The cannabis world is seeing a lot of investor love this week with two funding announcements. The first comes from cannabis dispensary retail management platform Flowhub, which landed a $23 million Series A from Kraft Heinz’s corporate venture capital arm, Evolv Ventures, e.ventures, 9Yards Capital, former NBA commissioner David Stern, the former CEO and co-founder of Venmo Iqram Magdo-Ismail, and Poseidon Asset Management. This brings Flowhub’s current funding total to $27 million.
Kraft Heinz is making its first foray into the cannabis industry and it’s likely aiming to snag a piece of the $66 billion projected value of the legal cannabis industry by 2025, according to Grand View Research. Some of its other investments include cell-grown cheese manufacturer New Culture and an in-house incubator, Springboard, aimed at developing new food and beverage products.
“Evolv Ventures is investing in emerging tech companies transforming the food and CPG industry and this is another example of moving beyond brands to invest in disruptive tech-enabled companies that are shaping new industries,” said Evolv Ventures managing partner Bill Pescatello in an email to AFN. “We are very excited about the potential of Flowhub’s technology innovation and leadership position in one of the fast-growing CPG categories today.”
Flowhub’s solution for dispensaries provides a way to scale operations to match consumer demand as states continue to change their approach to regulating legal cannabis. Its website claims that it can help companies sell, manage, analyze, and expand their businesses effortlessly. This includes tools for ensuring regulatory compliance, point of sale, inventory management, and API connectivity.
“What we are experiencing right now is an end to cannabis prohibition and Flowhub is on the front lines of this movement. Every legal transaction completed with the Flowhub retail platform is a positive step forward, and we are committed to helping our customers build thriving cannabis businesses,” Flowhub CEO and founder Kyle Sherman said in a press release announcing the investment.
“With this investment, we will continue to automate the cannabis supply chain, retail and reporting processes and bring to market technology solutions that are not only shaping the cannabis retail business, but also driving forward the future of legalization and de-stigmatization.”
The startup launched in 2015 in Sherman’s basement and has now grown to an 80-person company in downtown Denver.
Bespoke Financial’s $7m venture round
Snoop Dogg’s Casa Verde Capital invested in the $7 million round for early-stage startup Bespoke Financial. Other investors in the round included Greenhouse Capital Partners and Outbound Ventures.
Launched in 2018 by a group of individuals including the founders of ProducePay, a fintech platform serving produce farmers in the Americas, the company is using ProducePay’s proven model to alleviate some of the working capital limitations in the cannabis supply chain.
ProducePay has financed $2 billion in perishable commodities since launching in 2014, operates across 13 countries, and processes thousands of transactions each month, according to the startup. The startup has raised over $200 million in capital to boot.
“While the US legal cannabis market is forecasted to grow over 20% annually, reaching $23B by 2022, the industry’s true growth potential is limited by long cash flow cycles throughout the supply chain and a lack of scalable and efficient capital sources,” Bespoke Financial co-founder and CEO George Mancheril said in a press release announcing the funding. “Our approach will dramatically improve cash flow cycles across the supply chain and provide scalable working capital to fuel our clients’ growth.”
Bespoke offers what it describes as unique financing options for the cannabis industry by incorporating ProducePay’s underwriting model, risk management controls, and technological expertise in building a fintech platform that works. The new funding will be used to enhance its existing online platform that enables borrowers to request funds on a real-time basis and to expand its team and marketing base. It’s currently focusing on California’s cannabis market, but it plans to expand into other US jurisdictions.
“Bespoke is filling a critical funding gap for US cannabis businesses that are rapidly scaling and need short-term working capital solutions. With the recent softening of the public markets, private financing is becoming more expensive. As such, Bespoke has created an efficient alternative for cannabis companies to access liquidity while managing their dilution,” says Karan Wadhera, managing partner of Casa Verde, also said in the relesae. “Given the Bespoke team’s previous success in building the leading agtech platform, coupled with their depth of fintech expertise, we are confident in leadership’s ability to execute.”
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