After the past two years of entrepreneurship, I understand that in order to level up, you need to remain steadfast in your mission yet adaptable with your execution. Once the idea is solidified, you’ll need to decide if you’re going to raise money or bootstrap.
Let’s be frank-it takes financial resources to execute on a vision. It’s not easy, but it’s doable if you have the right mix of information, maintain adaptability, and stick with it when the going gets tough.
At SXSW last month, I had the opportunity to sit down and moderate our panel of incredible women, who are each making some real strides in the cannabis business. Whitney Beatty, CEO of The Apothecarry Case; Hope Wiseman, Co-Founder and COO of Mary and Main; and Amber Beatty, CEO of Leisure Life and Co-Founder of Supernova Women, joined me on stage in Austin, TX and laid out key information via their own lessons. We appreciated their candor and openness displayed during the discussion.
At EH, we are determined to highlight women of color who are not only operators in various stages of their business, but also leaders who wanted to talk about the unsaid, the numbers, the challenges. We want to show how they are overcoming said challenges, including the ways they maintain and sustain the financial resources necessary for their businesses.
There are a few ways to get money for your cannabis business: venture capital, angel investors, family and friends, pitch competitions, business accelerators, and even crowdfunding. At EH, we were accepted into Canopy Boulder, a cannabis business accelerator for ancillary companies. That initial $30K investment provided a catalyst for change, and prompted our full deep dive into building out our company. Since, we’ve bootstrapped, and it has allowed us to experiment while we lock in what works.
One thing I know for sure—everyone talks about securing the bag but few talk about how they secured it and how to maintain! These ladies did.
There’s value in starting small and building
Wiseman shared that they spent upwards of $250K pre-application to put together the right team for Mary and Main to execute a solid application. “All at risk capital that could go poof.” How did they obtain the funding? They bootstrapped for a number of reasons. “We did our best to fundraise pre-application, but were unsuccessful…with good reason. We didn’t have a background in the industry. I was 22. I understand why.”
After they won the Maryland license, they continued to bootstrap, which Wiseman shares was extremely difficult. They are now in a place to scale, and as a result, are currently fundraising. “There’s value in starting small and building,” she says.
Definitely.
Come correct, make sure your information is in tact.
On the ancillary side, Beatty had typical startup costs. She first raised $30K in her friends and family round, then she put in $100K of her own money to get her to her Minimum Viable Product (MVP). ”It’s important to remember to look at the issues that come with fundraising in this space. I cannot go to Bank of America and say I want a small business loan to open a cannabis grow. They will not let you take out a loan for a cannabis facing business. Even on my side-I don’t even touch the plant,” she says.
Other options? VC or angel investor investment. “I also don’t know if you notice this, but I’m a female,” later adding, “I’ve also been black my whole life.” The crowd’s faint laughter highlights the known challenges women, black women, face in fundraising. Looking at the reality of the landscape, Beatty says, “I need to come with my information in tact. I need to make sure that all my t’s are crossed and i’s are dotted.” Good advice.
Get savvy to mitigate costs
For her current dispensary project, Senter is raising $650K for her seed round, prior to obtaining the license—undisputed as the hardest time to raise. “You’re raising money on hopes and dreams,” says Senter. She breaks down the costs associated with this phase. The attorney gets paid a retainer, other legal fees, you must engage an architect for renderings to show what the project looks like, and rent—which is one of the biggest costs. “You have to rent a space that you’re not generating any revenue on. This process can last anywhere from 1 to 2 years. So you gotta get really savvy.”
So, to mitigate those costs, Senter and her partners got a subtenant.
Check out the video to get the full scope of the discussion.
Need assistance with putting together your cannabis business plan or need some more insight on if this industry is right for you? Sign up for a free 15 minute consultation today!