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This NYC Startup Just Raised $3M to Be the Highway for Cannabis Ecommerce

 

LeafLink_FITA

Cannabis is hot and expected to grow to a $20B industry by 2020. At the forefont of this growth is NYC startup LeafLink, a cannabis- focused ecommerce platform that currently streamlines the sales for 800 dispensaries and retail stores.   The company is already doing over $65M a year in sales and will be looking to expand with its latest round of funding.

AlleyWatch chatted with cofounder and CEO Ryan Smith about the company and how its most recent funding round.

Who were your investors and how much did you raise?

LeafLink raised a $3M Seed round led by Lerer Hippeau Ventures, for whom it was their first investment in the cannabis industry. Additional participants include strategic investors from both inside and outside the cannabis space, including Casa Verde Capital, Phyto Partners, Wisdom VC, and Wan Li Zhu and Paul Ciriello of Fairhaven Capital.

Tell us about your product or service.

LeafLink is the leading B2B cannabis ecommerce platform, where more than 800 retailers are placing wholesale orders for over 100 brands in Colorado and Washington. Cannabis retailers previously managed their ordering process through emails, texts, and phone calls with a decentralized web of cannabis flower, edible, concentrate, and topical vendors. With LeafLink, they can place all of their orders in one marketplace. The vendors then manage their incoming orders using the platform’s suite of business tools, including a CRM, data reporting, order status tracking, and fulfillment queue.

What inspired you to start the company?

Cannabis represents a once-in-a-generation opportunity to define, rather than disrupt, an industry. We’ve each founded and exited companies in the b2b space, and so we are hyper-focused on supply chain inefficiencies that slow down business growth. 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.

Ryan Smith

Ryan Smith

How is it different?

LeafLink is different because our team focuses on execution above all else, creating tools based on clear pain points after having worked and continuing to work closely with cannabusiness professionals. At LeafLink, our team is comprised of a unique great balance between some with great cannabis experience and others with exceptional technical and startup experience.

What market you are targeting and how big is it?

We are targeting legal cannabis brands and retailers in the United States. The industry as a whole is projected to be more than $20 billon by 2020.

What’s your business model?

LeafLink is a marketplace with accompanying business tools. Cannabis brands pay a monthly subscription fee to be on our platform, and it’s free for retailers to shop from them.

You company has scaled fast now doing $65M a year in orders through the platform.  What are some growth tips for fellow entrepreneurs in our audience that you can share?

First, build something that is truly useful to your clients. Ask them what they need, don’t think you know. Then, refine your approach until you find the form that works best, then scale it up. Execute quickly.

What was the funding process like?

We’re excited to work with well-known investors from both inside and outside the cannabis space, with knowledge in b2b marketplaces, SaaS and tech that will support our growth.

What are the biggest challenges that you faced while raising capital?

Of course, some of our potential investors were hesitant about Trump’s election; however, with the overwhelming public support for marijuana legalization and the tax revenue and jobs that existing markets have created, we believe that states will continue to adopt medical and recreational cannabis programs. Ultimately, people recognize tech will define this industry and LeafLink’s team is quickly becoming the industry standard platform.

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?

In the next six months, we are launching in Nevada, Oregon and California to continue to position ourselves as the standard ordering platform, as we’ve already done and will continue to do in Colorado and Washington.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

Never stop meeting new people. When you’re building a new company, commit to meeting at least three new people a day.

Where do you see the company going now over the near term?

We just went live in Nevada and Oregon, and we plan to launch in California this spring.

What’s your favorite rooftop bar in NYC to unwind?

Mister Purple is my go-to spot.

About the author: AlleyWatch

AlleyWatch is the destination for startup news; opinions and reviews; investment and product information; events reported, experienced, seen, heard and overheard here in New York. But it’s who we are that makes us different: we’re the writers and the entrepreneurs; the investors and the mentors; the lawyers and the marketers; the realtors and the recruiters – the people who work in the industry.

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