Vangst Secures $19M to Connect Cannabis Industry with Talent
The Rise of Specialized Labor Marketplaces
Currently, a competitive job market is fueling investment in vertical labor marketplaces. These platforms concentrate on specific industries, such as healthcare or hospitality. For instance, Trusted Health, a healthcare staffing platform, secured $149 million in funding last November.
Similarly, investors are recognizing the potential within hiring platforms dedicated to the rapidly expanding cannabis industry. As of last fall, approximately 320,000 individuals were employed in this sector, representing a 32% year-over-year increase.
Vangst: A Cannabis Industry Hiring Leader
An investor group, spearheaded by Level One Fund, recently invested $19 million in Series B funding into Vangst. This Denver-based company, established six years ago, connects both temporary and permanent employees with cannabis companies across the United States.
Vangst’s success is evident in its current offerings. Founder and CEO Karson Humiston notes the platform currently lists around 500 temporary positions weekly, typically filled within 48 hours. These workers are classified as W-2 employees and paid directly through Vangst’s payroll system.
Furthermore, the platform features nearly 2,000 full-time roles with a combined gross salary value of $85 million.
Revenue Model and Growth Strategies
Vangst generates revenue through multiple streams. For temporary placements, the company charges clients 50% above the employee’s hourly rate; for example, a $15/hour employee might cost a client $22.50/hour.
For permanent positions, Vangst receives a percentage of the candidate’s first-year salary as a placement fee. Additionally, the company offers subscription services to employers, allowing unlimited job postings.
Recently, Vangst has expanded into content creation, offering priced modules focused on roles within the cannabis industry, such as the responsibilities of a trimmer.
Overcoming Challenges and Adapting to Change
Despite initial momentum following its $10 million Series A round in 2019, Vangst faced significant challenges with the onset of the COVID-19 pandemic. The company was compelled to reduce its workforce by half, from 70 employees, as clients scaled back operations.
In response to dwindling revenue, Vangst strategically shifted its focus to placing full-time salaried candidates in roles like accounting, product management, and software engineering. This pivot proved to be a crucial survival strategy.
As the market recovered, Vangst successfully established a new and robust business line.
Current Challenges and Future Outlook
Currently, Vangst’s primary challenge is not demand, but rather the availability of qualified candidates. Like many employers, the company is actively seeking talent through trade shows and SEO services.
A portion of the new funding will be allocated to expanding its marketing team.
Vangst advises its clients to offer competitive compensation and highlight their company mission, values, and employee benefits to attract candidates.
The outlook remains positive, with further job growth anticipated as more states legalize cannabis.
Expanding Legalization and International Ambitions
New York’s legalization of recreational cannabis last September is projected to create 60,000 new jobs, according to former Governor Andrew Cuomo. New Jersey has also recently enacted legislation permitting and regulating recreational marijuana, with businesses already launching.
Markets like Michigan are experiencing particularly rapid growth. Vangst currently serves clients in Colorado, California, Nevada, and Arizona, among the 18 states where recreational cannabis is legal.
Looking ahead, Vangst plans to expand internationally, beginning with exploratory discussions in Barcelona with investor Casa Verde Capital, which is increasingly focused on European startups.
Humiston emphasizes the need for continued learning and adaptation as Vangst enters new markets, mirroring the challenges faced in the U.S. regarding business needs and regulatory compliance. The exploration of international opportunities will begin this spring.