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Cannabis lender Bespoke Financial raises $8M from Casa Verde Capital and Sweat Equity Ventures

Cannabis financing company Bespoke Financial today announced it raised $8 million in a Series A financing round. Through this round, the company brought new, key investors into its corner as it fights to bring financing solutions to companies in the cannabis space.

Bespoke is a direct lender and provides several financing solutions to companies operating in cannabis. These short-term loans allow the companies to build credit with Bespoke, which then offers better terms on subsequent loans and products. The company says its loan origination volume has grown exponentially, outgrowing forecasts by 25% over the proceeding year. The company has deployed $120 million in gross merchandise volume over 2,000 cannabis license holders, with zero defaults to date.

With this new round of capital, Bespoke intends to launch new financing structures and expand its financing options across various distribution channels.

CEO and co-founder George Mancheil calls this round a pivotal moment for his company and stamp of validation on the direction and products offered by Bespoke Financial. As he tells TechCrunch, this round provides several key partners to the growing startup.

The financing round was co-led by Snoop Dogg’s Casa Verde Capital and Sweat Equity Ventures, along with Ceres Group Holdings, Greenhouse Capital Partners, DoubleLine Capital’s co-founder and former president Philip Barach, and Robert Stavis, an investor based in New York.

This is Sweat Equity Ventures’ (SEV) first investment into a cannabis company. SEV, backed and funded by LinkedIn founder Reid Hoffman, is led by Dan Portillo and works differently from traditional venture funds. SEV works with founders to provide top engineering and business talent to its portfolio companies. In exchange for these services, SEV takes equity from the companies instead of just writing checks.

“This is our firm’s first investment in the cannabis industry, and we are excited to partner with Bespoke as more and more states legalize cannabis use, and the Federal government contemplates nationwide legalization. This partnership combines Bespoke’s finance and cannabis acumen with our team’s expertise scaling innovative tech companies, and will provide cannabis companies greater access to streamlined financing while benefiting investors with increased transparency and enhanced risk surveillance,” says Dan Portillo, managing partner of Sweat Equity Ventures, in a released statement.

Karan Wadhera, managing partner at Casa Verde Capital, says Bespoke Financial addresses real needs in a growing industry. Casa Verde Capital previously invested in Bespoke Capital, including in a $7 million round in 2019.

Bespoke CEO Mancheil tells TechCrunch his company is focused on being more than just a lender; it wants to be a modern financing company that allows it to act as a true partner with the cannabis industry.

With this $8 million in financing, Bespoke Financial has raised $28 million to date. The company was founded in 2019 and, as of this announcement, has 12 employees.

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Cannabis dispensaries’ online sales are way up, and Dutchie, which connects them to their customers, is a major beneficiary

Dutchie, a nearly three-year-old, Bend, Oregon-based software company focused on connecting consumers with cannabis dispensaries that pay it a monthly subscription fee to create and maintain their websites, process their orders and track what needs to be ready for pickup, has raised $35 million in Series B funding. The capital came both new investors Thrive Capital and Starbucks founder Howard Schultz, along with earlier backers, including Kevin Durant’s Thirty Five Ventures and the cannabis-focused fund Casa Verde Capital.

The money comes hot on the heels of Dutchie’s first major round of funding — $15 million that it closed last September — and suggests that the cannabis industry has fared better during the COVID-19 pandemic than people outside the industry might imagine.

We had a fast chat yesterday with the company’s co-founder and CEO, Ross Lipson, about the year that Dutchie is having.

TC: I’d seen recently that Dutchie has added contactless payments.

RL: Yes, when the pandemic hit, virtually all of our dispensaries shifted to a curbside pickup model. We built a solution that allows customers to select curbside at checkout, and also includes a way to notify the dispensary when they arrive and provides them information on how to locate their vehicle.

TC: A year ago, there were more than 30 states where cannabis was either medically legal or that had legalized the recreational use of marijuana. How has that changed?

RL: We now work with over 1,300 dispensaries in 32 markets. By comparison, a year ago we were only operating in 9 markets. Nationwide, 47 out of 50 states now allow some form of legal cannabis, and 2020 could bring full legalization in major markets such as New Jersey and Arizona.

TC. Can you put that into context? How many dispensaries are there in the U.S.?

RL: Dutchie processes 10% of all legal cannabis sales worldwide and powers over 25% of dispensaries. That’s more than 75,000 orders a day.

TC: You had 36 employees the last time we talked. What’s that number now?

RL: We currently have 102 employees and we aim to double our team by the end of 2021.

TC: Aside from helping dispensaries shift to a curbside model, how has the pandemic impacted your business?

RL: Virtually all states deemed cannabis dispensaries as essential businesses [once COVID took hold]. Many still had to comply with state laws and close their physical stores, though, leaving only one option for sales — online ordering. We saw dispensaries shift from about 30% of overall sales coming from Dutchie to upwards of 100%, and our business grew 600% in roughly one month.

Overall, we’ve seen a 700% surge in sales volume during the pandemic. We had to scale quickly to deal with six times the load on our technology.

TC: Think those numbers will shift around as some parts of the country open up?

RL: Dispensaries are poised to keep online ordering and e-commerce options available because it is part of what their customers now expect.

Pictured, left to right, above: Ross and Zach Lipson (Zach, Ross’s brother, is the company’s co-founder and chief product officer).

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Snoop Dogg’s Casa Verde gets into the sleep space, backing NY-based Proper

Helping Americans get their 40 winks has never been more necessary as the country faces what some health experts have called a sleep epidemic, and Snoop Dogg’s cannabis-focused firm Casa Verde Capital wants to help.

The firm is leading a $9.5 million investment into a company called Proper, which is launching with a combination of sleep coaching and supplements, pitching a “holistic” sleep health solution.

One-third of U.S. adults don’t get enough sleep according to Proper’s estimates, and the company’s chief executive, Nancy Ramamurthi, says that the COVID-19 epidemic has only made the problem worse.

“Proper aims to help solve what the CDC has identified as a public health crisis — insufficient sleep — with a truly more holistic and personalized solution,” said Ramamurthi, founder and CEO of Proper, in a statement. “Proper has combined the best of natural, safe, evidence-based sleep supplements with expert behavioral coaching, which consumers have not traditionally been able to access. Now, thanks to the increasing popularity of telehealth, sleep coaching can be delivered online.”

The sleep coaching services from Proper are provided by board-certified health and wellness coaches under the guidance of a clinical psychologist and behavioral sleep medicine specialist, according to a statement from the company.

Ramamurthi said that clinical validation is a core component of the company’s business. Indeed, the company is currently running its formulations through a clinical trial to prove their efficacy. It’s an additional step that the company doesn’t need to take, she said, because the supplements have all been studied with clinical trials supporting the use of the ingredients as treatments for sleep therapy. “That’s in addition to them being used for thousands of years,” said Ramamurthi.

Proper was incubated within the consumer health venture studio Redesign Health and will use the new capital from investors led by Snoop Dogg’s Casa Verde to boost its sales and marketing efforts and continue its research and development activities.

While sleep aids may seem like a strange market for a cannabis-focused investment firm, Casa Verde partner Karan Wadhera says it’s a highly strategic investment for the firm.

[Cannabis] is an input as well and its use case will go beyond how people think of cannabis stigmatically,” Wadhera said. “At its core, [Proper] is a company that’s helping us target this sleep epidemic. We think CBD and cannabis at large can play a big role in addressing that in a way that traditional products haven’t been able to.”

The investment in Proper, then, points to a maturation of the cannabis industry, as investors look at the various chemical components of the cannabis plant and try to tease out a broader range of health and wellness applications. “We are starting to shift how we think about the business. It doesn’t have to be a core, specific cannabis product,” Wadhera said. 

Image Credits: Proper

Ramamurthi says that her company will be exploring applications for cannabinoids in its supplements later. “As we continue our product development process one of the things we are looking at is CBD,” she said. “CBD is one of the more effective ingredients at reducing stress and anxiety, and stress and anxiety are one of the main reasons why people can’t get to sleep.”

Proper’s studies are supported by a scientific advisory board that includes Dr. Adam Perlman, the director of integrative health and well-being at the Mayo Clinic, and Dr. Allison Siebern, a clinical psychologist and board-certified sleep medicine specialist at the VA Medical Center in North Carolina.

There’s a reason why sleep is so poorly understood and ignored as a health issue in America. Around 90% of primary care physicians rate their understanding of sleep’s impact on the body as “poor to fair” and there’s only one board-certified sleep specialist for every 43,000 Americans, according to Proper’s data.

Customers who sign up for Proper’s service can select one of five sleep formulations available for $39.99 per bottle or for a subscription with a 10% discount. New users also get a free 30-minute consultation with a Proper sleep coach, the company said.

The five versions of Proper’s sleep products include a core sleep product made from GABA, valerian root extract, rafuma leaf extract, and ashwagandha root and leaf extract; a sleep and restore product that includes melatonin; a calming pill with L-theanine added to the core sleep product; a clarity product that includes concentrated grape extracts; and, finally, an immunity product with added zinc, vitamin C, B6 and D.

 

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Meet Bespoke Financial, a lender for cannabis companies backed by Snoop Dogg’s Casa Verde Capital

Bespoke Financial wants to provide cannabis businesses with the same kind of financial services that other businesses get, but that dispensaries and growers can’t yet access.

The regulations around cannabis operations are so stringent at the local level — and so nebulous at the federal level — that national banks won’t give businesses in the cannabis industry the same basic services (like short-term loans).

That’s why one former Goldman Sachs banker has partnered with two entrepreneurs from the traditional agriculture industry to create Bespoke Financial. And it’s why the company has raised $7 million in financing led by Casa Verde Capital — the investment firm launched by legendary cannabis aficionado, Calvin Broadus (AKA Snoop Dogg).

In some ways, George Mancheril is the new face of the cannabis business. The former banker hails from Goldman Sachs and Guggenheim Partners and worked on the desks that dealt with alternative lending.

A transplant to Los Angeles roughly six years ago, Mancheril says he saw the migration of legally sanctioned cannabis begin for recreational use and knew there would be opportunities for new lending businesses.

“Cannabis will become a broad, mature industry just like any other, and if that is going to happen, there needs to be a debt structure that can support that,” Mancheril says.

The biggest impediment to the industry’s growth is the one that Bespoke Financial wants to tackle first — and that’s access to debt.

To build the company’s first product, Mancheril looked to his co-founder’s Pablo Borquez-Schwarzbeck and Benjamin Dusastre. Borquez-Schwarzbeck and Dusastre previously launched ProducePay, a fintech platform focused on produce farmers that has financed roughly $2 billion in perishable commodities throughout 13 countries. It’s backed by around $200 million in venture capital and debt financing.  

What Mancheril and his co-founders have done is take ProducePay’s underwriting model and apply it to the cannabis industry. The financial instrument that they’re starting with is known “in the business” as factoring.

It’s basically advancing money to businesses for a contract that’s signed in exchange for a cut of the money once a company gets paid for the goods or services they’ve rendered.

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“While the US legal cannabis market is forecasted to grow over 20% annually, reaching $23B by 2022, the industry’s true growth potential is limited by long cash flow cycles throughout the supply chain and a lack of scalable and efficient capital sources,” says Bespoke Financial co-founder and chief executive, George Mancheril, in a statement. “Our approach will dramatically improve cash flow cycles across the supply chain and provide scalable working capital to fuel our clients’ growth.”

The $7 million infusion from investors, including Casa Verde, Greenhouse Capital Partners and Outbound Ventures, will be used to build out the company’s business and establish its first credit lines with customers. Mancheril says it already has around $3 million worth of loans revolving through its business. Right now, the company is focused on California, but says it could expand to other regions that are embracing legalization. 

“In general, in the cannabis industry overall, it’s difficult to access any part of the financial system,” says Karan Wadhera, a managing director at Casa Verde. “Now that we’re moving into a place where equity financing is getting expensive, a company like Bespoke plays an important and valuable role in the ecosystem to help young brands and mature brands get access to working capital when they need it the most.”

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Vangst just raised $10 million to plug more people into the fast-growing cannabis industry

People are increasingly interested in finding a way to participate in the cannabis industry, and for good reason. It’s growing like a weed (yes, we said it). According to a San Francisco-based research company, Grand View Research, the global legal marijuana market is expected to reach $146.4 billion by the end of 2025.

Still, it isn’t easy for potential recruits to know where to look for both temporary and permanent jobs, and it’s just as challenging for companies to find candidates who understand their business. Enter Vangst, a now three-year-old, Denver-based startup that just raised $10 million in Series A funding from earlier backers Casa Verde Capital and Lerer Hippeau to become the go-to recruiting platform for the industry, even while going up against several older entrants, including Seattle-based Viridian Staffing and Ganjapreneur, in Bellingham, Wash.

Yesterday, we with chatted with the CEO and founder of the now 70-person company, Karson Humiston, about launching the platform in college, and why she isn’t so worried about the competition. She also shared some interesting stats around how much cannabis jobs pay.

TC: Some people launch startups in college. Not many of them grow them into sustainable companies. How did Vangst get going?

KH: I went to St. Lawrence [University] and while there, I’d started a student travel company and compiled a database of students and recent grads — people who’d gone on trips through the startup or expressed an interest in going on trips. The spring of my senior year, in 2015, I sent an email to all of them asking what jobs they were interested in, and more than 70 percent said the cannabis industry.

TC: Wow, interesting.

KH: That was my reaction, but living in upstate New York where recreational cannabis isn’t yet legal, I didn’t know a lot about it. So I took a weekend off from school to go to a trade show in Colorado, where I saw everything from cultivation to extraction to retail to ancillary businesses. And when I asked what jobs they were looking to fill, they said, essentially, everything: a director of cultivation, retail dispensary store managers, HR, marketing. They all said it was their top pain point because if they posted on a traditional jobs board — and remember, this was 2015 — the listing would often get taken down. Meanwhile, there was no industry-specific resource because [marijuana] is federally illegal.

TC: So you dropped the travel startup idea and pursued this. Where did you start?

KH: First, I rushed back to St. Lawrence and made an inexpensive site on Wix and started connecting people in my database with summer internships. I’d told the companies I’d met with that I could find them employees for $500 and I called this new company Graduana, [with the tagline] green jobs for grads. My thought was, I’ll go to Colorado and do Graduana for six months and see where the industry really is.

By the spring of 2016, I realized that demand far exceeded interns and recent grads and that we needed to find recruiters who know what they’re doing. We brought on recruiters who were just focused on cultivation, for example, and who know the difference between someone who can grow cannabis in the garage and someone who has done large-scale agricultural growing. They they started pulling in people from the tomato and tulip and big commercial ag who’ve grown [plants] in big state-of-the-art greenhouses and could bring important skills to the table. We also brought in recruiters to just focus on the retail side of things.

It became this profitable, 25-person, boutique staffing agency. But we also saw an opportunity for on-demand labor, because of the seasonality of the industry. Cannabis grows, then it needs to be trimmed and packaged. . .

TC: So it was time for venture capital?

KH: When you’re talking about temporary staffing, it’s really been done manually in this industry, so we wanted to build a platform that would notify candidates that a certain company needs 20 trimmers and is willing to pay $12 an hour and where, meanwhile, employers could see that someone has trimmed for 2,000 hours. And each could rate each other. So we needed to hire engineering and a customer success team and legal, and our revenue wasn’t going to cover those costs.

Thankfully, a founder friend in the space, Ryan Smith of LeafLink, introduced us to Lerer Hippeau when he heard were raising a seed round. We received a warm intro to Casa Verde, too. And both have been amazingly helpful to us.

TC: Are you still doing high-end hiring, too?

KH: We are. Revenue from that piece of our business, where we’re helping companies find maybe COOs or a director of cultivation or extraction, more than doubled last year and continues to be profitable. We get 1,000 resumes some days. We now have 200,000 job candidates on the platform.

TC: Obviously, you’re charging employers different amounts depending on the the type of role that you’re filling. Can you share some specifics?

KH: Right. On the direct hire side, we take a percentage of their first year’s salary. On the gig side, a company tells us how much they’d like to pay for gig workers, and there’s a mark-up on that that we keep.

TC: No matter how long that person works for your client?

KH: It’s usually for a matter of weeks. If it’s longer than that, we charge them a buyout fee [to step out of the relationship].

TC: I take it you’re marketing the service to college students largely.

KH: We market the service through career fairs that we throw in different states, and at trade shows in and out of the industry. We also spend time going to college campuses. But our acquisition costs have been relatively low. Everyone who gets placed with us is known as an original Vangster and we do Vangster nights, where anyone in our network can bring a friend and we can help turn them into employees, too.

TC: More states are legalizing recreational cannabis; how are you drumming up workforces in different places?

KH: We have a team now in Denver, in Santa Monica and a small team in Oakland, and as we launch additional cities for Vangst gigs, we’re hiring managers and people who can do client outreach and candidate vetting and onboarding. We just hired an early employee of Uber, Will Zinsmeister, who helped oversee the launch of cities in Texas for Uber, so we’re excited to have Will and others thinking through supply-and-demand issues as we launch more widely.

TC: Out of curiosity, how much do cannabis jobs pay, and how many people work in the industry right now — do you have any idea?

KH: I think there’s more than 160,000 employees across the cannabis industry right now, and by 2022, the industry is expected to grow to around 340,000 full-time employees.

We did survey 1,500 people to put together a salary guide and one of the questions we asked was how much of their labor needs are seasonable versus otherwise, and they said about 30 percent.

As for the salaries, the on-demand jobs are very in line with other industries. When it comes to full-time jobs, outside sales jobs pay on average a salary of $73,000, which is in line with other outside sales jobs. On the higher end, a compliance manager can make $149,000, a director of extraction makes on average $191,000, and a director of cultivation on the high end can make $250,000.

TC: I think that’s more than people might have imagined. Who is landing these higher-end jobs other than people with backgrounds in traditional large-scale farming?

KH: You’re seeing people graduating with a degree in botany who’ve maybe worked for a cannabis company for six years and are seen as having very unique experience. We’re seeing a lot of clients in Maryland and other places saying they want candidates from Colorado.

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Hip hop finds its beat in the startup scene

Hip hop stars are taking their reputations to Wall Street and Sand Hill road.

Unlike their rock star brethren, who’ve historically been disinterested in dabbling with startups, quite a few hip hop artists have amassed good-sized portfolios. They’ve seen a few big hits too, most recently including a massive up round for zero-commission stock trading platform Robinhood, which counted Jay-Z, Nas and Snoop Dogg among its earlier backers.

But just how deep does the hip hop-startup relationship go and where is it headed? To shed some light on that question, we put together a review of Crunchbase data on the startup investment activity of famous musicians. We looked at both hip hop and pop stars, culling a list of 21 artists who are either active investors or have joined one or more rounds in recent years.

The general conclusion: Artists are doing more deals, raising more funds and backing more companies that graduate to up rounds and exits. Here are a few examples:

  • Besides getting a slice of Robinhood, Jay-Z and his entertainment company, Roc Nation, also saw an early portfolio company, flight club startup JetSmarter, go on to raise financing a year ago at a reported valuation more than $1.5 billion. Roc Nation also made headlines this week for investing in Promise, a startup providing alternatives to incarceration for people who can’t afford bail.
  • QueensBridge Venture Partners, the investment fund co-founded by Nas, was an early-stage investor in video doorbell maker Ring, which Amazon just bought for $1.1 billion. The firm could also see some paper gains this week in the much-anticipated market debut of Dropbox, which it backed in a 2014 Series C round. In addition, QueensBridge participated in a $25 million Series B round for cryptocurrency trading platform Coinbase back in 2013. Coinbase’s last reported valuation was around $1.6 billion.
  • Casa Verde Capital, a cannabis-focused venture fund co-founded by Snoop Dogg, has closed its debut fund with $45 million. Just this week it backed a $3.5 million round for vape manufacturer Green Tank.

That’s not to say everything a star touches turns multi-platinum. We found quite a few flops in their portfolios and assembled a list here of 10 startups now shuttered that counted a hip hop or pop star among their backers.

Becoming and remaining famous requires many of the same skills and qualities as running an entrepreneurial venture, including an exceptional degree of tenacity.

Of course, flops are part of life for early-stage investors, so there’s no reason we’d expect celebrities to be an exception. Moreover, most of the now-shuttered companies were not heavily capitalized by venture standards.

However, there are some higher-profile or more heavily funded companies on the flop list. One is Washio, a laundry delivery service, which raised $17 million from Nas and 20 other investors before hanging itself out to dry in 2016. Another is Viddy, an app for shooting and sharing video clips backed by Roc Nation.

Why the rich, hip and famous like startups

A number of venture pundits and pop culture mavens have previously pontificated why celebrities, and hip hop stars in particular, are drawn to startups.

One possibility is that rap music and startups resemble each other at the earliest stages, postulates Cam Houser, CEO of the 3 Day Startup Program. Rap music starts with a rapper and a producer. This duality, he says, is similar to the beginning stages of a startup, which commonly also brings together two people, a business and a technical co-founder.

Rap and startup entrepreneurship are also both longshot career tracks that celebrate raw ambition and unabashed self-promotion. To make it, however, both require an excellent grasp of what sells in the real world.

Branding is perhaps the most common rationale provided for the celebrity-startup connection. With their massive fan bases, swooning coverage and millions of social media followers, celebrities can certainly help get the word out about a new product or app. That said, the attention usually works only if said product also has compelling attributes of its own.

One of the less controversial explanations is that becoming and remaining famous requires many of the same skills and qualities as running an entrepreneurial venture, including an exceptional degree of tenacity.

It’s also true that in venture capital and the music business, it’s the hits that matter. It helps that we’re seeing plenty of those. 

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