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These 5 VCs have high hopes for cannabis in 2021



Cannabis has always been essential to some. Thanks to COVID-19, cannabis is now an essential business and many companies are entering 2021 after seeing huge gains in 2020.

TechCrunch surveyed five key investors who touch different aspects of the cannabis business. We asked these investors the same six questions, and each provided similar thoughts, but different approaches. Despite remaining headwinds, the future is looking up for most cannabis businesses, according to these investors.

Morgan Paxhia, managing director of Poseidon Investment Management, put it this way: “2021 could be nothing short of amazing for our industry. We expect capital flows to pick up massively from pent-up demand, good public markets bringing more IPOs, lots of M&A and new innovative startups coming on scene. We see opportunity with social equity for the first time, driven by private markets rather than poorly constructed regulations. It’s going to be fun!”

  • Morgan Paxhia, managing director, Poseidon Investment Management
  • Anthony Coniglio, CEO, NewLake Capital
  • Emily Paxhia, managing partner, Poseidon Investment Management
  • Matt Shalhoub, managing partner, Green Acre Capital
  • Jerel Registre, managing director, Curio WMBE Fund

Morgan Paxhia, managing director, Poseidon Investment Management

2020 was a blockbuster year for cannabis. What advice are you giving your portfolio companies entering 2021?

Typical mantra for us, stay focused. Markets, deals and valuations are volatile in our industry but we all have to do our best to tune out the noise and focus. I’d say a great example of a team with focus is GTI. They have executed against a strategy while many of their supposed peers have done very irrational deals, impaired shareholder value, etc. GTI continues to march down its path and their results are showing.

How is COVID-19 changing the cannabis landscape?

2020 was an inward-facing year as most companies could not travel, capital was tight and macro was uncertain. This inward work has led to a lot of fundamental improvements for operators. There are others that got one last puff of wind but their businesses are too impaired and will continue to fall to the wayside.

2021 could be nothing short of amazing for our industry. We expect capital flows to pick up massively from pent-up demand, good public markets bringing more IPOs, lots of M&A and new innovative startups coming on scene. We see opportunity with social equity for the first time, driven by private markets rather than poorly constructed regulations. It’s going to be fun!

From retail to SaaS to research, there’s a lot of inroads to investing in cannabis. What sector of the business do you see has the best opportunity for growth in 2021?

We are bullish on select state markets. For example, new adult-use markets in NJ and AZ and existing markets with new growth prospects opening in CA and NY.

SaaS could get very interesting as there are several players reaching scale that are garnering mainstream attention.
International opportunity is mostly Mexico. It is the largest federally legal market that will just be opening in 2021. Many have not taken this one seriously but we have and are very proud of the efforts that went to moving such a monumental step forward.

The history of drug enforcement in the United States has been deeply unjust and racist; as we enter a period of growing legalization, are there things that startups and investors can do to address that inequity?

The industry, meaning established companies, entrepreneurs and investors need to drive solutions here. Regulations have been terrible and only exacerbate the issue. We have been putting a lot of thought into this area for years, watching various aspects such as the missteps taken by government and the unfortunate poor intentions from supposed investors.

We see a path emerging here that is collaborative, simple and should be attractive to capital providers. Stay tuned.

Who are some leaders in the cannabis space — companies, founders, growers?

  • My sister Emily is a co-founder and rock star! She is a true leader in this space on so many levels.
  • Ahmer Iqbal, CEO of Sublime — Ahmer took the role at a very challenging time and with very little capital was able to rebuild the company into a leader in the CA market.
  • Jason Wild — Not only is he a savvy investor, he puts his money where his mouth is. Outside of Poseidon, I do not know any other person in this industry that puts up so much of their own money into what they believe in.
  • Coleman Beale, CEO of Bastcore — If you are not familiar with the industrial hemp renaissance in the U.S., look no further. This technology-driven hemp-processing company is rejuvenating textiles in the U.S., using domestically grown hemp and processing for uses in such textiles as denim.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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What Musk’s $100 million carbon capture prize could mean



Tesla CEO Elon Musk, now the world’s richest person with a net worth north of $180 billion, announced on Twitter that he plans to give away $100 million of it as a prize for the “best carbon capture technology.”

He added in a subsequent tweet that he’ll provide more details next week, so it’s not yet clear how such a contest will work or even what technologies might qualify. Carbon capture can refer to methods that prevent greenhouse gas pollution escaping from power plants and factories, or various ways of pulling it out of the atmosphere.

Some startups are developing so called direct-air capture machines that pluck carbon dioxide molecules from the air; these can then be stored underground or used to create carbon-neutral fuels. Other groups are exploring ways of using minerals, trees, plants and soil to pull down the greenhouse gas.

Neither on-site carbon capture or air removal are happening on large scales today, however, principally because they’re highly expensive and there’s limited value for the captured gas right now. But more money and attention is flowing into both areas as the dangers of climate change grow.

Climate models show that vast amounts of carbon removal will be necessary to prevent really dangerous levels of global warming, given how much we’ve emitted and how slowly we’re moving away from fossil fuels. Meanwhile, on-site carbon capture tools may offer promising ways of cleaning up certain tricky sectors, like cement and steel production, or to provide carbon-free electricity from natural gas plants when intermittent solar and wind sources flag.

The number of nations and corporations banking on some level of carbon capture removal is rising sharply as they plan to zero out emissions in the coming decades, creating a growing reliance on expensive or unproven approaches—and thus an imperative to accelerate progress in these spaces.

Musk is far from the first to offer up funds to the field, either as an award or a more direct investment. A year ago, Microsoft announced plans to create a $1 billion fund for “carbon reduction, capture, and removal technologies,” as it looks to cancel out its entire historic emissions. Direct-air capture startups such as Climeworks, Carbon Engineering and Global Thermostat have all raised at tens of millions of dollars of investment. And the CarbonX prize has offered $20 million to companies developing ways to incorporate carbon dioxide into products, in an effort to create bigger markets and greater value for the gas.

Another $100 million could certainly help whatever venture, or ventures, clinch Musk’s prize. But it will also only go so far. Carbon Engineering, for instance, has previously said just one full-scale direct-air capture plant could cost between $300 and $500 million.

Money aside, however, one thing Musk is particularly talented at is drawing attention. And this is a space in need of it.

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Elon Musk is donating $100M to find the best carbon capture technology



Elon Musk said Thursday via a tweet that he will donate $100 million toward a prize for the best carbon capture technology.

Musk, who recently surpassed Amazon’s Jeff Bezos to become the world’s richest person, didn’t provide any more details except to add in an accompanying tweet the “details will come next week.” It’s unclear if this is a contribution to another organization that is putting together a prize such as the Xprize or if this is another Musk-led production.

The broad definition of carbon capture and storage is as the name implies. Waste carbon dioxide emitted at a refinery or factory is captured at the source and then stored in an aim to remove the potential harmful byproduct from the environment and mitigate climate change. It’s not a new pursuit and numerous companies have popped up over the past two decades with varying means of achieving the same end goal.

The high upfront cost to carbon capture and storage or sequestration (CCS) has been a primary hurdle for the technology. However, there are companies that have found promise in carbon capture and utilization — a cousin to CCS in which the collected emissions are then converted to other more valuable uses.

For instance, LanzaTech has developed technology that captures waste gas emissions and uses bacteria to turn it into useable ethanol fuel. A bioreactor is used to convert into liquids captured and compressed waste emissions from a steel mill or factory or any other emissions-producing enterprises. The core technology of LanzaTech is a bacteria that likes to eat these dirty gas streams. As the bacteria eats the emissions it essentially ferments them and emits ethanol. The ethanol can then be turned into various products. LanzaTech is spinning off businesses that specialize in a different product. The company has created a spin-off called LanzaJet and is working on other possible products such as converting ethanol to ethylene, which is used to make polyethylene for bottles and PEP for fibers used to make clothes.

Other examples include Climeworks and Carbon Engineering.

Climeworks, a Swiss startup, specializes in direct air capture. Direct air capture uses filters to grab carbon dioxide from the air. The emissions are then either stored or sold for other uses, including fertilizer or even to add bubbles found in soda-type drinks. Carbon Engineering is a Canadian company that removes carbon dioxide from the atmosphere and processes it for use in enhanced oil recovery or even to create new synthetic fuels.

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Chinese esports player VSPN closes $60M Series B+ round to boost its international strategy



eSports “total solutions provider” VSPN (Versus Programming Network) has closed a $60 million Series B+ funding round, joined by Prospect Avenue Capital (PAC), Guotai Junan International, and Nan Fung Group.

VSPN facilitates esports competitions in China, which is a massive industry and has expanded into related areas such as esports venues. It is the principal tournament organizer and broadcaster for a number of top competitions, partnering with more than 70% of China’s eSports tournaments.

The “B+” funding round comes only three months after the company raised around $100 million in a Series B funding round, led by Tencent Holdings.

This funding round will, among other things, be used to branch out VSPN’s overseas esports services.

Dino Ying, Founder, and CEO of VSPN said in a statement: “The esports industry is through its nascent phase and is entering a new era. In this coming year, we at VSPN look forward to showcasing diversified esports products and content… and we are counting the days until the pandemic is over.”

Ming Liao, the co-founder of PAC, commented: “As a one-of-its-kind company in the capital market, VSPN is renowned for its financial management; these credentials will be strong foundations for VSPN’s future development.”

Xuan Zhao, Head of Private Equity at Guotai Junan International said: “We at Guotai Junan International are very optimistic of VSPN’s sharp market insight as well as their team’s exceptional business model.”

Meng Gao, Managing Director at Nan Fung Group’s CEO’s Office said: “Nan Fung is honored to be a part of this round of investment for VSPN in strengthening their current business model and promoting the rapid development of emerging services and the esports streaming ecosystem.”

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