It’s not often that an entirely new industry buds in America. Thanks to changing laws, cannabis is flourishing in Washington, Colorado, and Oregon, with potential for exponential growth. Green is the new gold rush.
Equity Rock Investments is a Portland-based private equity firm dealing specifically with cannabis-based businesses. Driving a team that has provided over $50 million in funding to the cannabis sector, CEO Robert Kerr came to Pregame HQ on 4/20 to share more about in investments and opportunities in cannabis in a live interview by Greg Pressler.
Equity Rock has a portfolio of legal cannabis ventures in life science labs, real estate, retail, banking, and fintech organizations. The company was established in 2016 and is quickly expanding its reach across the sector. With two decades of banking experience, Robert is a visionary in competitive markets and lauded as an innovative leader who recognizes opportunities and executes strategies delivering predictable business returns.
As the cannabis industry rapidly develops, Robert sees a major opportunity in software, both for business operations and for connecting consumers to product. There is ample opportunity for B2B businesses, like packaging and compliance, and existing vendors can expand to focus on cannabis clients.
He noted the intra-industry debate about cannabis cultivation being art vs science; while growers are craftspeople, investors want to see a scientific approach.
Here are more of our favorite takeaways for startup founders, both in cannabis and beyond:
Understand your business structure.
Making stuff and hoping for the best is not sufficient as a business model.
It’s not just the product and profit potential. Investors look at what legal structure was chosen, how financials are being managed (or not managed), how internal processes and operations work.
Quality of product and quality of business are not necessarily the same thing.
The best product may not have an optimal model to support its sustainability and growth. Product is important, as is revenue potential, but must be supported by the right model.
Find your niche.
Robert reiterates the Pregame principle of starting with target audience to build your brand. More here.
Focus on financials.
Founders often over-inflate what they think they will make based on lack of research. Particularly in cannabis, there are industry standards for pricing and how the market demand affects supply. Understand concepts like cashflow and profit & loss, and how they apply to your business.
Stay on top of laws & current events.
On the day of this event, Oregon’s Governor had just passed a new law with implications for cannabis retailers. Meanwhile, in Washington D.C., key players in the federal government are pushing for a complete ban. New opportunities in business mean new laws and extended debate, so be aware of what is happening and how you can affect the process.
Make your business model appropriately flexible.
Factor in all the moving targets, like legal changes, FDA regulations, supply chain, and market conditions, especially in a new industry. Remain agile so you can survive unforseen obstacles.