Q&A With ArcView Group CEO Troy Dayton Posted 19 days, 21 hours, 28 minutes ago by Anna Helhoski   |   Comment

Troy Dayton: Me and Steve Deangelo from Harborside Health Center founded ArcView in 2010. I had been working as a fundraiser for the Marijuana Policy Project and living in Northern California. I was raising money from high net worth individuals who cared about donating to change the laws, and then I was raising money for the burgeoning legal cannabis industry starting in Northern California around that time as well. I noticed it was easier to raise money from people who had a vested interest. Also, companies were looking to grow their businesses and expand, but they didn’t know how to do it, they didn't know investors. These high net worth people who were major donors to drug policy reform were interested in the sector, but they didn’t know the players and didn’t understand the idiosyncrasies of the market. So, we decided let’s put them together and let’s create a platform for investors and entrepreneurs to connect and take the industry to the next level.

We noticed there were two key things the industry needed, which were also two key problems: investors want to invest in areas they really know well or with people that have a track record of returning investment money back. Neither of those two things exist in this industry - the investors didn’t know this industry and there also was no one with a track record for delivering investment money back. The next best thing was to build the kind of relationships that give the familiarity and context to start doing that and provided them with data so they can get to know it more.

Troy Dayton: We have over 200 high net worth, accredited investors that pay an annual membership fee to be part of ArcView. These are all people who are looking to put at least $50,000 in the sector over the next year. Some sit on a committee and once a week we have these webinars where companies that are seeking funding in this sector come and give their presentations (we have four to six a week). Every two-and-a-half months or so, we choose the top dozen who came over that time frame and they get to pitch from the big stage. The next one is actually happening the day before the Cannabis Business Summit, at the Denver Center for the Performing Arts. It’s a shark tank of the cannabis industry where they come up and pitch their deal and investors decide whether they want to participate. Oftentimes they collaborate together to invest on a deal or do due diligence on a deal. In the last year we’ve had 14 companies that have successfully raised over $10 million and over $300,000 to support political causes.

Troy Dayton: It really runs the gamut; we have so many types of investors, venture capital firms, traditional real estate investors, high tech entrepreneurs, etc. We’ve got people who are looking at this as an impact investment and as a way to move the political needle, so it really runs the gamut. I’m often surprised to find which companies investors find exciting, so it depends. They’re looking for teams that have the wherewithal to accomplish the mission of the company and they’re looking for ideas that have the potential for 20 times or 10 times the return at some point. In many cases they like loan deals; they have a lot of dispensaries in particular and have been very successful at raising money through high interest loans as opposed to equity.

Troy Dayton: It’s way too early to tell. All these investments have just been made in the past year or so.

Troy Dayton: We’ve seen people raise anywhere between 50K and 2.2 million, so it really runs the gamut. It depends on the stage of the company. Companies that already have traction, an operation history and that are looking to expand, whether ancillary or direct contact, those companies are getting a really great premium in the fundraising marketplace. There’s a lot of new interest in the sector and there’s only a small handful of brands that already have any traction in it. There are so many new entrants into the space and the investors that are really looking to back a winner, in many cases, are willing to overpay a little bit because there’s just so many people who have any traction in this floating marketplace.

Troy Dayton: One is MassRoots, they're the Instagram of Cannabis. It’s a social network for cannabis enthusiasts and they’ve done two rounds of $625,000 investments through us. They have a few 100,000 users and it’ s really doing well. There’s a company called EBBU, a cannabis brand based in Colorado and they’ve raised a lot of money and they were started by [Dooma Wendschuh] who is a well-known video game creator. Another company is Canna Security America, a security firm that was one of the first companies to raise money through ArcView. Medicine Man Denver raised over $1 million through ArcView in a high interest loan situation. Hydrogarden Industry Innovations have a handheld electronic trimmer that’s gotten some traction. Another area is packaging, we’ve had three packaging companies be successful – Quark, RoDawg and FunkSac. They are all packaging companies that have raised significant capital. I think packaging is becoming an interesting trend.