By / October 17, 2018

Cannabis startups are gaining more ground thanks to crowdfunding

The cannabis industry is changing for the better because of the shift toward the general outlook on the plant. Consequently, many entrepreneurs have taken an interest in the industry’s potential. When the JOBS Act went into effect, many expected cannabis entrepreneurs to kick start their venture.

However, it was only last year when the startup industry for cannabis began to flourish

If there is one person who understands how far the cannabis startup industry has come, that is Fundanna CEO and Co-Founder Vincent Petrescu. Fundanna is a pioneer cannabis-focused Reg CF funding portal that got the approval of FINRA. The portal has had its fair share of challenges, but there is a better outlook on things now.

Speaking to Crowdfund Insider, Petrescu says that the lack of industry knowledge and information is the main contributing factor as to why investors are reluctant to take part in cannabis startups. However, they were able to surpass this issue along with many others by expanding their offerings to reach out to all investors.

More about Fundanna’s service SAFE

Fundanna has also designed a SAFE(Simple Agreement for Future Equity)+REV service. Through this model, investors have a double-exit opportunity. Moreover, with its partnerships and programs, Fundanna wants to become the Kickstarter of the cannabis industry.

Money, investment in cannabis
There is an ongoing shift in the general outlook for the humble marijuana plant, giving rise to many cannabis entrepreneurs. (Source)

Canada’s cannabis companies lacking in investor relations?

Crowdfunding platforms are going to be crucial in the budding industry as many startups are having difficulties to launch. As newcomers, they need to be well-versed when it comes to business matters. Even in Canada’s booming cannabis industry, companies are not able to fully commit to their duties to investors.

According to Financial Post, 100 percent of 21 licensed cannabis producers in Ontario, British Columbia, Alberta and Quebec feel that they need to improve their investor relations by giving them proper financial disclosures. These companies believe that they are not able to reveal key information such as the fair value of their products and possible legal matters that could arise with U.S.-based operations.

What is even more alarming is that these companies are unable to commit to their duties even though recreational marijuana will be made fully legal next week. By then, more entrepreneurs and investors looking to take advantage of the new trend will enter the cannabis industry in Canada.

money from crowdfunding
More and more entrepreneurs and investors looking to take advantage of the new trend. (Source)

The risks and gains for the investors in the cannabis industry

At this rate, many investors are blindly betting on companies without having any idea about the potential risks and gains. This could result in major losses, and future investors might be discouraged from investing in the field further.

By having cannabis startups go through crowdfunding platforms, they will be able to establish their rapport with investors early on. They will also be guided as to what their responsibilities are to their investors.

Crowdfunding platforms like Fundanna will be crucial for the industry’s growth. These startups will come at the right time as marijuana legalization in the U.S. and Canada is reaching a new turning point.

(Featured Image by Maklay62)

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