In the first half of 2016, cannabis startups raised $31 million across 14 deals, according to AgFunder data. That was a small slice of the total $1.8 billion agtech funding pie and less than half what the sector raised during the whole of 2015 ($68 million).
One company is set to account for a large portion of 2016’s funding total for cannabis tech startups after raising $13 million at Series B last month. San Francisco-based cannabis delivery startup Eaze claims that this round makes it the most funded cannabis company in the game.
Targeting medical marijuana patients, the app-based marketplace helps patients find verified dispensaries in their local neighborhoods.
“We are a technology company that connects verified patients with compliant dispensaries,” Keith McCarty, CEO & founder of Eaze told AgFunderNews via email. “Eaze doesn’t touch the product throughout the entire process; we simply license out our technology to a handful of compliant dispensaries, which in turn make the on-demand delivery to verified patients.”
A diverse range of high profile investors are backing Eaze. They include: 500 Startups, Snoop Dogg’s Casa Verde Capital, early-stage VC DCM Ventures, Beepi executive chairman Fabrice Grinda, global NYC-based multi-stage investor FJ Labs, micro venture firms Fresh VC and Mission and Market, hip hop artist Nas-backed QueensBridge Venture Partners, former Facebook exec-backed Slow Ventures, and a VC firm that likes to tackle regulated marketplaces, Tusk Ventures.
Its funding track record dates back to 2014 when it closed a $1.5 million seed round months after it was founded. The following year, it closed one of the sector’s 20 largest Series A rounds of the year with a $11 million funding.
Some existing investors re-upped their commitments for the Series B round, with Fresh VC taking the lead. A few new funders joined, including early stage NY-based Winklevoss Capital and Rose Capital.
We recently caught up with McCarty to learn a few secrets behind its success and how it views the cannabis tech space from the top of the mountain.
Why is Eaze the best-funded among cannabis startups? What were the challenges to achieving this?
With its latest round of funding, Eaze became the most funded and fastest growing cannabis technology company in the world with $25 million. Although many investors saw the benefit of the technology, some were uneasy regarding the future of regulation in California. We surmounted concerns by demonstrating the power of our data in educating regulators and thereby helping to shape policy throughout the state.
How has the available investor base developed over the years you’ve been around?
As companies like Eaze are able to provide more insights into the nascent industry, investors can make more educated investments. With more understanding of the landscape and analysts projecting it to be worth $50 million in the next four years, we’re slowing starting to see more investors be open to investing in cannabis.
What are your views on federal regulations and how does that impact your business? Will you focus regionally until things are resolved?
Currently, Eaze is available in nearly 100 cities across California. As an agile technology platform, we’re able to scale quickly. Our expansion however, is strategic, with the patient experience of utmost importance. We’re currently laser focused on California, but eventually will be everywhere delivery is legal.
Where are you getting most demand and with what types of strains?
You can see more about our consumer preferences here – 2015.eazeup.com. While flowers are our most popular form of cannabis across all our markets, oil cartridges are gaining quickly in popularity. The last data we pulled found that Southern Californian markets preferred Indicas and NorCal preferred Sativas. We’re also seeing a huge growth of cartridges (the oil for vapes).
What about competitors? Do you have any?
Our biggest competition is the illicit market. We work closely with regulators to help craft responsible frameworks which enable safe patient access to help diminish the illicit market.
What’s your general take on the cannabis startup community? What is it good at, what is it lacking, what are the challenges?
When Eaze launched, aggregate data about the California patient market did not exist. Technology companies in this space have since been able to reduce stigma and lack of education through data insights. Eaze can aggregate hundreds of thousands of transaction and patient behaviors and help educate the entire ecosystem to help progress public policy, and set a standard for product consistency and safety.
Are you a cannabis startup? Get in touch: [email protected].
