Raising money is never easy. And funding a cannabis company, which cannot rely on traditional financing options like banks or small business loans, is even harder.
Fortunately, alternative financing methods exist and some are particularly effective.
This is the story of how a company raised more than $12 million thanks to a connection made at a cannabis industry event.
‘Talk To Someone You Don’t Know’
It all started when Joe Lustberg, managing partner of Upwise Capital, scheduled a meeting with investor John Gainor of Ironwood Capital at a Benzinga Capital Conference in 2020. Having been encouraged by Chief Zinger Jason Raznick, who always recommends that event attendees chat with people they don’t know, make new connections.
Following Raznick’s advice, Gainor introduced Lustberg to Silverpeak Holdings and numerous other cannabis operators.
Kismet?
The introductions led to Upwise facilitating an in-house transaction for Silverpeak Holdings LLC to complete an acquisition that helped increase its EBIDTA and expand on its vertical integration model. The transaction was a $2.5 million non-dilutive unsecured bridge financing solution with no personal guarantee required and was completed within three business days.
A few months later, Upwise would close on another $10 million senior secured debt facility with Silverpeak through its partner Green Ivy Capital.
“Upwise facilitated that transaction as well”, Lustberg told Benzinga during a recent conversation.
“Through the Benzinga platform, we have met many referral partners and cannabis operators that have turned into successful relationships. Upwise is a full-service debt financing marketplace for the cannabis industry with many years of experience raising debt capital for cannabis companies. The Benzinga capital conferences offer us great networking opportunities,” he added.
For Gainor, the events are valuable as well.
“I am a consummate networker and Benzinga’s platform provided me with the opportunity to meet Joe from Upwise Capital, and then, in turn, introduce him to several of my opportunities. I would not have closed my last financing if it weren’t for Benzinga and Upwise,” he said.
How Upwise Works
Upwise and the lending partners it works with have been providing debt financing solutions to the cannabis industry over the past year.
Its marketplace of more than 250 capital providers for marijuana-related businesses features diverse construction financing options to:
- Build out cultivation and processing facilities at “the as completed cannabis valuation,” typically based on 65% to 70% Loan to Value.
- Finance equipment, typically at 70% to 100% LTV based on the equipment value.
- Complete sale-leaseback transactions.
- Finance purchase orders and inventory.
- Complete senior debt facilities with hedge funds and family offices.
In-house, Upwise can offer up to $10 million in unsecured working capital to cannabis operators, based on the cash flow of the business. Some lenders in the cannabis capital markets are now even starting to consider the licenses as collateral and Upwise is able to leverage licenses and off-take agreements with reputable brands. Working with a firm like Upwise can help expedite the search process for new and experienced cannabis businesses exploring the debt capital markets.
Más contenido sobre cannabis en Español en El Planteo.
