Guys with Money. What's the difference?

Know the difference.

Do you know the difference between an Angel Investor and a Venture Capital (VC) firm?

If you are like most people, the only thing you probably think of is “oh, those are guys with money.”

Except… it’s not that simple.

Finding Money is Hard.

It’s difficult for a startup to find investors in any industry. Finding money as a cannabis business is just as difficult. When you combine the two it becomes easy to see why i502 startups have a hard time getting off the ground. If you’re one of them, you understand the sub-title’s message from this section: finding money is hard. But something we hope to leave you with, however daunting it may be, is that finding the right money for you is its own beast. The first step is to know what you need.

A few things to keep in mind before you head out to the wild west searching for cash.  First, there is a difference between an Angel and a VC.

  • An Angel Investor is typically an individual who has done well for themselves and now are looking to help others get started. Since an angel investor is usually a single person or small group, their decision making is sometimes more personal and able to scale down to smaller start-ups.  In return for funds from an Angel Investor, you usually give up a piece of your company or some sort of repayment term down the road. Angels don't usually come for free.
  • A Venture Capital firm or Venture Capitalists (VC) are very different. VC firms can be structured in several ways, but usually involve a board of trustees or decision makers who “vet” your investment to ensure it is secure and is going to make them money. Lots of money. VCs tend to have higher minimum investments (such as $1mil+ for some) and usually report to multiple different investors for their funds. 

Make Rejection Your Friend.

Next time you go looking for money, take a close look at where your company is currently at.  If you can’t show some true projections and solid financials for your company… maybe skip the big boys at the VC table and look for something closer to home.  Friends,  family, and others in the industry to work with as partners. Often times there is a complimentary cannabusiness out there looking for someone like you, but more on this later.

In the search for funding, one thing is sure... get used to the idea of being turned down. Finding the right investors is a lot like applying for a job.  You are going to have to give the same speech over and over again until you find the right fit for your company.  On a positive note, each investment firm or individual investor will have their own ideas for how to value your company and what metrics they look for to feel "safe." 

Therefore it’s extremely important to not place all your hope in one basket, or investor. Having a variety of options only benefits you. The only downside is that they take more time to cultivate, which leads into our next point.

Waste Less Time.  Be Prepared.

Before you get to the table for your pitch, be ready to prove why your company or opportunity is better than the rest. The reality is that when you’re seeking investment, you aren’t just competing with the store down the street, you’re also competing with all the cannabis companies around the world for your share of the same investment funds. 

Additionally, be sure that your pitch includes information for how do you plan on making the investors rich. After all, the cold hard truth is that they aren’t in this for you. They are in this to make money for themselves.  If you can both do it together, then it’s even better.  Your conversation should circle around how you plan for the both of you succeed, not just what is best for one side. The best deals work for both sides.

Whether you’re seeking funds or have funds to lend, we have the means to get you connected to where you’re going. We center our business around bundling up your opportunity for the market, and that process starts with the offering package. At CannaLocations we create custom offering packages for each of our listings. Combine that with our years of experience in bringing deals together, and you know a knock-out team has your back.

Phone: (206) 566-4020


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Good luck out there!

Jennifer Hudson