Privateer Holdings, which invests in companies in the cannabis space, announced that Founders Fund has made a “multi-million dollar investment in its Series B round” that has yet to close.
Seattle-based Privateer previously raised a $7 million Series A round from high net worth individuals and family offices, and the firm currently is raising a $75 million Series B round that will include a $15 million convertible bridge note that was raised last year. Privateer CEO Brendan Kennedy said the Series B is expected to close in a few weeks.
The amount that Founders Fund is investing in the round is undisclosed. The firm said it is not leading the round.
To date, Privateer has disclosed three investments in the cannibas industry. Leafly, a Seattle-based provider of cannabis information; Tilray, a Canadian-based merchant that sells cannabis products; and Marley Natural, a New York-based seller of cannabis products.
Privateer said this is the first time an institutional investor like Founders Fund has invested in the cannabis industry. Currently, 23 U.S. states and the District of Columbia have laws that allow for medicinal marijuana, and four states (Alaska, Colorado, Oregon and Washington) have legalized its recreational use. Still, VCs have shied away from blazing a trail and backing cannabis-related startups because of the legal risks. Another concern is that many institutional VCs have LPs which are government institutions, and they may not yet feel comfortable supporting legalized pot.
“Public sentiment is already in favor of the use of cannibas for medicinal purposes and sanctioned recreational use is growing, too,” said Geoff Lewis, the partner at Founders Fund who led the deal. “We invested in Privateer because we feel there is an opportunity to build a Coca-Cola type of company that will become dominant in the cannibas market and Privateer is positioned to be a leading player.”
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