Tress Featured In The mg List: 15 Industry-Leading Investment Firms
Investment dollars can be hard to come by in a tightly regulated, federally illegal industry. These firms are changing the game, offering operators of all sizes an opportunity to grow.
With rapid industry growth comes an inevitable need for increasing amounts of capital. Although investors have had their eyes on the budding cannabis market for about a decade, acquiring funds for scaling and expansion remains challenging. That’s really no surprise, since most investors are leery of sinking dollars into a sector subject to extensive oversight by state officials, taxing authorities, and potentially law enforcement.
From cultivators and dispensary owners to manufacturers, distributors, and marketers, industry insiders are accustomed to jumping through regulatory hoops in order to comply with diverse, and sometimes conflicting, state-market standards. Investors, on the other hand, have many opportunities to build wealth in sectors that don’t require constantly adjusting expectations. The potential returns in cannabis are great … but so are the risks.
Nevertheless, the industry overall has done remarkably well on the financial front. Globally, 544 companies attracted $5.3 billion in venture capital between 2014 and year-end 2019, according to Crunchbase. After a disappointing 2020 in which investment plummeted by 68 percent, TechCrunch trumpeted the American industry’s return to favor in 2021 with a 165-percent year-over-year increase in capital infusion. The average raise per transaction grew, as well, expanding from $7.5 million in 2020 to $19.9 million in 2021.
Of particular note, debt financing is on the rise. Total debt and capital raises topped $12 billion in 2021, according to Viridian Capital Advisors. Equity raises amounted to about $7.1 billion — a significant jump from the 2020 total of $2.7 billion. Debt raises amounted to $5.3 billion, up from $1.6 billion in 2020. The average debt raise of $48.1 million in 2021 was more than double 2020’s average.
Even for seasoned investors, navigating the cannabis market can be challenging, and many traditional funds and money managers don’t incorporate industry properties into their portfolios. More than fifty longstanding private equity, angel, and venture capital firms do, though, either exclusively or as part of a larger mix. This month, The mg List highlights fifteen of them.
Tress Capital arose from a collaboration between a longtime cannabis advocate and a Wall Street expert. President and two-time cancer survivor David Hess began advocating for cannabis in 1995 after cannabis changed his life as he went through chemotherapy. “David brought the industry expertise and contacts, and I brought Wall Street,” said Tress cofounder and CEO Asher Troppe. “As a firm, we’re really about doing good while doing [financially] well. We have heart behind everything we do, and our deep knowledge of both plant science and investing allows us to succeed.” Tress’s portfolio contains a diverse collection of companies including Headset, Cannabis Now, and Omura.