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cannabis startups

Cannabis Startups Raise $66.3m in 2016 as Canopy Leads 2017 with $300k Accelerator

February 22, 2017

Cannabis-related technology startups raised $66.3 million in venture capital investment in 2016, according to AgFunder’s 2016 AgTech Investing Report.

Of the 27 deals captured in 2016, the vast majority were seed stage rounds. This is unsurprising for an emerging sector that is still finding its feet in the US, let alone elsewhere globally. These figures hit strikingly close to those in 2015 when cannabis tech startups raised $64.8 million across 33 deals.

Diversifying Sector

In contrast to their adolescence, however, cannabis startups are already well on their way to covering an impressive array of technologies. In 2015, the cannabis startups that raised funding were targeted more toward developing social and delivery networks and supply chain technologies. In 2016, they diversified to include biotechnologies – such as breeding tech, cannabis-derived pharmaceutical products, and cannabis farm inputs. There were also a growing number of on-farm data collection and software services, and indoor farms dedicated to growing the crop.

US-based startups dominated the year accounting for 23 of the 27 total deals, with Colorado, where cannabis is legal, the leading state with eight startups. California followed with five of the year’s deals. Startups also yielded from Canada, Belgium, Israel, and Ireland.

While cannabis remains an illegal substance at the federal level, there are at least at least 18 funds dedicated solely to backing cannabis-focused technologies, including Snoop Dogg’s Casa Verde Capital and Peter Thiel-backed Privateer Holdings.

Canopy Leads 2016 Investment in Cannabis Startups

CanopyBoulder, the Colorado-based accelerator program focused exclusively on cannabis startups, was the most active investor in 2016 with five deals. The program made more investments than that during the year, but not all made it into the AgFunder technology report as Canopy focuses on all startups innovating ancillary cannabis products and services for the cannabis sector, so not all will have made it into AgFunder’s technology report.

Today, Canopy announced its Spring 2017 cohort.

The program is investing $300k in 10 cannabis startups that are taking part in its Spring 2017 cohort. The companies participating in the 16-week accelerator program will each receive $30k in seed funding. They will also have an opportunity to score an additional $50k at the program’s conclusion.

Throughout the program, the companies will have access to mentors and a cannabis investor network maintained through The Arcview Group, Canopy’s partner in the program.

Founded in 2010, The Arcview Investor Network encompasses over 600 accredited investors who have invested more than $91 million in 135 companies. Arcview produces the State of Legal Marijuana Markets report and co-founded Cannasure Insurance Services, which provides business insurance to cannabis operations. The Arcview Group also backed online ordering platform CannaBuild and social media for marijuana platform MassRoots.

Canopy’s 2017 Spring Cohort

The 10 cannabis startups participating in Canopy’s spring cohort range from very consumer-focused products, to cannabis retail services, to technologies aiding the farming of cannabis.

  • Bloom Automation, based in Massachusetts, provides robotics for the cannabis industry to help solve the high cost of manual labor. Bloom creates high-tech robotics that allows for tasks within a cultivation setting to be automated.
  • Cannabis Big Data, based in Colorado, integrates with data sources such as point-of-sale and accounting to publish critical business management reports that identify areas for improved efficiencies and revenue.
  • CannaZoning, based in Washington State, is a platform that provides visualization of state and local marijuana zoning laws, helping businesses understand the lay of the land, filter the noise, and avoid costly pitfalls associated with cannabis business zoning.
  • Croptimize, based in Colorado, provides technology to drive efficiencies for growers, encouraging energy savings and conservation. They optimize demand profiles and reduce operating expenses through machine learning to leverage rate structure management and utility incentives.
  • Estrohaze, based in New York, is a cannabis-focused media outlet designed to break the stigma surrounding women and minorities. The platform includes resources, career opportunities, and lifestyle content that focuses on women of color benefiting from the cannabis plant.
  • Firesale, based in California, uses geo-mapping technology to provide real-time information on cannabis deals in any location. Its user-friendly search functionality allows consumers to find a flower based on potency, strain, or price.
  • Sana Packaging, the product of two founders located in Connecticut and Switzerland respectively, believes current packaging solutions are wasteful, don’t store efficiently, and don’t allow space for branding and compliance labels. Sana offers rectangular, stackable cannabis containers made from biodegradable hemp-based plastic, resulting in a reduction of their carbon footprint by eliminating traditional petroleum-based plastic from the equation.
  • Snapp Digital, based in Ohio, provides ad control for digital networks. Snapp’s platform allows advertisers to buy ad space and manage content from a simple dashboard, solving the problem of buying and managing ad space in a simplified and cost-effective platform.
  • Solutions Vending, based in Florida, believes smart vending machines aren’t smart enough. It utilizes facial recognition software to convert standard vending machines into an intelligent data collection kiosk, collecting valuable purchasing information.
  • Who Is Happy connects cannabis consumers around the globe with an international geo-location based social network. Launched in 2016, the app quickly grew to 170,000 users and now has almost 1 million check-ins to date.

Some of Canopy’s existing portfolio companies include plug-and-plant home cannabis grow system maker Leaf, sensing and automation platform developer Grownetics, vaporizer developer Ananas, online wholesale marijuana marketplace Tradiv, vaporizer accessories maker Healthy Headie Lifestyle, premium cannabis subscription delivery service Ganja Boxes, cannabis media company TwoCubes, and curated accessories provider Glasshous.

Canopy isn’t the only cannabis-focused accelerator. Oakland, California-based Gateway launched in Fall 2015. It backs biannual classes of 10 cannabis startups with $30k each and almost half a year of office space in exchange for a 6% stake in the startup.

Cannabis startups have also made appearances in non-sector specific accelerators. Meadow, a San Francisco startup offering medical marijuana delivery, is a 2015 Y Combinator alum, scoring $120k in funding from the accelerator. And motorleaf, an automation and data analysis tool for indoor farms, including cannabis growers, is raising a round on AgFunder.

Top 10 Cannabis Startup Fundings in 2016

Here’s a look at the 10 biggest cannabis-tech funding rounds in 2016:

Company Category Amount raised Round Country City
Eaze Miscellaneous $13,000,000 B USA San Francisco
CBC Biotechnologies Ag Biotechnology $7,000,000 A USA Tampa
Canndescent Novel Farming Systems $6,500,000 SEED USA Santa Barbara
Prairie Plant Systems Ag Biotechnology $6,500,000 A CAN Saskatoon
Aphria Novel Farming Systems $6,000,000 DEBT CAN Leamington
Pono Life Sciences Novel Farming Systems $5,300,000 A USA Honolulu
PharmaCielo Novel Farming Systems $4,000,000 A CAN Toronto
Supreme Pharmaceuticals Novel Farming Systems $3,600,000 LATE CAN Vancouver
Growlife Robotics & Mechanization $2,800,000 LATE USA Seattle
Green Gorilla Supply Chain Technologies $2,500,000 A USA Los Angeles

Are you a startup innovating in the cannabis space? We want to hear from you! Email [email protected]

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