Despite the fact that the space is still maturing, the legal marijuana industry has captivated many high-profile cannabis angel investors. Several platforms focused on funding these operations have been on the rise, and as Silicon Valley founders focus their efforts on helping these operations obtain funding, we’ve seen an increase in the number of angel investors willing to take a chance on cannabis.
Even as the marijuana space continues its expansion, acquiring cannabis angel investor funding for cannabusiness startups and established cannacompanies isn’t the easiest task. However, the investors are there if you have a cannabis operation worth funding.
Keep reading to learn more about cannabis angel investors and what to expect on your journey to acquire funding.
What are Cannabis Angel Investors?
Cannabis angel investors are high net worth individuals who are willing to invest in the cannabis industry. These angel investors have access to capital and are well-connected within their network.
Generally, these investors fund cannabis projects that they believe will benefit society via social justice or scientific breakthroughs.
In the past, these angel investors focused on funding tech companies in Silicon Valley. Now, they’re putting their focus towards cannabusinesses and scientific breakthroughs in the cannabis space.
However, it’s important to note that some angel investors have a specific interest in medicinal marijuana projects while others invest solely in recreational weed projects.
Cannabis Angel Investors Vs Venture Capitalists
Although there are many similarities between cannabis angel investors and venture capitalists, there are some distinctions between the two.
For starters, not every cannabis angel investor will follow the path of a traditional venture capitalist. Just because these investors have funded tech startups in Silicon Valley doesn’t mean they’re willing to do it again for cannabis-related projects.
The reason why many startup founders struggle to find these angel investors is because they’re looking for a traditional venture capitalist rather than an angel investor.
In the same way that you would seek out a venture capitalist for your startup, you can also find cannabis angel investors who are willing to fund cannabusinesses as well as scientific breakthroughs in the space.
How do cannabis angel investors find dispensary investment opportunities?
Dispensary investment opportunities aren’t always so easy to find; sometimes, it takes actual legwork to find these opportunities.
It’s important to remember that the cannabis industry is still young, which means there are limited investment opportunities to choose from.
However, as more cannabusinesses continue to launch and states vote on whether or not recreational marijuana should be legal, we can expect a greater number of quality investment opportunities.
In order to find dispensary investment opportunities, cannabis angel investors may join industry networking events and attend cannabis conferences.
Here, they can meet with like-minded cannabusinesses looking for funding as well as other cannabis angel investors who are interested in funding comparable operations.
Are there hemp investors looking to invest in hemp grow operations?
Hemp investors are beginning to take notice of the potential for cannabusinesses that focus on both hemp and marijuana.
With growing support for the legalization of both hemp and cannabis, many investors are looking towards investing in these two cash crops as a means of diversifying their portfolios.
As with any industry, there will always be some risk involved. However, as more states vote on the legalization of both hemp and cannabis, those risks will decrease as time passes. Hemp and hemp products are actually now federally legal with the introduction of the 2018 Hemp Farm Bill.
In addition to diversifying their portfolios, many investors are looking at cannabis as a potential means of providing alternative medicine for consumers.
How to Find Cannabis Angel Investors
If you’re looking for funding to launch your cannabusiness or fund your cutting-edge scientific research in the cannabis space, finding cannabis angel investors should be one of your top priorities.
Networking events, conferences, and other forms of industry networking can help you find those investors.
While there are many benefits to networking within an already established industry, it’s important that you know many cannabis angel investors are seeking out cannabusinesses and projects that will benefit society via social justice or scientific breakthroughs rather than just profits.
It’s important to remember that not every cannabis angel investor will be interested in funding your cannabusiness or scientific breakthrough.
However, as more states continue to vote on the legalization of both hemp and marijuana, we can expect a greater number of quality investment opportunities that attract cannabis angel investors.
What do cannabis angel investors look for in a cannabusiness?
In order to attract the attention of cannabis angel investors, it’s important that your cannabusiness has strong leadership and a strong investor presentation.
In addition to providing information on your business plan and its goals, your presentation should also include projected values as well as what you believe will set it apart from the competition.
It’s also important that you understand what cannabis angel investors are looking for in cannabusiness startups and applicants. This will give you insight into who is the right angel investor for your pitch.
Like any industry, we can expect there to be some risk involved when it comes to investing in new ideas and startups. However, as more states continue to vote on legalization, those risks will decrease.
Cannabis angel investors are interested in cannabusinesses that have strong leadership teams with backgrounds in marketing, branding, finance, etc., have a market for their products or services, are passionate about the business they are trying to get off the ground, and have clear goals and objectives to get there.
If you meet these qualifications, you may be able to attract cannabis angel investors’ interest. But keep in mind, if you’re looking for an investment in your cannacompany, it’s best to do some research on the investors before pitching them. In some cases, while you might acquire the funding you need, you might not find the right investor for your company.
Benefits of Working with Cannabis Angel Investors
Working with cannabis angel investors isn’t always easy for cannabusinesses, especially when it comes to acquiring the funding needed. However, there are many benefits to working with cannabis angel investors in the process of starting your cannabusiness or in acquiring funding for expansion.
One of the key benefits that come to mind is that cannabis angel investors typically offer more money than banks and other lending institutions.
Another benefit is that these angel investors may offer the owners the freedom they need to run their business without too much interference. This can be very beneficial for cannabusinesses seeking funding for expansion because it gives them the ability to grow into new markets without having their growth curbed by outside forces that don’t have the company’s best interests in mind.
This can be especially important for cannabusinesses looking to enter new markets which are still viewed by some as less than reputable. For example, California cannabis businesses are finding it easier to expand into other states despite being on opposite ends of the legalization debate.
There are also tax benefits that cannabis angel investors can provide cannabusinesses beyond the ability to secure funding.
Also, keep in mind, if your angel investor has connections throughout the cannabis industry, this can be beneficial for your operation. For example, if your business makes edibles and the investor already has connections at dispensaries throughout the state, it may be as simple as making a few phone calls and sending a few emails to get your products into the dispensaries.
Downsides of Working with Marijuana Angel Investors
When it comes to working with these angel investors, there are particular benefits and risks associated with such partnerships. While some of the advantages may seem ideal for many cannabusinesses, be mindful of what you’re agreeing to before signing any contracts.
For example, cannabis angel investors may hold a certain percentage of equity in your business and want to be able to influence the decisions you make. However, if there’s a disagreement on how your cannabusiness should be run or what markets you should explore next, it could be the destruction of the working relationship between you and your investor.
Angel investors also typically have a lot of money that they’re willing to invest in your cannabusiness. However, this can lead to problems if you want to acquire additional funding from other investors in the future.
How to Make Your Business Attractive to Cannabis Angel Investors
Angel investors want to see that the cannabusinesses they are investing in will be strong enough to withstand future changes related to cannabis legalization. Keep this in mind when putting together your pitch for funding.
Also, it’s important not to underestimate what you’re asking of these investors. Even if you’re looking for a relatively small amount of money, having an informed plan for how that capital will be used can help you to secure the funding you need.
Angel investors are positioning themselves within the cannabis industry. Some may want to support start-up cannabusinesses while others are looking for established companies to invest in.
These investors are usually looking for cannabusinesses with an existing customer base or products that have already been tested on a limited scale.
Working together, cannabis angel investors can be an attractive alternative for many cannabusiness owners who are seeking funds outside of banks and traditional lending institutions. With this understanding, ganjapreneurs should first do their best to research any potential investor before asking them for money or giving up equity in their company.
4 Signs You Have Found Good Cannabis Angel Investors
Although cannabis angel investors come in all shapes and sizes, there are a few signs that you’ve found some high-net-worth individuals who want to help your cannabusiness grow. These are the four most important traits of an ideal investor:
1. They Know What You & Your Company Need
Angel investors are usually experienced business people with multiple successes under their belt. They also typically have the ability to spot cannabusinesses that could benefit from their involvement and financial support.
Naturally, they want to make sure you share this same vision for your cannabusiness. Your goal is to present yourself as an individual or company that can utilize its funds in a way that advances the goals of the investor.
2. They Want Your Cannabusiness to Thrive
Although some cannabis angel investors simply want to invest in your business because of the promise it holds for future returns, others may be looking at how you can improve upon an existing product or service within the industry.
In either case, it’s important that you’re able to clearly communicate what your cannabusiness can offer in return for the funding that’s being provided.
3. They’ve Made Similar Investments Before
Obviously, it’s beneficial when you’re working with an angel investor who has actively made investments in cannabusinesses similar to yours in the past. This familiarity with how you operate will help them to feel more secure about their decision to invest in your business.
4. They Trust You
Finally, many cannabis angel investors are looking for people or companies they can trust. As such, make sure that they have a clear understanding of where you stand on important issues and why they should consider partnering with you rather than another individual or company within the same industry.
In addition to establishing yourself as a trustworthy person, it’s important that you’re able to demonstrate a high level of professionalism as well as an understanding of how their money will be spent.
How Can Cannabis Angel Investors Help Your Business?
The best cannabis angel investors can provide cannabusinesses with a combination of funding, guidance, and industry connections. As such, there are several ways they can help your business in particular:
Angel investors can provide vital capital for cannabusinesses at the beginning stages. This initial injection of capital is often necessary in order to get these businesses off the ground. Once cannabusinesses are up and running, many angel investors will continue to support the companies they invest in by providing recurring funds or simply helping them grow via strategic advice.
Cannabis angel investors usually have a good deal of experience in the industry and know what it takes to get a cannabusiness up and running. They also understand the ins and outs of various business models which can help them to provide valuable advice regarding how your cannabusiness should grow over time.
Angel investors within the cannabis space typically have existing relationships with bankers, lawyers, and other cannabusiness professionals who are essential when it comes to helping these companies make important decisions when necessary. The right connections can also be extremely beneficial for opening up new markets when you’re ready to sell your product or service outside of your home state.
Tips to Maintain a Positive Relationship with Cannabis Angel Investors
You’ll always want to keep your cannabis angel investors apprised of the latest developments within your cannabusiness. As such, make sure to communicate regularly with them regarding important information which could affect their investment in you or your business.
This includes providing detailed financial reports on a regular basis as well as keeping them up-to-date on how you’re spending their money and what type of progress has been made toward long-term goals.
On top of this, it’s important that you’re able to provide your angel investors with an idea of when they can expect to see returns on their investments. Even if these returns aren’t immediate, having this information available will demonstrate your ability to run a successful business and be very likely to gain additional investments from these individuals in the future.
If you’re confident that your company will be able to establish long-term success within the cannabis industry, then it’s beneficial to find the right investors who share this vision. Then, it’s time to help them to see what type of impact they can have on your business throughout its lifecycle.
Angel investors typically don’t want a large amount of control over how you run your business. However, establishing a good relationship with them still requires good communication and transparency. This is how you’ll ensure both parties can be confident about their decision to partner up for the mutual benefit.
Closing on Cannabis Angel Investors
As you begin to seek out and develop relationships with cannabis angel investors, make sure that you’re realistic about what type of returns they can expect to get on their investments.
Many investors are happy to receive a portion of the profits made by the cannabusinesses they invest in. But others will prefer to remain silent partners who simply want to see these businesses succeed.
However, it’s important that the investors don’t feel like they’re getting ripped off or taken advantage of. If this is how they feel, it could result in them withdrawing from your operation.
All in all, angel investors can be incredible assets for those operating in the cannabis industry. This is why we help our clients with cannabis business investment acquisitions.
If you’re looking for help preparing your company for an investment acquisition, contact us now to speak with one of our experts. We’re ready to organize your books and provide the right insights to ensure your operation appeals to investors.