The potential of the cannabis industry is drawing the interest of entrepreneurs from every conceivable background. But because of the intricacies of the regulations and restrictions surrounding the industry, including licenses and other fees, the entry level price point can be prohibitive. Some states in the U.S. require proof that those applying for dispensary licenses have at least $1 million in cash to even be considered.
Most entrepreneurs at the outset don’t have that kind of ready cash, and will have to find funds for their cannabis business elsewhere. Friends and family will only be able to help so much, the rest of funding will likely come from angel investors and venture capitalists.
Consider these the big leagues of money acquisition. While your Uncle Bob may be swayed by your charming personality and the fact that you’ve shovelled his driveway every winter since you were 11, a professional investor is not going to have any such illusions. In order to impress one enough to invest in your business, your presentation must be thorough, complete and supported by fact-based research and evidence of market opportunity and potential for success.
So where to begin?
Define Your Focus
Your business idea has to be focused, sound and has to solve a problem. It may sound simple to distill your business idea into a single sentence, but this is often one of the most challenging initial steps.
The demand for cannabis and cannabis products is seemingly limitless. But your business cannot serve every cannabis user without diluting focus. Will you provide medicinal or recreational products? WIll you target consumers, or business that supply consumers? Will you sell more product for less, or less product for more?
It’s not easy to funnel the creativity necessary to imagine the concept of your business into a single, short sentence, but it’s an exercise that is worth it. By distilling your business idea in to one clear concept, you are creating a solid foundation from which to build a strong, successful business, as all decisions you make will come back to this one key concept. Without a clear idea of what your business is, it’s easy to get lost amongst all the choices that will present themselves as you build and grow. Spreading a business too thin over too many funnels, and attempting to serve too many markets at once often translates into serving none of them very well. And investors are very aware of this.
Find your Investors
In order to convince someone to give you money, first you’ll need to find them. There are directories of angel investors and venture capitalists online. Go to tech-centric websites or publications like Tech Crunch to find lists of potential investors.
There are a lot of firms with a lot of money out there, but the difficulty is getting on an investor’s radar. Sharpen your elevator pitch and get ready to network. Venture capitalists are people, too.
Relationship-building will be an important part of your strategy. Look for networking events, workshops or lectures on investing and finance to meet and greet potential investors in order to get them to hear your pitch. The broader of a net you cast, the more success you will have in connecting with the right investor for your cannabis business.
Create a Convincing Pitch Deck
When pitching to investors, you must have a compelling pitch deck that you believe in. A good pitch deck has around 10-15 slides that show all aspects of your proposed business. Make sure to include how your business solves a problem, demonstrate potential market size and outline the technology and production capabilities necessary to build the business. You’ll also need to discuss the level of difficulty involved in both building and running the business, and whether or not it has been done before in a different way and how that worked out. Be prepared to discuss who your team members are and to get exact about how your product fits the market and who will buy it. Consider every possible question and detail, down to branding and product packaging.
Your pitch deck is your one shot at impressing a potential investor, so make it look like you mean business. If writing is not your strong suit, consider hiring a professional writer. Make sure any images you use are professionally shot, any infographics are professionally done. It won’t do you any favours to try and do it yourself, unless you know how to make it look good. Reach out to trusted friends or contacts that work in a variety of related industries, including investment, PR, media and of course, the cannabis industry to get their takes on your pitch deck and tweak accordingly.
Your pitch deck will take time, and possibly money, to complete. Consider the investment in your pitch deck as an investment in your future business.
Practice, Practice, Practice
It’s obvious, but bears making the point anyway. Practice presenting your pitch. Do it over and over again. Do it in front of people, in front of a mirror, or in front of your dog. It doesn’t matter who your audience is, as long as you are practicing speaking, practicing emphasizing the points you want to hit, and practicing your tone of voice and body language. With practice will come confidence, and confidence in what you are selling is absolutely essential when pitching investors to fund your business.
Pitching investors can feel intimidating, but it doesn’t have to be. By defining the focus of your business, networking with investors to connect with those that are open to hearing your pitch, investing in creating an impressive pitch deck that succinctly captures all aspects of your business, and practicing your presentation until you are comfortable and confident with the material, it’s only a matter of time until you secure the funds you need to build your cannabis business.
Article by Andrew Witkin, Founder & President of Sticker You.
As the founder of StickerYou, Andrew believes in the enormous power of customization. With over a decade of StickerYou success, he is one of Canada’s leading experts in e-commerce, customization, startups, marketing and the tech economy.
He is a graduate of Dalhousie University and holds an MBA from the Schulich School of Business, York University. Witkin has previously served as VP North American Licensing for Nelvana/Corus Entertainment and Director of Marketing for MegaBrands/Mattel.