Living the high life: Cannabis PE firm attracts first institutional investor

Peter Thiel’s Founders Fund has committed several million dollars to Privateer Holdings which is raising $75m in Series B funding.

Privateer Holdings, the private equity firm focusing on the legal cannabis industry, has attracted its first institutional investor in Founders Fund, the venture capital firm established by PayPal co-founder Peter Thiel.

Privateer is raising $75 million in Series B funding and sold Founders Fund a minority stake for several million dollars; the exact sum was not disclosed.

The commitment represents the first-ever institutional investment into the cannabis industry, according to Privateer. And it is a new field for Thiel, who is more commonly associated with investments into technology start-ups like Facebook and Spotify.

The investment was led by Founders Fund partner Geoff Lewis, who said: “We’ve been evaluating the cannabis industry for several years and we haven’t seen another company that comes close to Privateer Holdings in terms of strategy, professionalism, talent, expertise, and potential for growth.”

Before Founders Fund, Privateer attracted capital from family offices and ultra-high net worth individual in a $7 million Series A round in 2013 and a $15 million convertible bridge note in 2014.

Privateer invests into cannabis production and other services surrounding the industry and was founded in 2010 by three private equity and venture capital veterans: Brendan Kennedy, chief executive, Michael Blue, chief financial officer, and Christian Groh, chief operating officer.

Investments in Privateer’s portfolio include Leafly, a cannabis review and information service and mobile application, and Tilray, the Canadian cannabis production company.

In November 2014, the PE firm also entered into a partnership with the Bob Marley family to launch the world’s first global cannabis brand, Marley Natural. The brand will start to sell the product in late 2015, according to Privateer.