Investors seek to get high on Marijuana startups

Cannabis-focused startups have raised over $213 million (approximately Rs 1,417 crore) in 2015

Over 50 cannabis startups have emerged in the US. Photo: CB Insights

With the intense debate over legalising Marijuana comes another push—private equity funding for companies dealing with Cannabis.

Some of the Cannabis-specific investors include Priveteer Holdings which itself raised $82 million in funding from renowned rapper Snopp Dogg's cannabis-focused fund Casa Verde Capital and Founders Fund.

According to CB Insights, Cannabis-focused startups have raised over $213 million in 2015 alone. Fourth quarter alone saw a ‘high’ number of nearly 30 deals. With the startup scene in the Silcon Valley, US, already so hot, private money is now chasing companies beginning to soak their feet with business models rotating around Marijuana.

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It further says that some of the cannabis startups that have cropped up cater to the whole ecosystem including delivery or subscription, compliance, online payments, analytics, social networking, news, investors and so on.

Currently, there are over 50 cannabis startups in the US.

Medical marijuana (from a plant called cannabis which is used as a psychotropic drug) has already been legalised in 24 states in the US. This has led to several cannabis-focused startups cropping up in providing various services to customers.

There has been a massive push to legalise marijuana in the country with over 35 million US citizens using medical marijuana each year. Pennsylvania was the latest in April 2016 to legalise medical marijuana.

In the delivery, subscription ecommerce and marketplace category cannabis startups include Eaze Solutions and Meadow which help patients receive medical marijuana in California from dispensaries on-demand. Meadow had raised $2.1 million for its specialised cannabis sales software, according to the report.

FlowHub and MJ Freeway, these are startups in the area of cannabis compliance and seed-to-sale tracking software. They raised $8 million from Tao Capital Partners and Roger McNamee in December 2015, said CB Insights.

The third part of the cannabis startup ecosystem is the payment and transactions management. Companies such as SericaPay and Hypur help facilitate ordering, payments and banking for medical marijuana.

Then there are BDS Analytics and Steep Hill that offer cannabis industry data and medical cannabis lab analytics.

There is even a social networking site that cater to the cannabis market which include MassRoots. The company is looking to go public and has recently filed for listing on the NASDAQ.

To stay updated on news, content and ways to discover cannabis startups such as Leafly and Merry Jane help customers.

Then there are startups offering consumer and enterprise cannabis-focused products such as marijuana breathalyzer by Hound Labs and Kush Bottles which is into marijuana packing and supply.

Finally, there are cannabis startups for creating new brands and managing the brand. This includes Strainz and Suncliff.

With private equity and venture capital funding chasing startups in the hope of investing at lows and exiting at highs, this specific startup business, at least, offers them a chance to enter at a ‘high’.

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