BOULDER, Colo., May 5, 2015 /PRNewswire/ -- As cannabis prohibition ends one state at a time, more cannabis entrepreneurs are coming up with brilliant ways to help cannabis business solve problems and capitalize on opportunities. However not every idea makes it past the idea phase, and the primary reason is lack of funding.
Matthew Kind, the host of the CannaInsider.com podcast spent months talking with cannabis entrepreneurs and discovered all the different ways they raised money for their ventures. "What shocked me the most," says Kind, "is that entrepreneurs were generally familiar with just one or two ways to raise funds and were totally unaware or simply didn't consider all the possible ways to fund their cannabis business."
While most entrepreneurs have heard of venture capital as one source of funding, there are many other avenues, including peer-to-peer lending, crowdfunding, and accelerators.
An accelerator takes a small ownership stake in an entrepreneur's business and in return provides a small amount of capital, mentorship and access to industry contacts including investors. Typically accelerators last about three months at which point the founders graduate.
Aeron Sullivan is the founder of Tradiv.com, and is an entrepreneur at the accelerator CanopyBoulder. "There is still a lot of fear and apprehension out there related to cannabis investments," says Sullivan. "Investors want to invest, but most lack the due diligence tools to ensure their investment is safe -- they need to rely on shrewd investors, like the CanopyBoulder team, to vet those startups and mitigate their risk to the maximum extent possible. Also, Canopy's access to industry connected mentors is unmatched; they have helped us to get up to speed quickly in a way that would not have been possible otherwise."
Another emerging method of funding cannabis startups is through crowdfunding sites such as KickStarter and IndieGoGo. The way crowdfunding works is that many people in an online community provide small amounts of capital in exchange for some incentive. Often that incentive is simply a pre-order of an entrepreneur's product or service or a perk, like the chance to meet the entrepreneur in person. The most powerful form of crowdfunding, equity crowdfunding, is just emerging now.
Until recently the SEC didn't allow contributors to a crowdfunding campaign to receive equity or ownership in the business raising capital. That has changed and now accredited investors can participate in equity crowdfunding. This new era of crowdfunding promises to unleash a tidal wave of possibilities for both cannabis entrepreneurs and investors alike.
The Top 10 Ways to Raise Capital for your Cannabis Business
CannaInsider.com provides a free cheat sheet that details the top ten ways to raise startup capital for your cannabis business. You can find the cheat sheet at: http://www.cannainsider.com/raise-capital
Each week, Matthew Kind, the host of the CannaInsider Podcast, interviews the leaders of the cannabis industry to help listeners understand both the incredible opportunities and dynamics of this rapidly evolving industry.
Learn more at http://www.cannainsider.com/