As Marijuana Business Models Grow, Pot-trepreneurs Search For Angel Venture Capitalists

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“The world changed 10 weeks ago,” said ArcView chief executive Troy Dayton, referring to when Colorado and Washington voters approved legal marijuana for adults

 

As Wall Street vacillates back-and-forth and the next wave of financial opportunity is hunted down like a rabid dog; Weed, marijuana…’The Devils lettuce’ is starting to look like a good investment opportunity to some venture capitalists.

Recently, the ordinarily upscale Washington Athletic Club accommodated a rather eclectic gathering of unusual guests, as innovative pot-trepreneurs had a captive V.C. audience to pitch their cannabinoid based products to.

Representatives of the San Francisco based ArcView Group met with Josh Gordon, 26, who traveled from New York in search of startup funding for his new company Rodawg, the requested funds were for approximately $500,000. With his company’s crosshairs aimed specifically at marijuana connoisseurs (those with a more discerning sense of style). Rodawg’s upscale containers will protect your joints from the harsh environments, while at the same time steering clear of the old stereotypes of ‘big breasted nurses’ or marijuana leafs emblazoned on the front. This new school, high style joint caddy is closer to a fine cigar container, thin elegant and ready for action. According to his investor pro forma Josh anticipates a minimum of 35 % in annual growth and a yearly revenue of $3.7 million in five years.

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Next up, bending the ear of the ArcView Group’s representative was Chris Walker, 40. Chris went there to pitch a marijuana cultivation product for a Swedish company that makes full spectrum lights for rapidly growing pot plants. Walker believes their Heliospectra’s biofeedback technology will generate healthier, higher-yielding pot plants, while at the same time conserving energy. Chris was fishing for approximately $2 million of venture capital money.

“The world changed 10 weeks ago,” said ArcView chief executive Troy Dayton, referring to when Colorado and Washington voters approved legal marijuana for adults. Merchants who dealt in the underground are meeting on Main Street. Investors who had sunk money in software are now considering marijuana-related ventures and what might be the start of a multibillion-dollar industry.

“Seattle along with Denver has become ground zero for an emerging industry,” Dayton said. “So it’s only fitting we hold our quarterly investors’ meeting at ground zero.”

While some VC money came rushing into the industry early on, the feds unreasonable marijuana prohibition remains intact, and the omnipresent risk of the DOJ’s onslaught has kept many investors out of the fast growing marijuana business. Many investors are sitting this one out…at least until the epic battle between the states and our federal government is addressed in a way that arouses a sense of confidence.

Pending a federal understanding, ArcView is currently only investing in secondary products and services. Pointing to the possibility of a federal crackdown, Mr. Dayton sees several persuasive motives for only investing in supplementary products and services, and leaving the investment of weed growing for someone else.

The marijuana cultivation end of the business model is played out – and is already well-capitalized by friends and family of many growers, noted Dayton. And, there’s a better chance that a subordinate business will be purchased one day by a bigger company, which is where a really big payout might come for investors.

Dayton, who worked in Silicon Valley, hopes to foster what he sees as a natural connection between technology investors and the marijuana business.

“Some of the best ideas come up through the counterculture,” he said. “If you look at the beginning of the personal-computing revolution, and renewable energy and organic foods, they all look similar.”

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