Marijuana Business Magazine August 2019

Marijuana Business Magazine | August 2019 14 The CEO of The Arcview Group reveals which companies he wishes he’d invested in—and ones to avoid Troy Dayton T roy Dayton wants to make the world a better place through cannabis. The co-founder and CEO of San Francisco-based investment group Arcview wants to make profitable investments in the cannabis industry, for sure, but there is also a large social component linked to his business philosophy. For someone initially motivated to get into cannabis through the goal of eventual legalization in the United States, the cannabis plant must be a force for good. Therefore, Dayton said, investments must be socially responsible as well as profitable. “I’m only interested in investing in companies that are helping to end cannabis prohibition and are building cause-marketing and corporate social responsibility into their businesses,” he told Marijuana Business Magazine. “If my work isn’t making the world a better place, what’s the point?” Arcview functions through the membership of more than 600 accredited investors who are invited to invest in cannabis companies that apply to present to Arcview staff and then go through a rigorous vetting process. What initially attracted you and Arcview to cannabis investing? I became an adult in 1995. That was when I began focusing most of my efforts on legalizing cannabis. I did small stints in the first dot-com boom and the renewable energy boom. Ultimately, I gave up my dreams of being part of a big business boom in order to do what was in my heart: work to end marijuana prohibition. It had really never occurred to me that the work to end prohibition would lead to the next big business boom—not until about 2009, when (Harborside co-founder) Steve DeAngelo and I thought up The Arcview Group. We believed that, if we could help capital and talent into the cannabis sector, that in the end would become the engine that would drive the rest of the political progress needed to free this plant. What is Arcview’s investment philosophy? As Arcview’s (general partner) Jeanne Sullivan often says, “If you want to go fast, go alone. But if you want to go far, go together.”This industry moves so fast, and it touches so many other disparate industries, that it is frankly hubris to believe that two or three people in a fund or one high-net-worth individual can effectively evaluate opportunities in a vacuum. We believe in tapping a broad network for deal flow, deal evaluation, for filling out rounds and then for helping that company succeed. Because Arcview has been the conduit to capital for hundreds of companies, we know most of the entrepreneurs raising capital. Humility is a rare trait in venture capital, but it leads to really listening to your network as you evaluate opportunities. Who makes up Arcview’s investor base? Back in the day, it was pretty exclusively angel investors who were looking to place $100,000-$500,000 in the sector, and a few of the large companies in the space— which, at that time, were companies doing more than $10 million in annual revenue. Fast-forward to today and, just like the industry has matured and larger players have come to the table, so has Arcview’s membership. We now have a mixture of Fortune 500 companies, billion-dollar-plus MSOs (multistate operators) and other public companies looking for acquisition targets, small and large venture funds, family offices and angel investors. Money Matters | Nick Thomas $2.5 BILLION The annual estimated value of the Illinois recreational cannabis market, now that the state has become the 11th in the country to permit adult-use marijuana sales and the first to approve a commercial industry through the Legislature. The bill, which is also expected to offer a blueprint for social equity programs, goes into effect Jan. 1, 2020.