The cannabis industry is thriving and you’re thinking about starting your own business. But where to start? What questions should you ask? This article will give you some pointers about how to raise capital for a cannabis business.
Cannabis entrepreneurs face many challenges, beginning with funding. Cannabis financing can be difficult because traditional bank loans are federally insured. Unfortunately, the cannabis industry isn’t federally legal. Therefore, banks usually don’t give loans to cannabis businesses because it would put them at risk of being prosecuted.
To begin your cannabis business venture, you will need to seek other sources of funding through investors. First, you should establish what your goals are. Then ask the following questions.
What Makes You Unique?
You are establishing a brand when you start a business. To attract investors, your brand needs to offer something unique. You should be asking yourself what do you have of value that people will want to buy and that investors will want to invest in. This can be anything from a new cannabis strain, to a new production method, or a new patented cannabis accessory.
Who Is Your Audience?
When seeking out investors, you should do your due diligence and make sure to find investors that specialize in what you have to offer. Your investors should have some connection to the industry.
The cannabis industry can be very volatile and competition is fierce. Investors will have very high standards and are only interested in people with a solid business plan. You will also need a flawless sales pitch that is well thought out and detailed. You will need to be able to explain with certainty why you’re worth the risk.
What Do You Need Capital For?
When you approach potential investors, the first thing they will want to know is why you’re seeking the capital. You should be able to supply them with a business plan detailing what you need the money for and how it will be spent.
Investors in the cannabis industry are no different than any other investor. They want to make sure the person or company they’re investing in has a solid plan. How will investing in your company benefit them in the future?
What Is Your Execution Strategy?
Now that you have the investor’s attention, you will need to explain how you’ll execute your plan. Investors are interested in growth. You will need to be able to explain how your execution strategy will use their money to grow and expand the business.
Fundraising for your company will take time and patience. Be prepared to be frequently turned down. Make sure to adjust and tweak your plan with any feedback an investor gives you. Finally, keep the cannabis culture lingo to a minimum. Just because an investor invests in cannabis doesn’t mean they’ll know or appreciate the lingo.
Bespoke Financial is Here to Help
Bespoke Financial is the first licensed commercial lender focused on growing the cannabis industry. Bespoke Financial is here to help you grow your business by offering cannabis business loans. Whether you need dispensary loans, inventory financing, purchase money financing, or invoice financing, we’re here to meet your financial needs.