A startup that's being called the "Salesforce of pot" has just raised $3.5 million to expand into new markets that have recently legalized recreational marijuana.
The company, Baker, raised an additional $1.6 million on top of its initial seed round in August for a total haul of $3.5 million.
Baker is a software platform that helps dispensaries generate more revenue, optimize sales, and increase customer retention in the burgeoning industry.
"This extension, specifically the fact that it closed so quickly on the heels of our initial round, validates our position that the cannabis industry needs industry-specific tools," Baker CEO Joel Milton said. "While parallels can be drawn to other industries, cannabis growers, manufacturers and dispensaries need solutions that cater to the legal and logistical demands of our industry."
Baker works with 250 dispensaries in 10 states where marijuana is legal, with plans to expand as more states, and Canada, introduce ballot measures to legalize recreational use. The company says it has generated $3.1 million in revenue for the dispensaries it serves.
Poseidon Asset Management, a cannabis-focused fund, led the round along with some individuals who made their first investments in the marijuana industry.
"Poseidon has been investing in the cannabis industry for over three years and Baker has proven to be one of the fastest growing, most scalable businesses we have seen," Morgan Paxhia, the Managing Director of Poseidon said. "Coupled with the recent successful ballot initiatives, which virtually tripled the size of the industry overnight, Baker is definitely a company to watch as it continues to mature."
Investors also noted similarities between the craft beer industry, and the marijuana industry.
"I noticed a big opportunity in the cannabis industry, which draws many parallels to the craft beer business with which I’m very familiar. Due to federal regulations, investments in the industry have seemed too risky,"John Green, Executive Chairman and Partner for Founder’s Brewing Co said. "However, following the November ballot initiatives (where recreational cannabis was legalized in four states that tripled the industry size), the opportunity became a lot more attractive."
Though venture capital dollars are still flowing into the industry, Jeff Sessions, the attorney general, has vowed to crack down — as marijuana is illegal at the federal level — and that's made some investors nervous.
Baker isn't a "plant-touching" business, but rather a software platform, meaning that it may be sheltered from a federal crackdown.
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