis is getting to be mainstream very quickly, so you're going to start to see ads on television and you'll start to see ads on digital-- We do a lot of digital video advertising, like pre-roll video on apps and websites, and I think you're going to start to see that being a lot easier and a lot more available to cannabis brands and then they'll start to build those national followings.

Sinead: Okay, great. Are there any particular pieces of the cannabis ecosystem right now that the two of you are most excited about?

Jordan: That's a great question. I think what Scott talked about in terms of the brands moving from the West Coast to the East Coast and the new consumers, I think there's just a very ripe opportunity to help companies- both companies, both the license holders on the East Coast and brands and experts on the West Coast to come together and make seven, eight years of learning out in Oregon or Washington, Colorado, take that and bring that expertise day one. The same thing like we're talking about with the data and knowing who's buying their products.

We say the same type of person that drinks red wine on the East Coast kind of looks the same as the person on the West Coast that drinks red wine. It's the same product. If we know people, like Scott's saying, or fit certain demographics, then we can target them as new markets come online. I think the acceleration of cannabis mainstream into the new markets including how the legislation and regulatory pieces roll out, that should happen a lot smoother hopefully than in the past. I think that the pace at which the growth is happening, and what we can do to facilitate that is probably the most exciting thing for us.

Maybe one other thing I think about is the entrance of family offices into the space because there's been a shortage of capital for the space and family offices because they're not prohibited by any governance or whatever so that they can invest how they want to invest. They are really taking to the opportunities to get in [unintelligible [00:20:57] big way. When you're launching a new vertically integrated company like Scott's describing, that's 15, 20 million of capital. That's not easy to raise on cannabis VCs in mass being able to write $15 million, $20 million checks, that's not where cannabis VCs have played, so the opportunity and the need for it is critical.

The entrance of family offices and what we're doing alongside Family Office Networks and the Cannabis Investment Club, we're really excited about being an entry point for those ultra-high net worth individuals to come into cannabis in a responsible way.

Sinead: Absolutely. Great. Going off that, do either of you see any gaps in the cannabis marketplace emerging that listeners should maybe be aware of?

Scott: Yes, [chuckles] every day. Yes, there's definitely gaps in-- Also, I look at it geographically too. If you go to the western states, the states that have had cannabis, there's not many gaps, there's not as many. There's people filling every sector of the industry and filling it with quantity. There's a lot of edibles brands in California right now. There's none out here in PA, and New Jersey, and New York, so that's a big gap in this part of the country.

As the industry keeps evolving, those gaps get filled because more capital comes in and businesses are developed. A couple of years ago, there were no point-of-sale systems for metric or seed-to-sale tracking programs. Now, there's 30 of them. I wouldn't want to start a business doing that today. I think a lot of it is based on where the business is developed and which state at this point.

Jordan: I think another interesting opportunity which we're seeing come up and it's the early days is this feedback loop between companies, let's just say manufacturers to keep it simple. The ones making products, and the consumers, and what are the effects that the consumers are having from taking particular products. Then where we get excited is on the lab and the analytical side.

One of our companies, Abstrax Tech which can analyze cannabis and they've identified up to 400 compounds within the cannabis plant. This is a really, really complex plant medicine and we don't know yet because it's been federally illegal, and the research and all that stuff have been minimal, we don't know the impact that this can have. What I'm seeing happen in the real world is that cannabis entrepreneurs, and operators, and stuff are not waiting for federal studies to be allowed.

We're trying to create our own feedback loop and bring in companies that conduct clinical trials. We've got the research side, we're looking at technology and platforms to gather all this data and make it usable. Then obviously, you're looking at the companies that are making the product and the ones that have the information on the consumers that can give us access.

That to me is a major thing in terms of trying to understand the impact of the plant is to get some feedback on how are people handling this and how are they getting affected by it. That's something that's pretty interesting from my standpoint.

Sinead: Great. Awesome. Getting back to where the Panther Group is at the moment, like we discussed earlier, you have invested in about 40 companies at this point since you started in 2014, and lots more to come I'm sure. What goals do you have at the Panther Group over the next year? Do you have any big plans coming up that you want to share?

Jordan: Yes, thank you for that opportunity. The number one need in the space, in general, is capital. We're doing a couple of things to solve that. One is we're going to be launching our new fund. The Panther Micro Fund targeting raised up to 10 million. We're out in the market coming up soon with that. Like I mentioned, we've got a partnership with Family Office Networks and the Cannabis Investment Club where we're bringing together a lot of active high net, ultra-high net worth family offices to come together and fund a lot of cannabis deals, so we want to bring a lot of deal flow into their group and get a lot of deals funded that way. Those are a couple of areas we're focused on.

Scott: I just also want to mention that in October, MJBizCon is in Las Vegas. We'll be there with- one of our investments is MJ Unpacked which is the first brand and retailer-focused show like a buying show. It will be at the Mandalay at the same time as MJBiz. I know a lot of your listeners will probably be in Vegas during that week and we'll be there often or all week and we'll be doing a lot, so please look for us when you're out there.

Sinead: That's great. That's funny. We actually just had George Jage, the founder of MJ Unpacked on the show. Listeners are all up to date on MJ Unpacked, but yes, that's an exciting event.

Scott: Yes. We're big fans of George and Kim and everything that they do. We're very excited to get back out there. We missed everybody last year.

Sinead: Absolutely. I think everyone's excited to get back in person there. That's great. Awesome. I wanted to ask you guys a few things. The two of you at this point, you've heard a lot of pitches, you're probably the cannabis pitch gurus in the industry at this point. If you were sitting down with a founder who was prepping his or her first pitch, what do's and don'ts would you give them?

Jordan: Definitely be yourself. Definitely, be prepared. Know the expected points of conversation, know the deck so that you can be able to walk through it and not have any issues if there are any technical difficulties, those things come up. Definitely, be prepared. Do your research. At this point, the space is pretty small, so if you can find someone who knows that person, it can give you a little bit of insight into what they're looking for.

Each group has its own buttons that get ticked. I would say along those lines, just use advisors and people who have been there. Know your strengths. If you're naturally a great operator but not a great fundraiser, that's okay, know that that's an area that needs to be improved, and either focus on it or make sure that you can cover it with other capable people.

At Panther Group, we're very transparent, and honest, and stuff, so we want to see and understand who you are. We're looking to invest in you, and the person, and the team, so we want to understand, really get to know you. That's important. That's from my vantage point, but I assume from other investor's vantage points, they look the same.

Sinead: Great. I love that you really played a very active role as an investor which is something that's hard to come by in the cannabis industry right now. That's definitely a unique characteristic of yours, of the Panther Group, and one that a lot of businesses look for in an investor, so that's great. On the flip side of that, what would you say should an investor look for in a pitch deck to really discern whether or not it would be worth their time, and what are maybe a few red flags there?

Scott: I just wanted to add to your last comment. It's really important, is us being there and along the journey, this is a journey, we're in for the long haul, and we like to help people along the way. It's really important for us to not just be a capital source and just a quiet-- We want to help. We want to help them realize their dreams and that's really exciting for me, and us, so personally.

As far as what we look for in a pitch deck, I would say certainly a lot of detail on what the plan is and what the projections are. Really show that you have an in-depth understanding of the numbers behind the idea. Lots of people have a good idea. What's your business model? When will you be profitable? How much capital will you burn until that time? That's one thing.

Some red flags are pitch decks that talk too much about the cannabis industry. My one suggestion to anyone is don't put too many slides in about how big the cannabis space is. All of us know already. We know it's big, we know it's exciting. We're already here because of that. Really focus on your business, and yes, the addressable market is important, but focus on how your business fits in.

Then I'll just add one other thing. A red flag is if you're not looking at the competition because if you come up into this space and think you have a brand new idea, you're probably not there. You really need to understand who's done this before, have they been successful, how much market share they have, how much money they raised. What I look for is someone that understands the landscape and how they might fit in and how they might win over time.

Jordan: I'll add a couple of things because I think this is interesting and probably informative for the listeners. For me, an exit strategy. I mean, it's generic, but for us, we need to know how you're planning on getting out of this business. We are not investing in any lifestyle businesses, they're all here to grow and exit, so we want to know how you're planning on making that happen. The team is extremely important, so make sure that you're talking about the team and sharing people's specific talents that make them uniquely qualified for that position.

The deck needs to flow. It needs to really tell a story. The number one thing that I always look for and try to get out of it is to walk away and say, "Okay, I get it. This is where they are, this is what they need, this is why they're going to be successful." It needs to just pretty easily compute and go together. If it's really complex and it doesn't flow nicely and stuff, then that's- I wouldn't say it's a red flag, but it's something that's going to probably make us not interested. Even worse than a red flag, it may end the conversation. Again, it gets into that preparation. The reality is you only have one chance to make that first impression.

Sinead: Absolutely. Well, thank you both so much for your words of wisdom there. That's super helpful for our listeners who are just getting going with their own ventures here and really appreciate those words of advice there. I'm going to jump to some personal development questions here, but after that, we'll get into your contact information and how people can connect with you guys and work with you if they're interested. First up, is there a book that has had a big impact on your life or way of thinking? Maybe we'll start with you on this one, Jordan.

Jordan: Yes, there are a few. I'd say on the personal side would be Eckhart Tolle', The Power of Now and also A New Earth. I think just the importance of living in the present and really just focusing on the moment that you have now. I think that's been something from a personal side. From a professional side, there was a book I think Patrick Lencioni wrote called Selling Naked. That was something that always stuck with me, a very good book. It's not what it sounds like. Another one recently that I've been reading is Dare to Lead by Brené Brown, also a very good book on leadership and willing to rumble as she says, and just being able to have tough conversations and open honest conversations.

That's something- I'll just add about this, the cannabis space that we love, the people are so genuine, and 99% of it, at least we found, the people we interact with and want to do business with are genuine and open. One of our salespeople, he's always amazed every day when he gets on the phone at how open and honest people are. Within a couple of minutes of the conversation, they're sharing all these details. That's just something that Scott and I, we're people-first, we're families. Just doing things the right way, and this thing is part of our lives. That's what's unique about the cannabis space. We're fortunate to be in it and to be able to weave a lot of the personal and professional things all in one.

Sinead: That's great. Yes, that's something I love. I'm fairly new to the industry. I've only been in the space for a couple of years now, but it's such a collaborative community, and like you said, very transparent with each other, which I love. That's a great point. Scott, what about you? Any good books that you--

Scott: Sure, lots of good books on the pandemic because I'm home a lot. Actually, The Power of Now. Our senior advisor is Dr. Ramy Tritt, who is Jordan's dad, and right before the pandemic, he gave me that book, The Power of Now, and it was very important, I loved it. Then I started reading a lot of other things and I'm really into learning about Buddhism. The book that I thought was the most important was by Thich Nhat Hanh and it was The Heart of the Buddha's Teaching about transforming suffering into peace, and it was just very powerful. I've read a lot of books like that in the last year and a half and I'm trying to work that into my personal and business life, all the things I'm learning there.

Sinead: Great. Awesome. That sounds fascinating. I'm going to have to add a few of these to my reading list. It's already a long one, but I'm going to put these up there. That's great. Next question here, what is your favorite unhealthy comfort food? This can be West Coast, East Coast. I know you guys have been all over the map in the US, but what would you say is your favorite- maybe a fast food joint?

Scott: Favorite fast food joint out West would have to be In-N-Out Burger for me. Jordan?

Jordan: I'm going to give the most boring answer, but it's an honest answer, which is I keep kosher, so I do not have a lot of fast food options, but I can tell you foods and stuff, my go-to, I have lots of foods ready, Oreos are just a personal favorite, a family favorite as well. Oreos, the regular ones are not dairy actually, so with the kosher thing, you can eat that after you eat-- I'd say go-to is Oreo.

Sinead: Nice. I'm vegan and Oreos are thankfully vegan, which is pretty amazing there. We keep them well-stocked in our pantry.

Jordan: Yes, there you go. Lots of different flavors, all different options, and [unintelligible [00:37:40].

Sinead: Awesome. Well, as we wrap up here, Jordan and Scott, how can listeners find you online and maybe get connected with you at the Panther Group if they're interested?

Scott: The best way is LinkedIn. I mean, it's the easiest way to find us on LinkedIn. Our website is thepanthergroup.co, we just relaunched it actually, and it looks great. You can come to the site and put your name in there. We are on Instagram, so you can follow us a little bit there. Also Clubhouse, we're doing a Clubhouse tonight at [7:00] Eastern about cannabis and politics. We're trying to get a little bit of audience there. For me personally, I'm easy to find on social media, Twitter, and feel free to reach out. I love making new contacts. As Jordan said, I just want to second what he said, we really do enjoy all the people and the interactions that we make every day. It's really a big part of what we do, and we're grateful. We also want to thank you officially for having us on, Sinead, and really appreciate the time today.

Sinead: Thank you both so much for coming on, we really appreciate it. Listeners definitely got some great words of wisdom in this interview, and definitely, some actionable things that they can take with them, so thank you both so much. All the best for the Panther Group and what you've got going on for the rest of the year.

Scott: Thanks very much.

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