Marijuana Business Magazine July 2018

LEAFLINK PRIMER progressing forward. As we get fur- ther down the line, it can become a little more of a vision because we’ve built this foundation of trust and execution on goals.” Smith said it’s important for entre- preneurs to seek funding from venture capital firms that have never invested in a cannabis-related company, as well as those that have already bought into the industry. LeafLink’s Series A funding came on the heels of a $3 million over- subscribed round led by cannabis newcomer Lerer Hippeau Ventures, which has invested in companies such as Buzzfeed, mobile payment ser- vice Venmo, online mattress retailer Casper and Warby Parker, a designer and purveyor of eyeglasses. “We need to educate people about what we’re building here, how impor- tant it is not only to medical patients but also for the state tax coffers,” he said. “You just have to create a big funnel and, hopefully, you can get the right fit.” L eafLink’s e-commerce platform links retailers with distributors and a variety of marijuana businesses. Retailers who previously called, emailed or texted more than 50 sales representatives to place orders now save a day each week shopping for all their brands in one cart on LeaflLink. Consumer brands use the platform to streamline their orders as well as all elements of their wholesale activity, leveraging its customer relationship management system, reporting tools and fulfillment and shipment queues. LeafLink – which has dual headquarters in NewYork and Los Ange- les – counts more than 2,000 retailers and 500 marijuana brands that are using its e-commerce platform. Flush with the latest $10 million, Smith plans to further expand the company as more states legalize cannabis. LeafLink has customers in California, Colorado, Oregon, Washington state, Nevada and Arizona. Smith plans to have operations in 15 states by the end of the year. – Margaret Jackson Picking the Right Investors Nosara Capital, a British venture capital firm that had not previously invested in cannabis-related com- panies, led the $10 million funding. Other investors included a mix of companies that had never invested in cannabis, including Wisdom VC, TIA Ventures and Brand New Matter, as well as Lerer Hippeau, Phyto Partners and Snoop Dogg’s Casa Verde Capital, which focuses on early stage ancillary investments in the cannabis industry. “The whole goal was to make the investor group similar to our internal team mix – people who have experi- ence in other industries with people who have experience in cannabis,” Smith said. “Bringing those two skill sets together is super important to the industry.” Conventional businesses that are successful at raising money position themselves to be industry disruptors. By contrast, Smith said, marijuana entrepreneurs who portray them- selves as visionary or future looking will have an easier time getting inves- tors excited about their businesses. When pitching LeafLink to inves- tors, Smith said he and co-founder Zach Silverman, who is chief technical officer, characterize the company as the backbone of the supply chain. “There’s really nothing to disrupt,” said Smith, who in 2016 was the first cannabis entrepreneur to be picked for Forbes’ “30 Under 30” list of young leaders. “It’s all brand new. We tell them what it can mean if we get in early and define it, because it’s so much harder to change habits than create something from scratch. We have the unique opportunity to empower businesses.” Smith cautions against raising too much money from small investors, noting that if you have 25 people writ- ing checks for $20,000-$30,000, it’s hard to maintain the relationships. “If they can only write a check for $25,000, that money means a lot more to them than a company that can invest $1 million,” Smith said. “Smaller investors require a little bit more attention. Having an over- extended group of investors can become burdensome. Don’t just take any money that comes your way – all money is not the same.” ◆ Don’t just take any money that comes your way – all money is not the same. 94 • Marijuana Business Magazine • July 2018