Privateer closes $100M round at $600M+ valuation to invest in cannabis startups

It’s high times for the marijuana industry, which has been flourishing in recent years as more regions move to decriminalise the use of it for medical and other purposes. Now, Privateer Holdings, one of the big investors in the space, has raised $100 million to back more cannabis startups and capitalise on that trend.

This Series C brings the total raised by Privateer to $200 million since the firm was founded in Seattle in 2010. The company — which in effect operates like a startup itself — said it would not be disclosing its valuation with this round, but in its last round (in 2015) it was valued at over $500 million, and we understand from sources close to the company that is a strong up round — so it is currently valued in the region of over $600 million.

It also is choosing not to disclose who is investing in this round, except to tell us that it is “ultra high net worth individuals, family offices and institutions.” We’ll see if we can get more specific names. Previous investors have included the Founders Fund — the firm headed by Peter Thiel — as well as Subversive Capital, Three Trees Ventures and Been There.

There are a couple of things to me that stand out about Privateer and the area where it invests. The first is that it’s an example of how every company is now a tech company.

In the case of Privateer, the company has disclosed investments in four companies (operative word here is “disclosed”), Leafly, Tilray, Marley Natural and The Goodship, which touch on a few different aspects of how tech is being applied to this industry to see how it can grow.

Leafly is essentially an interest-based social network meets marketplace, where users can exchange ideas about different strains, products and dispensaries, and how to find good deals. Tilray is both a producer of cannabis, a distributor, and an R&D lab investing in trying to find new applications for marijuana. Marley Natural and The Goodship, meanwhile, are more at the end of lifestyle brands tapping into the FMCG aspect of cannabis as a product. (One of The Goodship’s chocolate products is pictured above.)

The second area where Privateer is doing something interesting is that it exemplifies a company that seems to be operating and growing out a firmly held belief, alongside the more obvious investment principle, which is now ballooning into a $50 billion opportunity by 2016, according to one estimate.

“The War on Cannabis is wrong. It has made criminals out of millions of peaceful citizens. It has led to the incarceration of a vastly disproportionate number of people of color. It has squandered trillions of taxpayer dollars. It has empowered organized crime, promoted violence, trampled human rights, stymied science, and caused countless patients to suffer when natural medicines were close at hand,” the three founders write in a statement. “But hope is in sight. Brick by brick, the Berlin Wall of cannabis prohibition is crumbling and safer, saner and more sensible cannabis policies are taking hold. A consistent majority of Americans and Canadians support regulating and taxing cannabis like alcohol. And more than nine out of 10 believe medical cannabis should be legal. Under pressure from public opinion, politicians and bureaucrats are finally catching up. As the end of prohibition unfolds, Privateer Holdings is pioneering the future of the legal cannabis industry.”

Privateer’s founders — Brendan Kennedy, Michael Blue and Christian Groh — are putting their money where their mouths are. The three will be committing the equity equivalent of $5 million at the firm’s current valuation from their own shares in the company, “to help communities harmed by cannabis prohibition.” As this is coming in the form of shares, as the valuation increases, so will the donation.

The equity donation will be used to help fund various grassroots efforts in the wider industry, which might include, they said, campaigns to legalize cannabis; clinical research; educational initiatives; legal assistance for those who need it in cannabis-related offenses; and facilitating medical access.

Watch an interview with Geoff Lewis from Founders Fund and Brian Kennedy of Privateer here to see them expound more on the vision and goals of the company.