Nowadays, cannabis companies are very similar to any other kind of business. The thing that makes this industry legitimate is the fact that now you have organizations listen on the stock exchange.
A lot of rich people have become cannabis investors, and it seems that the general population is slowly catching up.
But how can you find the right investor? How to tell if you’re getting a raw deal?
In this article, we will talk about some of the most common types of cannabis investors and what the best way to approach them is.
What kind of investments are there?
Based on your particular needs and the company’s potential, you can seek money from several different types of investors.
If you have a particularly interesting idea for a cannabusiness, you are able to attain enormous funds. Business people are always on the hunt for interesting concepts, so as long as you have one, money shouldn’t be a problem.
We differentiate two main types of investments: debt investments and equity investments.
Debt investments are basically CBD business loans. You can choose between different types of loans, from small cash loans, which don’t require any backup, to larger loans where you need to mortgage assets.
The good thing about the loans is that you retain full control over the company. However, you need to have a healthy cash flow so you can return monthly installments.
If you opt for an equity investment, you will have to give a part of your company to the investor. They are much riskier for the person who’s giving the money, but they also can result in higher returns.
The positive thing for cannabis companies is that they don’t have to return the funds. They have much more leeway compared to taking a loan, which is important if an idea is still in development and you haven’t started making cash.
However, if you do start making money, you will have to give a part of your future profits to your now-partner.
Both approaches have their pros and cons and make sure to think hard before making a decision.
What are the main types of investors?
Although cannabis investing seems like a pretty straightforward concept, there is a lot to go through.
Different investors have different needs, which is why we can put them in several categories:
- Various financial institutions
- Property lenders
- Asset lenders
- Friends and family
- Angel investors
- Venture capitalists and trusts
- Stock market
Cannabis loans have become more common in the last few years. Previously, banks and other financial institutions didn’t want to do anything with this industry.
Although the situation is still not ideal, now you have specialized cannabis banks in almost every state. It is our belief there will be more financial institutions willing to borrow money from cannabusinesses, and with that, the interest rates will become = more favorable.
If you wish to contact a cannabis investor directly, there are several ways to go about things.
A lot of entrepreneurs are financed by their friends and family. And while this might work for smaller businesses, like dispensaries and such, larger operations will need more money.
This is where angel investors come into play. They are a special type of cannabis investors always looking for new prospects.
If you manage to grow your business to a certain size, you will have better access to venture capitalists and trusts. These are serious organizations in the business of investing.
Venture trusts have enormous funds and are willing to fuel interesting cannabis ideas. Unfortunately, they also need proof of success.
The last stage of cannabis asset investing in the stock market, which can provide you with unlimited funds.
How to find cannabis investors?
When we talk about cannabis investors, we usually refer to angel investors.
Most cannabis entrepreneurs are unable to reach later stages of development and appeal to venture capitalists. Instead, they focus on smaller investors who are able to fuel them with sums up to $100.000.
So, how do you reach such individuals? Where to find them?
Here are some ideas!
1) Cannabis directories
There are a lot of cannabis directories out there that can be used by both investors and companies that need investments. The Cannabis Business Directory, Cannapany, and Ganjapreneur are good places to start.
As you can presume, each one of these sites has an intuitive interface, and you can easily use them even if you have limited experience with directories.
Our suggestion is to place your company on as many directories as possible so that people can see you. Investors often check these sites for potential ideas and companies that need financing.
Although directories are awesome in their own regard, we suggest that you take a more proactive approach. This is why you should attend industry events.
2) Cannabis industry events
Cannabis events are great as they can directly put you in touch with cannabis investors.
Keep in mind that you don’t need to pay for a stall to make an impression. Instead, you can check if some of these investors have stalls of their own.
Alternatively, you can find them during seminars and presentations. Of course, you can always walk around and try to meet as many people as possible.
You will need to have a pitch prepared in advance. Most people have just one shot to leave an impression; if you have a half-baked idea, there is almost no chance that you will intrigue a prospect.
It is also much better if you have additional material so that a person can get acquainted with your venture later on.
While crowdfunding will not give you access to angel investors, it is still a good option for all those who require sizable financial support.
Like with everything else, it all comes down to presentation. Websites such as Kickstarter and IndieGogo are always good options, but we suggest that you try cannabis-focused sites such as Fundanna.
Besides having a good pitch, your success rate will be much higher if you’re able to give supporters something in return. Of course, marijuana-related products are always the best option, but you can also be creative.
4) Social media and other connections
Although social media is not an optimal solution, it can still be a good one.
The cannabis industry is not yet saturated, which means that most cannabis investors are open to the idea of connecting with other people.
Finding cannabis entrepreneurs and companies can be a bit hard, given that most social networks are very restrictive towards this type of content. However, that doesn’t mean it’s impossible.
Besides Facebook, you can also pitch them through LinkedIn. This network is much more professional, and it is tailor-made for people who are looking for funds.
Of course, you can try other solutions as well. As long as it works, it is a valid solution!
Cannabusiness is on a major rise, which is why it is relatively easy to find cannabis investors.
The entrepreneurs are very open to most CBD products, and there are increased numbers of recreational cannabis items on the market.
Finding an investor is not going to be hard, as long as you follow the tips mentioned in this article!