It can be challenging to find startup funding for a cannabis dispensary. Investors are out there, but it takes specialized skills and know-how to find them. Here are a few methods that may help you connect with startup funders.
Networking. Networking is the key to growth and success as no business can succeed in a vacuum. Your contacts are a vital part of your business and you should look after them. Thirty years ago, a huge rolodex was a sign of a master networker. Today, social networking is an excellent way to develop personal connections. You cannot ignore Linkedin, Facebook, and other social media networking platforms specific to your business and the cannabis industry.
Trade Conventions. If you are in the Pacific Northwest this winter, the Northwest Cannabis Classic takes place in Portland on December 6. This is a wonderful way to get to know the community, and to start or expand your network of potential investors or partners. Trade conventions are excellent for networking, but this year’s Cannabis Classic also features informative seminars on kick-starting a marijuana business, collaborating with other entrepreneurs, and finding potential investors.
Check out Weedbiz. Weedbiz specializes in cannabusiness with an eye towards finding investors. If you have an idea or business idea related to the medical or recreational cannabis industry, Weedbiz has developed relationships with private equity marijuana investors. These investors are seeking opportunities to get involved in the emerging legal cannabis industry.
Fundraising. Fundraising takes time and energy, but the results can be tangible. In the US there are nearly 1000 venture capital funds, and literally hundreds of thousands of individual “angel” investors. Here are a few tips for fundraising through venture capitalists.
1) Create a target list. This is a good a starting point. The key is to efficiently narrow down your list and identify investors that have a track record in your industry. Look at a list of 15 to 20 funds and 25 to 50 individuals who are relevant to your idea.
2) Avoid investors with potential conflicts of interests. Avoid investors who have invested in your competition. You don’t want an investor who has a conflict of interest, and you certainly don’t want to provide your competition with access to confidential information. Avoid this by conducting online reviews of the investors’ profiles, and by addressing any “fuzzy” issues when you meet.
3) Get a referral. Find a “warm” way in, and avoid cold calls or emails. Most people are too busy to take every proposition or idea seriously. Deals that don’t come through trusted contacts often end up in the wastebasket. It makes sense to find common interests and get someone who knows you to make the referral.
4) Get third party feedback. Get outside perspectives on potential investors. Contacting the CEOs of companies they have invested in can be helpful, but you can also do online research.
5) See how it goes. Your potential investors will be judging and evaluating you, and you have the chance to do the same during your face-to-face meeting. You want to be sure that the relationship is a good fit, just as your potential investors are looking for the same. Don’t be afraid to back out if something does not feel right.
Having a solid plan for networking is critical to your fundraising success, and to finding the right cannabis dispensary investors. Take time to develop and foster these relationships and you will see more opportunities and potential for investment. Finding the right investors is a serious job, and one that is necessary for the success of your cannabis business.
Having deep roots in all aspects of the cannabis industry, SIVA Enterprises is uniquely situated to connect new dispensary entrepreneurs with angel investors. Call us today to learn more about our consulting services.