What About Cannabis Pre-IPO’s?
Recently, Beyonce was reported to have made $300 Million from an investment she made a few years back with Uber, the popular ride-sharing service. Rumor has it that she was asked to perform at an Uber Corporate Event for her regular rate of $6 Million, yes she gets $6 Million to perform. Instead of receiving the cash Queen Bey opted to take shares in the privately held company. After a few years, Bey’s great business decision gave her a 50X return, turning that $6 Million Performance Fee into a $296 Million return on investment.
So how can someone like you and I get in on the big money?
In 2016, the JOBS Act went into effect, allowing private early-stage companies to raise money from all Americans and not just the top 3% (You know the extremely rich or Accredited Investors). If you do not know what an Accredit Investor is that probably means you are not one🤔, these are individuals who have a high net income and/or high net worth. But now startups can now use equity crowdfunding to turn their customers into investors. Yep anyone can become an investor in a company before it goes public.
Although, investing in start-ups can offer large rewards and it has even larger risk. Startup investing is risky and there are no guarantees of a return: many startups fail, and investments are lost. But some startups will succeed, and if they get acquired or IPO (Initial Public Offering) at a valuation higher than the one at the time of your investment, you will earn a return.
Additionally, if the company has another financing round, it can decide to issue Shadow Shares to you, with economic rights that provide a return.
Is this right for you?
Is it still a good fit for you?
I am sure that Bey didn’t spend countless hours trying to get in touch with the CEO of Uber to check on her coins. Remember, this investment just like any other has no guarantee so you must understand your personal risk appetite and decide if this kind of investment matches your overall financial strategy and goals.
If you have taken everything into consideration and still think investing in a start-up Cannabis Company is the right move for you there are two sites that can make investing easy. Fundanna the “first equity crowdfunding portal dedicated to the cannabis industry,” according to SEC and FINRA guidelines, which uses the phrase to refer to an entity that is regulated by both and permits anyone to invest in startups. Fundanna makes sure their investments are for everybody; in fact, anyone with as little as $100 can become a part of the next big start-up in cannabis. Moreover, they tell the companies that are raising funds to “make the investors ecstatic.” Meaning the security they offer contains Revenue Participation — as long the company makes revenue, the investors will be paid.
Another Crowdfunding site that offers Cannabis Companies is Republic. You may have heard of this platform; it is the same crowdfunding site that Chamillionaire and E-40 are using to make an equity investment into a minority and/or women-owned business. However, Republic only offers a few Cannabis or Cannabis- Related Companies. When you invest on Republic you receive a financial stake in the company in the form of a security. Most startups on Republic opt to use a security called the Crowd SAFE. In addition, most companies choose to give out perks as a reward for your investment.