Cannabis Investment Growth: 2020-2021 Data

Cannabis Equity Funding Experiences Significant Growth

The amount of capital being invested in cannabis businesses is currently experiencing a period of rapid expansion. An examination of data from Crunchbase indicates that cannabis-related companies are securing larger investments through equity financing. Furthermore, there appears to be a noticeable shift in funding patterns, with a move away from seed-stage investments towards later-stage rounds.

Dutchie Secures Major Funding

Recent news confirms that Dutchie, a prominent technology provider in the cannabis sector, has successfully completed another substantial financing round. This Series D funding, totaling $350 million, establishes a company valuation of $3.75 billion. This follows a previous round of $200 million raised in March 2021.

To date, Dutchie has accumulated a total of $603 million in funding.

Growing Trend of Large Investments in Cannabis Companies

Dutchie is just one example within a growing number of cannabis companies attracting significant investment in 2021. Jane Technologies, for instance, secured $100 million in a Series C round in August. Kadenwood also successfully closed a $50 million Series B funding round.

Additionally, some companies are utilizing post-IPO equity offerings to raise capital, such as MedMen, which obtained $100 million through a private placement. Weedmap’s parent company also benefited from a $325 million investment concurrent with its SPAC arrangement.

Increased Financing Intensity in 2021

During the initial five months of 2021, a total of 132 funding events were recorded for cannabis companies, with an average investment size of $15 million per event. However, the pace of financing has accelerated considerably throughout the year.

In the subsequent five months, cannabis companies experienced an average funding increase of $28 million across 73 funding events, representing an 86% rise. This encompasses investments ranging from pre-seed stages through Series D rounds, as well as post-IPO equity fundraising and equity crowdfunding initiatives.

Significant Growth Compared to 2020

The average investment amount has increased by 165% when compared to 2020 levels, rising from $7.5 million to $19.9 million. The number of funding rounds has also seen a dramatic increase, with 205 rounds reported in the first ten months of 2021.

This contrasts with the 176 funding rounds completed throughout all of 2020.

Investment Growth Across Various Stages

Investment sizes are increasing across almost all stages of funding. Crunchbase data reveals that the average seed-stage investment in 2021 is $1.86 million, an 85% increase from the $1 million average in 2020.

Series B and Series C funding rounds have also experienced substantial growth, with increases of 128% and 154% respectively, resulting in average sizes of $18.96 million and $101.67 million.

However, one exception to this trend is Series A investments, which have decreased by 25% year-over-year. The reason for this slight decline at this specific stage remains unclear.

Factors Driving Investment in Cannabis

Despite cannabis remaining a federally prohibited substance, companies are discovering innovative strategies for growth amidst increasing regulatory scrutiny. The COVID-19 pandemic played a role in this expansion.

Dispensaries were designated as essential businesses during the pandemic's early stages, and public acceptance of cannabis surged. As of the latter half of 2021, a greater number of Americans than ever before express comfort with cannabis, a sentiment that extends to investors.