Equity crowdfund your cannabis business

Go direct to your tribe for funding

It would be an understatement to say that most cannabis firms are capital starved and have difficulty securing equity or debt funding at reasonable terms and cost.  The likelihood of this situation changing in the short term is not good. 

Fortunately, there is another funding option that is appealing for early-stage cannabis businesses with a differentiated market position.  Enter equity crowdfunding. 

For the unaware, equity crowdfunding is a vehicle to raise seed capital directly from mass market retail investors via an online platform.  Importantly, crowdfunding is legal for cannabis companies in many jurisdictions including the US, Canada, and UK.  The typical, successful raise is $350K, powered by average investments of $750/investor.  This funding vehicle is a good complement to larger, more traditional Series A or Series B raises.

Crowdfunding is part promotion, part securities & accounting compliance and part corporate finance.  A variety of raise types (e.g., Reg A, Reg CF) can be supported on an array of platforms.  Fee structures vary but there typically are 3 cost elements for a firm:  1) out-of-pocket marketing plus accounting, financial & legal fees; 2) a cut of the total raise paid to the provider or platform and 3) client resourcing.  

Crowdfunding benefits
1. Ideal for cannabis and seed-level raises, which are typically ignored by bigger investors
2. Enables you to avoid predatory or pump n dump investors seeking outsized control
3. Safeguards your cap table
4. Turn your individual funders into brand evangelists
5. Often can be a quick, cost effective way to raise capital

Crowdfunding has raised money for a number of cannabis firms around the world. I have worked closely with a best-in-class crowdfunding provider, #CrowdfundSuite.  They are independent of any platform, so can direct you to the best funding solution for your needs.  Furthermore, they understand the intricacies of the cannabis space (including securities rules by jurisdiction) and can bring a variety of marketing best practices from other industries. 

Is crowdfunding ideal for you?
> Your raise is between $100K and $1M over a 12 mo. period
> Your firm has sizzle (ie a good story) as well as steak (ie good product, differentiated market position)
> The offering is made through a broker-dealer or a registered funding portal
> You have a community that cares (customers, followers)

Maximizing your success
- Work with a reputable provider who understands cannabis marketing, securities law and winning program design
- Devote the marketing funds (usually 3% of the raise target) and resources to creating a strong pitch and supporting it through social engagement and investor relations
- Understand all the moving parts including ancillary professional services requirements
- Be compliant with all the regulations including limits on promoting the offer

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