Dutchie, a nearly four-year-old, Bend, Oregon company that charges cannabis dispensaries a monthly fee to create and run their websites, process their orders and track what needs to be prepped for pick up, has raised $200 million in Series C funding at a $1.7 billion valuation. That's roughly eight times the valuation the company was assigned last August, when it closed on $35 million in Series B funding. In fact, $200 million is exactly how much backers thought it was worth last summer.
Why the massive jump in so short a period? Aside from general frothiness in startup investing, Dutchie just acquired two companies, Greenbits and Leaflogix, that will enable it to become even more of an all-in-one tech platform for its customers. Dutchie isn't disclosing how, or how much, it paid for either outfit, but the two concerns -- which make enterprise resource planning and point-of-sale software, respectively -- are being folded into Dutchie along with their collective 150 employees, effectively doubling the size of Dutchie, which now employs 300 people altogether.
Dutchie is also benefiting from some fairly strong tailwinds. In addition to a lockdown that has driven many new users to cannabis, five more states voted to legalize recreational marijuana in the November elections, and the federal government, which still categorizes marijuana as an illegal Schedule I drug and has thus denied cannabis companies access to commercial banking and insurance, appears closer to decriminalizing marijuana than any administration previously.
Given the way the company is evolving, and regulations are evolving, we talked with Dutchie co-founder and CEO Ross Lipson yesterday about whether Dutchie eventually begins to sell directly to consumers, rather than work with dispensaries. Once people no longer have to pay cash to the brick-and-mortar shops to which Dutchie sends them, will those outfits become less necessary?
Lipson insists they will not. While online orders have soared over the last year for obvious reasons and more shoppers grow accustomed to the ease of picking out products virtually, Lipson says that, "Longer term, this is a retail-first model. The nature of this industry lends itself to a hyperlocal model largely because of the way that plants are cultivated and processed, so I believe retail will remain intact and continue to be successful."
We'll see. In the meantime, Dutchie has $200 million more dollars from top backers to develop new products -- including discovery and education tools -- and to begin to expand internationally, says Lipson.
Tiger Global Management led its newest round, joined by Dragoneer and DFJ Growth, two firms that are just now making their first forays into cannabis-related investing.
Dutchie's earlier investors Casa Verde Capital, Thrive Capital, Gron Ventures and former Starbucks CEO and founder Howard Schultz also participated.
Asked if becoming publicly traded could be next for Dutchie as investor interest in the industry rises, Lipson says that Dutchie is right now "focused with what's on our plate."
As for any discussions with special purpose acquisition companies that might want to take the outfit public through a merger, Lipson says it "isn't engaged in those talks right now," but adds that the company will "weigh out the business opportunities as they come. We look at how does this decision bring value to the dispensary and the customer. If it brings value, we'd embark on that decision."