Private-equity companies are entrenching themselves in the emerging cannabis industry, with one firm reporting they raised more money than intended during their first two funds, according to a Business Insider report.
“It’s like a floodgate,” Steve Gormley, CEO of Seventh Point said in the report. “…I haven’t seen anything like this in my career.”
Seventh Point is poised to complete $75 million in fundraising this year, focused solely on cannabis industry ventures. About 18 percent of new marijuana businesses have seen injections of startup funds from private-equity and venture-capital investors, the report says.
According to Marijuana Business Daily’s 2016 fact book, formal market sales of legal cannabis are set to reach $4.3 billion in 2016, and could touch $11 billion by 2020. Nearly half, 47 percent, of active cannabusiness investors plan on pouring $10 million or more into private companies in the next year.
Privateer Holdings, founded in 2011, received $75 million from Silicon Valley’s legendary Founders Fund in 2015 – further proof that private-equity companies who typically operate outside of the cannabis sector believe it will become lucrative for investors. Dutchess Capital, whose diverse investments include energy, healthcare, and information technology, unveiled their plan to focus on cannabis in 2012 and were early-stage financers of MassRoots to the tune of $475,000.
According to an analysis from ArcView Market Research, the sector is set to grow by 30 percent annually until 2020.
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