How do Weedmaps and Leafly make money

Talkin go money

What do tech startups and marijuana companies have in common? More and more funding platforms are on the rise to support both companies. Many of these startups have Silicon Valley veterans at their helm. In the case of the marijuana industry, while the growth potential in this sector is still in its infancy, many investors sit up and take notice. One of the most important factors attracting investors to this fledgling industry is that there is still plenty of room for innovation. (For an assessment of the current outlook for investing in the cannabis industry, see the article: Want to Make Money In Marijuana? Read This First.)

SFGate reports that the marijuana industry grew at a rate of 74 percent last year and is now $ 2. 7 billion industry. Currently, the state of California makes up half of this industry, and it has been estimated that if marijuana were to become legal in California, the industry's revenues could easily be doubled.

No shortage of demand

Compared to tech startups, the marijuana business can take an important advantage. While tech companies often face the need to create demand, or at least educate their consumer base, there is no shortage of demand for marijuana startups. Right now, medical marijuana is in Washington, D.C. and 23 states, while recreational marijuana has only been legalized by Colorado and Washington.

Given this demand, investors who once supported tech companies are now driving their funds into the cannabis industry. TechCrunch reports that the Founders Fund recently invested in Privateer Holdings. The fund, founded by Peter Thiel, a co-founder of PayPal, was just one of the firms offering $ 75 million to Privateer Holdings, a company that currently has multiple cannabis investments. (For more information on Privateer Holdings and the outlook for investing in other marijuana companies, see article: 2015 Marijuana Stock Analysis.)

Among the recent investors looking to invest their money in the marijuana industry is Calvin Broadus, Jr., better known as Snoop Dogg. The rapper made no secret of his affinity for marijuana and now reports that he is putting together a special fund for the express purpose of investing in marijuana startups.

The timing is right

Regardless of the reasons you are investing in this emerging industry, it certainly seems like a good time to invest in marijuana. Venture funding in marijuana startups is now pouring in from all directions. Quickly known as potpreneurs, marijuana startups are banking heavily on the potential for marijuana to be legalized in more states. Among those startups is Weedmaps, an app that gives users the ability to find medical marijuana dispensaries. Given the potential earnings outlook for Weedmaps, investors rose quickly. Weedmaps was eventually bought by General Cannabis, Inc. with a combination of stocks and cash. (For more information, see: Pot Stock Pitfalls To Watch.)

Another marijuana startup, Leafly, gives users the ability to rate and rate different cannabis strains. for the marijuana industry. Founded by a trio of former Kelly Blue Book employees, Leafly started out as a simple side project in 2010. Within a year, it grew into a full-time company that soon caught the interest of Privateer Holdings. Shortly after private equity firm acquired Leafly, the company really got started, signaling how much of a difference the right investors can make in any start-up, especially in an area focused on the cannabis industry. Before it was acquired by Privateer, Leafly had drawn around 15,000 reviews of various strains of marijuana. After the acquisition of Privateer, Leafly expanded to up to 80,000 registered users. More importantly, from an investment perspective, Leafly brings in $ 100,000 per month in revenue, according to Forbes.

Promising marijuana startups on the rise, thanks to investors

Leafly certainly isn't the only marijuana startup that is generating interest from investors. Leaglich Labs has raised more than $ 12 million from more than 100 individual investors. Based in Minneapolis, Leaglich is unique in that it is only one of two such companies that are licensed by the State of Minnesota.

Palliatech also managed to raise $ 10 million in the funding. Investors who are funding the NYC-based maker of marijuana-based pain relievers include Gruppa Sputnik OOO, a Russian VC firm.

Not all marijuana startups have crossed the $ 10 million threshold in funding, but they have still managed to raise tidy sums of money from investors all too willing to invest in cannabis companies. Among them is MassRoots, a kind of social network for marijuana lovers. In September, MassRoots raised $ 500,000 for a total of $ 1. 2 million. The ArcView Group is one of the investors funding MassRoots. (For guidelines on evaluating the value of such new ventures, see the article: Valuing Startup Ventures.)

Given the growing interest in the growing marijuana industry, it is hardly surprising that so many venture capitalists have turned their attention and funding to a rapidly evolving cannabis tech industry. CrunchBase reports that there were nearly 30 venture investments in marijuana startups in the last year alone.

Working around the stigma of cannabis

Not all investors got on the bandwagon that quickly when it comes to investing in marijuana startups; many investors have remained hesitant because of the stigma associated with cannabis-based investing. While opportunities exist, this stigma associated with marijuana has caused many investing firms to hold back simply because they do not want to be involved in investments that directly involve the production and sale of marijuana. Whether or not a company "touches the plant" is a distinction that has become indispensable in the marijuana industry.

Still, there are numerous side business investment opportunities for investors who have concerns about the stigma associated with marijuana. Such sideline activities include the companies that provide security for medical marijuana dispensaries. As the profit potential for marijuana companies continues to rise, more investors who previously wanted to remain anonymous have been more open to their interest in the growing cannabis industry.

Right now, most of the investment going into marijuana companies is actually making its way north of the border into Canada, where the federal government has legalized the use of medical marijuana. However, US investment is on the rise. It is estimated that up to 12 million people in the United States use cannabis on a daily or almost daily basis. While the use of marijuana for medical purposes is currently only legal in 23 states, the issue will again be a topic for voters next year. In addition, recreational marijuana use is already legal in Colorado and Washington and will soon be legal in Alaska next month and Oregon in July.

The bottom line

While the legalized marijuana industry may still be a new frontier, it's developing rapidly, driven by investors more than willing to hedge their bets on the potential of this controversial project. booming opportunity.