US cannabis investment firm Privateer Holdings expects to raise $100 million in the first half of 2016, in what its chief executive Brendan Kennedy calls a pivotal year for the cannabis industry.
In January 2015, Privateer announced it had raised $75 million in a round led by Silicon Valley venture group Founders Fund – the largest funding round in legal US cannabis financing’s short history. Commitments worth $100 million would more than double the firm’s total funding since Privateer Holdings’ inception in 2010.
Privateer chief executive Brendan Kennedy told Agri Investor that this year the group is looking to deploy capital internationally and build brands it hopes will lead growing markets across the globe.
The Founders Fund input not only significantly increased the group’s total funding, but also signalled a willingness by mainstream investment groups to put their reputations and capital behind the cannabis industry.
“Until a year ago, all our investors were high net worth individuals and family offices,” said Kennedy. “[The Founders Fund commitment] was an important milestone for us as an investment company, but also for the industry as a whole.”
Founders Fund boasts a portfolio of current and former investors associated with Facebook, Airbnb, Lyft and SpaceX. Peter Thiel, co-founder of PayPal, is one of Founders Fund’s funding managers.
As US cannabis use and investment grow, Kennedy sees an inexorable move towards legalisation beyond the US:
“We’ll raise $100 million in the first half of 2016, and we’ll deploy half that outside of the US,” he told Agri Investor.
The group is the best-funded cannabis investment group in the US, but its portfolio consists of just three companies. Kennedy added the market is too raw for a pure venture-capital model, despite its recent growth.
Instead, Privateer is focused on relying on a depth of knowledge across the sector to target companies it believes it can develop into global brands. In 2014, Privateer established perhaps the most recognisable brand name in the sector, when it partnered with the family of reggae music icon Bob Marley to develop the cannabis brand Marley Natural. Kennedy says brand recognition is important for creating a premium as leaf prices for medical and recreational marijuana fall.