- Business Insider identified the top VCs making deals in the cannabis industry, based on how many investments they made in 2019.
- The VCs told us they’re looking to invest in areas including: advertising technology, international opportunities for CBD and hemp, drug delivery platforms, lab testing, synthetic cannabinoids, and more.
- One of the most common predictions Business Insider heard from VCs? That 2020 will be the year where a few brands will ‘pull away from the pack’ and emerge as the top brands in cannabis.
- This is the second edition of our list of the top VCs in cannabis. You can read the previous list here.
- Click here for more BI Prime stories, and subscribe to our weekly cannabis newsletter, Cultivated.
Last year was difficult for the cannabis industry.
The industry was hit with a number of headwinds, including slower-than-expected retail sales in Canada and legal jurisdictions in the US, as well as a spate of vaping-related illnesses in the US that prompted some states to introduce bans on the sale of vaping products.
On top of that, the cannabis bubble burst and stocks slid — some indexes that track the industry lost over 50% of their value last year — all of which contributed to the collapse of mergers like the one between MedMen and PharmaCann, and forced other mega-mergers to get pared back or repriced. Both startups and public companies in the industry were forced to let go of employees and sell off assets.
Despite the challenging year, venture investment in cannabis startups surged in the first half of 2019, before declining, according to the data provider PitchBook. Overall, venture investors committed a total of $2.3 billion to the industry last year, up from $1.5 billion the year before, as Business Insider reported. That’s up from just $17 million in 2013, right after Colorado became the first state to open its doors to the commercial cannabis industry.
Much of that money, however, has flowed into early-stage companies. For companies later in the growth cycle, there still isn’t much capital available because THC, the psychoactive component of cannabis, is federally illegal, so many big funds are reluctant to invest.
The federal status of cannabis also means that many investments from VCs are focused on ancillary companies, like business-to-business software and hardware that don’t directly touch the plant.
To get a handle on who the top dealmakers are in this budding industry, Business Insider reached out to the top VCs investing in the cannabis sector. We emailed the 15 biggest VCs based on number of deals made in 2019, according to data from PitchBook. Of the 15 we contacted, 14 responded.
The investors told us where they invested in 2019, how many deals they made, and what they’re excited about investing in this year.
