Tech VC Funds Weed Industry Startup Privateer

Marijuana growers once invested in tech, now tech returns the favor

2 min read

Tech VC Funds Weed Industry Startup Privateer
Photo: Alamy

Back in the 1980s, solar panels were really expensive. So expensive, they didn’t make sense for most companies (forget homeowners, the day when an average person could afford a solar panel on his roof was a long way off). That is, they didn’t make sense for anybody except for one set of entrepreneurs—the marijuana growers.

The solar panels these businesspeople invested in to power their greenhouses kept the solar panel industry alive while the technology slowly crept down the cost curve. I’ve heard from today’s solar industry leaders (not for attribution) about the days when paper grocery bags full of cash made up much of their revenue streams. I’m not the only one who has heard these stories; the Huffington Post reported that Dave Katz, founder and president of AEE Solar, one of the largest distributors of solar products in the United States, told author Nick Rosen that his solar business “was entirely dependent on pot growers for the first few years.”

And now, it appears, the tech industry is returning the vote of confidence in a nascent industry. The Founders Fund, headed by PayPal alum and early Facebook investor Peter Thiel, made a “multi-million dollar investment” in Privateer Holdings, according to an announcement last week. Privateer has been starting, acquiring, and investing in marijuana related companies since 2011. The Founders Fund investment is part of a Series B round that, in addition to earlier investments, is reported to bring the total capital raised by Privateer to $82 million. 

This is big news, because it’s the first time any top VC fund invested in a “cannabusiness.” Privateer so far is involved in three companies—Leafly (Yelp for weed reviews), Tilray (an online medical marijuana marketplace), and Marley Natural (a line of weed strains and related products endorsed by Bob Marley’s family). Geoff Lewis, a partner at the Founders Fund, told Wired that the investment is similar to the firm’s investment in Airbnb, that is, the business has some regulatory stuff to sort out, but that will happen.

The Founders’ Fund is used to investing in businesses that can take a long time to become established—like private rocket maker SpaceX and big data cruncher Palantir.

This news is a bit ironic, considering just four months ago Thiel in a CNBC interview blamed mismanagement at Twitter on the “pot-smoking going on there.” Thiel later backpedaled and told Business Insider that with the right business model “you could smoke a lot of pot and still have a great company.” Guess he’s counting on Privateer to prove that.

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