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Investment report / market analysis page
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1.4 MB
Summary
This document is a page from an Ackrell Capital report (Chapter VII) discussing private capital markets in the cannabis industry. It analyzes the sources of capital available to early-stage companies, notes the absence of traditional institutional investors due to legal issues, and references data from 2016 through November 2017. The document bears a 'HOUSE_OVERSIGHT' Bates stamp, indicating it was part of a document production for a congressional investigation.
Organizations (4)
| Name | Type | Context |
|---|---|---|
| Ackrell Capital, LLC |
Investment firm publishing the report on cannabis capital markets.
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| FINRA |
Listed in footer as an organization Ackrell Capital is a member of.
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| SIPC |
Listed in footer as an organization Ackrell Capital is a member of.
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| House Oversight Committee |
Implied by the Bates stamp 'HOUSE_OVERSIGHT'.
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Key Quotes (3)
"The cannabis industry today is replete with early-stage private companies seeking to raise capital."Source
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Quote #1
"However, because of the legal considerations, traditional institutional investors—most notably the venture capital and private equity communities—continue to be mostly absent from the market."Source
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Quote #2
"The following table provides a summary of the reported capital (equity and debt) raised by private cannabis-related companies in 2016 and year to date through November 30, 2017."Source
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Quote #3
Full Extracted Text
Complete text extracted from the document (2,043 characters)
ACKRELL
CAPITAL
CHAPTER VII Capital Markets for Cannabis Companies
CAPITAL
CHAPTER VII Capital Markets for Cannabis Companies
■ Private Capital Markets
The cannabis industry today is replete with early-stage private companies seeking to raise capital. This capital, whether equity or debt, may be available from (i) “friends and family,” (ii) more formalized groups and networks of “angel” investors, (iii) family offices, (iv) dedicated cannabis investment funds (currently few in number, but growing), and (v) strategic investors. However, because of the legal considerations, traditional institutional investors—most notably the venture capital and private equity communities—continue to be mostly absent from the market.
The cannabis industry today is replete with early-stage private companies seeking to raise capital. This capital, whether equity or debt, may be available from (i) “friends and family,” (ii) more formalized groups and networks of “angel” investors, (iii) family offices, (iv) dedicated cannabis investment funds (currently few in number, but growing), and (v) strategic investors. However, because of the legal considerations, traditional institutional investors—most notably the venture capital and private equity communities—continue to be mostly absent from the market.
As with most early-stage companies in other industries, many emerging cannabis-related companies are trying to follow the typical progression of raising equity capital, as illustrated in the following chart.
Equity Financing Progression for Cannabis-Related Companies
Today
Future
Friends and Family
Seed
Series A
Series B
Series C
Initial Public Offering
Individual Investors
Institutional and Strategic Investors
Today
Future
Friends and Family
Seed
Series A
Series B
Series C
Initial Public Offering
Individual Investors
Institutional and Strategic Investors
The following table provides a summary of the reported capital (equity and debt) raised by private cannabis-related companies in 2016 and year to date through November 30, 2017. While the table indicates that significant capital is available in the private markets, we believe that the dearth of accessible institutional capital makes it challenging for many companies to raise subsequent rounds of financing after successfully securing their start-up capital. In addition, the amount raised per transaction is small and there have been very few announced financings of meaningful size by private companies. While we believe that the data is informative, it is challenging to get accurate and comprehensive data for the number and dollar amount of transactions that occur in private markets within the cannabis industry because of the number of transactions that are not reported.
© 2017 Ackrell Capital, LLC | Member FINRA / SIPC
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