Medical cannabis startup incubators and accelerators are funding the companies that are driving growth in the global medical cannabis market.
Offering valuation growth for companies and revenue opportunities for shareholders, medical cannabis startup incubators and accelerators are playing an important role in today’s global cannabis market.
The global cannabis market is expected to reach $57 billion by 2027, according to Arcview Market Research and BDS Analytics. Hundreds of entrepreneurs with innovative brands and products are vying for a piece of the pie, but without the right financial and expert support most will have to settle for crumbs.
Cannabis is a capital intensive industry — which can pose a problem for companies with great business plans, big ideas, but not much experience in securing financing and navigating the complex process of taking a company public. We often think of this as a dilemma unique to very early-stage startups, but many successful late-stage startups often find themselves unable to enter the next stage in their growth cycle due to a lack of financing.
In the medical cannabis industry, this poses an even bigger challenge as financial institutions are still hesitant to provide loans and banking services companies in this space. The investment community also seems hesitant to jump into early-stage, private cannabis startups. For now, most cannabis focused investment dollars are going to the publicly-traded licensed cannabis producers. But there is a lot of opportunity to be had in the innovations of the startup sector.
Medical cannabis-based companies in need of funding options and access to basic commercial banking services to help them build and grow are looking to incubators and accelerators. These companies provide alternative financing solutions to the cannabis industry and are now capturing market share, representing another entry point for investors in the global cannabis space.
Incubators and accelerators in the cannabis sector supply the capital and support services that companies need to quickly build their valuations and graduate to the next stage in their growth cycle without diluting their equity prematurely.
Cannabis incubators and accelerators provide capital and expertise
Incubator programs are usually targeted at early-stage companies that need seed capital and guidance — including help with marketing, branding and strategies — to gain leverage in a competitive market. Accelerator programs are meant for more mature startups that may already be generating revenue but need a capital bridge to move up to a higher valuation so they can be in a better position to raise large funding rounds on their own.
Even more important than money, the biggest benefit a startup can get from an incubator or accelerator is expertise. That expertise comes in the form of support services — ie. training, mentoring, networking and development programs — that help companies succeed in a complex and evolving cannabis market.
In any industry, the statistics show that very few startups ever even make it out the gate. That truth is even more bleak in an emerging market like cannabis with very restrictive regulations that can vary widely even between neighboring jurisdictions. Incubators and accelerators can supply fledgling cannabis companies with industry specific legal advice to help navigate those complexities successfully.
Leading cannabis market incubators and accelerators
One of the most active startup accelerators in the cannabis space is Colorado-based CanopyBoulder, which has launched 63 businesses since 2015. The firm focuses on companies offering ancillary products and services for both the medical and adult-use cannabis market — think tech, data analytics, security and consumption devices. On top of seed capital and follow-on funds, CanopyBoulder also provides the expertise of its industry insiders and program alumni.
In February 2018, the company raised $2 million for its 2018 accelerator fund. Ten companies were recently enrolled in CanopyBoulder’s 16-week accelerator program for a total investment round of $300,000. The roster includes a cannabis legal services company; a cannabis media outlet; a fintech cannabis banking platform; and DNA testing service to personalize cannabis consumption.
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Published: January 09, 2019
Founder & Interim Editor of L.A. Cannabis News