Twitter, Facebook, Snapchat. Some of the biggest and hottest names in the tech sector in the last 10 years all have something in common.
They’re all publicly traded now, after the real, life-changing gains had come and gone.
Silicon Valley is notorious for rich valuations through multiple rounds of private capital funding.
Only when the growth slows and those with the means to move on to smaller companies with better growth potential are satisfied, are the shares sold off to the public.
What many people don’t realize is that this phenomenon isn’t something intrinsic, or limited, to the tech sector.
It has simply been where there is explosive growth potential for small companies that can tap into new markets.
Yet the pervasive idea that it is just a “tech thing” is why the current explosion of private money cornering the best investment opportunities is flying under the radar, despite being in an industry that is seeing growth that exceeds the internet boom of the 2000s.
It’s All About Growth Potential
The simple fact of the matter is that even the handful who have become wildly rich from tech stocks don’t care one bit if their next investment is tech related.
It is all about the business model, the market a company can tap, and the odds that it will realize its potential.
One new industry in particular stands above the rest in this regard.
Medical cannabis is what we’re talking about here, and it is long past being contentious or fringe.
The North American cannabis market posted $6.7 billion in revenue in 2016, up a full 30% from 2015, according to a recent report from Arcview Market Research.
And that phenomenal growth isn’t an outlier. Arcview projects sales to grow at a compound annual growth rate of 25% through 2021.
At that point, it’s expected to be a $20.2 billion market.
Tom Adams, editor-in-chief of Arcview Market Research, said in a statement, "The only consumer industry categories I've seen reach $5 billion in annual spending and then post anything like 25% compound annual growth in the next five years are cable television (19%) in the 1990s and the broadband internet (29%) in the 2000s.”
That’s right. The cannabis market is growing as fast as internet companies were in the 2000s.
Venture Capitalists, family offices, and private equity funds are tuned to see these opportunities, and they have the inside track on getting in early.
This is the kind of growth that can turn hundreds into thousands, thousands into millions, and millions into billions in just a couple years.
They are flooding into the marijuana industry and steadily removing the need for companies to find most of their initial funding through public offerings.
And when the IPOs do come around and offer plenty of growth potential, these early investors are already looking at triple-figure gains.
Big Funds Are Already Established
To get in on these early investments and control as much equity as possible, a slew of private funds dedicated to cannabis investing have already been established.
Take Privateer Holdings, for example. Peter Thiel’s Founder’s Fund backs it, and it crossed the $100 million mark in fundraising back in 2016. It’s pulled in $122 million in total.
Tuatara Capital isn’t far behind with $93 million to invest, and Seventh Point, which is looking at completing $75 million worth of fundraising this year.
And it is all ramping up right now. As Seventh Point's CEO, Steve Gormley, recently told Business Insider:
"It's like a floodgate. We oversubscribed [raising more money than intended] our first two funds. I haven't seen anything like this in my career.
"Here's what's interesting. As recently as a year ago, you saw most of the investment activity happening organically. It was homegrown — pardon the pun — from within the industry itself.
"I'm seeing the profile of the cannabis-industry investor thawing. Whereas it was only cowboys, I'm seeing people who are more traditionally bottom-line driven and conservative coming off the sidelines."
MedMen Capital launched a $100 million fund last year, with $30 million already covered. Then you have Poseidon Asset Management, Salveo Capital, Casa Verde, Phyto Partners, and on and on.
Stake Your Own Claim
Here is the thing, though. These people have an inside track, but that doesn’t mean you can’t as well.
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Source : outsiderclub