Overview

Our FIrm

Phyto Partners is a Venture Capital firm that provides debt and equity capital to privately held cannabis companies. Since June 2015, Phyto Partners has deployed capital into 30 distinct portfolio companies. Our investments stem across the value chain of the cannabis industry; because we believe ancillary businesses are critical to facilitate the growth of the industry. Our portfolio investments touch education, branded products, agriculture technology, point of sale software, biotechnology, and more.

Through our capital resources and broad network of industry relationships, we offer our companies financial sponsorship, critical strategic support, and business development assistance. Phyto Partners aims to be “more than a check”, by actively introducing our portfolio companies to potential customers, investors, and M&A targets, all while bringing our expertise to the table.

Our portfolio companies are able to leverage off one another and collaborate to execute successful business plans. Our advisors and industry relationships bring together the knowledge and expertise to help our portfolio companies thrive in the dynamic and fast growing cannabis industry.

Investment Criteria

  • Experienced management team
  • Clear value proposition
  • Defensible market, customer and product positions
  • Intellectual property
  • Visibility to profitable cash flows
  • Synergy with our portfolio companies
  • Strategic capital co-investors
  • 6-9 months monitoring of management/operations and execution
  • Justifiable valuation

 

Areas of Focus

  • Advertising Technology
  • Agriculture Technology
  • Biotechnology (Genetics and Biosynthesis)
  • Brand Building (Consumer Packaged Goods)
  • Cannabis Delivery Services
  • Data
  • Education
  • Hemp/CBD
  • Intellectual property around product bioavailability and onset/offset time
  • Medical Dosing Technology
  • Software (SaaS)

We are focused on investing in businesses that enable the licensed producers to comply with laws, manage the business, connect with customers, build brands and operate more efficiently.    

We seek scaleable business models with high barriers to entry and high margin products or services. 

In the cannabis supply chain, we see the most value in product/brand development. Innovation will be a key differentiator for growing and building brands. We see other areas of the value chain being more commoditized over time.  Given the newness of the legal cannabis industry, every part of the value chain will drive value in the near-term.

There is substantial pressure upon the cannabis industry to respond to legal regulations, which can be complicated, time consuming, and expensive. We look for companies that can profit because of this regulatory and compliance chaos. 

Significant opportunities exist to invest in cannabis industry operations requiring the engagement of neutral third parties to ensure accurate, timely, and competent compliance with various state and federal regulatory authorities.  Technology solutions and data analytics will be a critical infrastructure backbone and will provide significant opportunities for exponential growth opportunities.

How Big is the Opportunity?

The total addressable market for cannabis continues to grow with new jurisdictions being unlocked at a rapid pace. Around 90% of the states in the US have some sort of medical cannabis program in place and an increasing number are becoming recreational, which allows for common use amongst adults that are 21 or older. 

As a business opportunity, cannabis legalization is spawning a gold rush creating an entire industry from legal growing operations to secondary and tertiary businesses to support the conversion of this industry from illegal to legal.   In 2018, the Cannabis industry generated ~$11 billion in sales and created nearly 250,000 new jobs.  In 2019, the growth is suspected to continue with sales estimates of $14 billion and jobs to be created estimated at 500,000.

Investment Capital 

 Private capital is seeking out opportunities in the Cannabis industry at a break neck pace.  Cannabis-related companies raised over $13.8 billion in 2018, compared to $3.5 billion in 2017.  Private investments specifically grew from $591 million in 2017 to $4 billion in 2018, according to Viridian Capital Advisors.

 

Funding the Cannabis Industry

 

 

Phyto in the News

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As seen in Benzinga
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