The cannabis business is exploding. The US market alone is expected to pull in $15 billion in 2020 – more than the NFL. But for entrepreneurs just starting out in this particular industry, the startup costs can be a huge barrier to entry. Regulations and restrictions on the cannabis business, including licenses and other fees, can be exorbitant. Some states in the US require proof that businesses applying for a dispensary license have $1 million to even get a chance at approval.
That’s why you need to be able to find investors who will help cover those initial costs and back you as you grow. For some small businesses, friends and family may be the first people to pitch as potential investors, but that can only go so far. You’ll likely have to turn to angel investors and venture capitalists for the big bucks. The good thing is, interest in the cannabis market is huge right now, and investors of all backgrounds are looking for a good way into the industry. Your job is to convince them that your business is the best way in.
To do that, you’re going to have to hit them with a really solid pitch. Putting together a punchy presentation that presents a strong, clear case for your business is absolutely key to getting there. Here are some tips for a really great investor pitch.
Define Your Focus
Your business idea needs to original, it needs to be easy to explain and it must solve a clearly defined problem. It may seem counter-intuitive, but distilling your business idea into one simple sentence is often the hardest part about getting started.
The demand for cannabis and cannabis products seems infinite. But you can’t serve that whole market. So what’s your niche? And who are you serving? Are you targeting recreational or medical users? Are you targeting consumers, or businesses who target consumers? Should you sell more product at a lower price point, or less product at a higher price point?
Take the time to make sure you really know the answers to these questions in and out. Make sure you know what makes your business unique. And use that information to craft your focus and define the one sentence that describes your business. For StickerYou, we create custom stickers and custom labels for customers for business or personal expression. An entire business distilled into one sentence.
This simple description is the foundation that you will build your whole company on, and its guiding light. All decisions flow out from that one idea. Without it, you can become lost in a sea of potential choices about any given step of building the business. With it, you can be clear to yourself on what you need to do and where you are going – and you can be clear about it when talking to investors.
Craft Your Pitch Deck
Now that your idea is rock solid, you need to build it into a presentation that will wow your potential backers. A good pitch deck has 10 to 15 slides that clearly and succinctly describe your business concept and how it will make money for your investors.
Be sure to include information on the problem you’re solving, potential market size, and what technologies and production capabilities you’ll need to build your product and grow your business. You also need to clearly outline the money questions — the costs, the potential for growth, and how much your backers can expect to make back on their investment. And do not forget to include information about foreseeable challenges and how you plan to deal with them. Investors want to know that you have thought through all those issues and come up with solutions. The worst thing is if an investor asks you about a potential big problem that you hadn’t thought about at all. So make sure you’re prepared.
Practice, Practice, Practice
Sure, this might seem obvious, but it bears repeating anyway. You can not be too prepared. You want to know your pitch inside and out so that any time anyone asks you about it, you’ve got it down cold, in as few words as possible.
Run through your deck and your elevator pitch with friends and family as many times as you can. This will help you iron out any kinks and it will help rid you of any nervousness you have in talking about it. The better you know your stuff, the more natural it will feel, and the more confident potential investors will be in you and your plan.
Seek Out Your Investors
To convince people to give you money, you’ll first need to find them. Start on websites that have directories of venture capitalists and angel investors, and send them a friendly email with your pitch deck. You can also look on tech-centric websites like TechCrunch for names of potential investors.
But you’ll also need to get out into the world and meet those funders face to face. Hit up networking events, workshops, conferences, and lectures on investing and finance to find the people you need. The wider a net you cast, the better your chances of finding the people who will be excited to invest in your cannabis business.
Author Bio: Andrew Witkin, Founder & President
As the founder of StickerYou, Andrew believes in the enormous power of customization. With over a decade of StickerYou success, he is one of Canada’s leading experts in e-commerce, customization, startups, marketing and the tech economy.
He is a graduate of Dalhousie University and holds an MBA from the Schulich School of Business, York University. Witkin has previously served as VP North American Licensing for Nelvana/Corus Entertainment and Director of Marketing for MegaBrands/Mattel.