Toronto-based cannabis news and entertainment startup HERB has raised $4.1 million in seed funding in a round led by Lerer Hippeau Ventures to build its tech platform and video production studio, as well as hire new staff and launch offices in Los Angeles and New York.
Other investors include Slow Ventures, media entrepreneur Michael Lazerow, Bullpen Capital, WeWork Chief Product Officer Shiva Rajaraman, Liquid 2 Ventures, Shopify executives Tobi Lutke (CEO) and Harley Finkelstein (COO), and early-stage investor Adam Zeplain, according to the company.
The deal is noteworthy for the number of investors joining the round, given that mainstream venture firms have largely stepped back from companies involved with cannabis, which remains illegal in the United States at the federal level, although 29 states allow possession for medical purposes and eight states and the District of Columbia have legalized recreational use.
Thus far in 2017, 14 cannabis-related startups in the United States and Canada have raised $30.24 million from venture investors, according to data from Thomson Reuters. In 2015, investors poured $98.98 million into six cannabis-related companies, VCJ previously reported.
This is the first funding round for HERB, which launched three years ago, according to founder and Chief Executive Matt Gray. None of the investors will take a board seat, he said, and the company is not disclosing its current valuation.
The company currently offers marijuana-related news and entertainment videos to more than 5 million unique visitors each month on topics ranging from weed tampons and weed-infused wine to updates on federal and state laws regarding the substance. It’s already profitable and grown to 21 employees thanks to a native advertising revenue model, according to 27-year-old Gray, who previously co-founded the Web developer bootcamp Bitmaker, which was acquired by General Assembly.
In September, HERB plans to unveil a new technology platform as part of its goal to transform itself into an online cannabis marketplace.
Gray aims to build HERB into “the largest and most accurate database of everything cannabis related,” and eventually “get anyone in the world cannabis or cannabis-related products in under ten minutes,” he said.
Gray likens his vision for HERB to Uber, a ride-hailing company that doesn’t own cars, and to Airbnb, a lodging company that doesn’t own real estate.
“In the cannabis industry, the most valuable company won’t actually touch the plant, and that’s what we’re trying to do with HERB,” he said.
Competing sites in the sector include Snoop Dogg‘s marijuana media platform Merry Jane, and cannabis information site Leafly, which is backed by the private equity fund Privateer Holdings, according to Gray.
Gray acknowledges that cannabis-related legislation is a patchwork across different jurisdictions, making worldwide expansion a challenge.
“The laws across the world vary. [In Canada, recreational cannabis] will be completely legal by this time next year,” he said.
But Gray remains optimistic that cannabis usage will become more accepted in the coming years, and he predicts that the market will be larger than that of alcohol or organic foods in a decade.
“There’s an undeniable shift in consciousness,” he said. “Yesterday’s social stigmas become tomorrow’s social norms.”
Photo of cannabis leaf and $100 courtesy of OlyaSolodenko/iStock/Getty Images
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