With more and more states legalizing Marijuana it’s about time the business world catches up and starts preparing for a whole new industry. The company that is taking this on…Leaflink. With the easy to order B2B wholesale platform, they are setting themselves up in a surging market to only grow and grow over time.
Founder Ryan Smith talks with AlleyWatch about how his business in a historically controversial industry successfully raised capital.
Who were your investors and how much did you raise?
We just closed our seed round, oversubscribed at $750k led by real estate professionals, high net worth families, and one NY-based angel fund.
Tell us about your product or service.
LeafLink is a b2b wholesale order management platform for the cannabis industry. Our goal is to empower cannabis professionals with the same tools every other multi-billion dollar industry demands.
What inspired you to start the company?
We are hyper-focused on supply chain inefficiencies that slow down small business growth. Cannabis represents a once-in-a-generation opportunity to define, rather than revolutionize an industry. Through LeafLink, the supply chain process will not fall victim to the long-term inefficiencies that have been ingrained in alcohol distribution, for example. The market is proven, growing and gaining general acceptance quickly; now is the time to bring great tools, built from the ground-up, to professionals in the space.
How is it different?
Our team is the differentiating factor. After I sold my last company, we worked tirelessly creating financial software that had to be compliant with changing FINRA and SEC regulations. That understanding and respect for legislation, coupled with Zach’s experience in b2b, dual-sided marketplace technologies sets LeafLink apart. We also raised a larger angel round than most other cannabis tech startups at our stage, which allows us to bring on the most competitive team members. Finally, our connections provide an enormous edge in an industry that’s particularly focused on loyalty and trust built over the long-term. There is no defined supply chain process today and LeafLink will soon be accepted as the industry norm.
What market you are targeting and how big is it?
The cannabis industry, and it is projected to grow to a market size between $8-11b by 2019.
What’s your business model?
In the near-term LeafLink is operating as a SaaS company with monthly fees for access to the platform and network. In the longer-term, we will be exploring additional revenue lines that we’ll announce in Q1.
What was the funding process like?
Each of us has exited companies, one to a public firm in 2014. Our investor base is strong and highly motivated to support LeafLink’s definitive impact on this industry.
What are the biggest challenges that you faced while raising capital?
There are still concerns around investments in the cannabis industry due to federal regulations that do not allow for the markets operating in a number of states. One important note for our investors is LeafLink is not a marijuana company that needs to be licensed; LeafLink is a technology company that services the cannabis industry. Investing in startups is always inherently risky, but we had to also explain that not only is LeafLink a startup, but the industry itself is also effectively a startup; that risk factor had to be conveyed.
What factors about your business led your investors to write the check?
The founding team, market size and strategy were major motivators for investors in LeafLink’s round. We believe the prohibitions in this industry will fall to the same progress as other, recent, social issues. Millennials are already there, but the most interesting thing we found in raising capital is the acceptance that is rapidly growing among older generations. People are thinking logically on the potential behind this industry to both regulate a product and allow states to collect taxes that will help balance budgets.
What are the milestones you plan to achieve in the next six months?
We are in the process of completing our beta testing round and will launch in Q1, with a strategic rollout plan through 2016. In the next six months, we are actively hiring our core team, focused on highly motivated individuals in it for the long-term.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Always execute and never stop meeting new people.
Where do you see the company going now over the near term?
Our goal is to empower cannabis entrepreneurs and their businesses. Today, our primary goal is to create solutions that add immediate value to professionals in the industry.
Where is your favorite place to enjoy the fall weather in the area?
Not Brooklyn. Haha, can I say that? I know Zach would disagree