From $0 to $100M: How two Cannabis entrepreneurs grew without outside funding?
Co-founders of MJBiz and Wana Brands shared their strategies as keynote speakers for the Cannabis Marketing Summit.
Deciding whether to fundraise for a start-up company is a big decision. On one hand, having money to support the initial growth can alleviate some of the growing pains; on the other, raising funds can be a job unto itself – and that money often comes with strings attached.
For two well-known companies in the cannabis industry – event and media company MJBiz and edibles manufacturer Wana Brands – the decision not to pursue investors proved ultimately successful, with both companies selling for more than $100 million each in the past few years.
MJBiz co-founder Cassandra Farrington and Wana Brands co-founder Nancy Whiteman were the keynote speakers at the annual Cannabis Marketing Summit in Denver last week.
“A very wise woman, Kim (Sanchez) Rael, who is CEO of Azuca, … we were talking about raising funds, and she said, ‘Never raise money that you don’t actually need,” Whiteman shared. “And to say that I’m grateful would be a bit of an understatement. … It just comes with a lot of baggage.”
Taking money in exchange for equity in a business dilutes ownership for the existing shareholders. In addition, the new shareholders often feel the need to have input on business decisions, despite not having a background in the development of the company.
“If you can pull it off, there’s a huge freedom to not raise any money,” Whiteman noted.
How to “Shoestring” Your Operation
Farrington and Whiteman both shared tips on how they were able to grow their businesses without an outside influx of cash.
1. Focus on your product.
Wana Brands had a lot of trial and error in its product research – including an attempt at infused beef jerky. But when it landed on gummies and the products started to really sell, the team turned its attention to focusing on “quality, consistency, and promoting the quality and consistency of the products,” Whiteman said.
2. Share resources where possible.
When Farrington launched MJBiz, her business partner and her were already operating two other B2B newsletters, which meant that technology and production costs could be shared across titles.
“We knew our business model, we knew we could do this on a shoestring budget,” she said.
But that resource-sharing can be achieved even if you don’t have other properties in-house for that reason. For example, operators can partner with others within the industry – via associations or just group agreements – to develop purchasing agreements to increase order discounts.
Or consider outsourcing some of the business operations, such as payroll, so that the experts can handle it for less than a full-time employee would cost you.
3. Choose the right partners.
If you go into business with the wrong person, or even hire the wrong subordinates or executives, it can quickly become a business morass, which both Farrington and Whiteman said they were lucky to avoid.
“Many of my hardest moments as an entrepreneur have involved my people, one way or another,” Farrington said.
Whiteman wholeheartedly agreed with that sentiment: “All of my worst mistakes were when I didn’t listen to my own instincts on people.”
Choose to work with people who complement your skills, who can fill the gaps that exist within your organization. And make sure they’re a cultural fit from the get-go – otherwise conflict will quickly arise and set you back behind square one.
