September 22, 2017

Front Range Biosciences (FRB), a leading agricultural biotech firm specializing in tissue culture propagation of high value crops including cannabis, announced it has raised $3 million in bridge round funding from a group of investors that includes Phyto Partners, Salveo Capital, Sand Hill Angels, HBS Angels of NYC, Halley Venture Partners, Anthill Ventures, and Canopy Boulder.

Nick Hofmeister, COO and co-founder of FRB, noted that this round echoed the company’s previous round in that investor interest surpassed what was expected, saying, “As with our last round, investor demand exceeded our expectations. We are very thankful to all of our investors for their continued support and advocacy of FRB.”

Founded in Lafayette, Colorado, FRB focuses on tissue culture propagation of crops at industrial scale to create efficiency and to lift quality consistency for clone production. Through this process, FRB propagates seedlings through cloning on a “nutrient culture medium of known composition”. By doing so, FRB eliminates numerous operational challenges faced by cannabis cultivators including disease, lack of consistency and inability to achieve scale.

The company also employs Next Generation Sequencing technology with their varietal improvement program to create a map of cannabis genetics. This service enables producers to target and develop the most commercially applicable and desired cannabis traits in their stock, including disease resistance, oil and resin yield.

California Bound

The company plans to use the funds from this round to support the scaling up of its technology and processes, and its expansion into California and other U.S. states that have legalized marijuana.

“With the rapid growth of the commercial cannabis industry, there is increasing demand for improved cultivation practices for large-scale grow operations,” said Dr. Jon Vaught, CEO and co-founder, in a press release. “We plan to use our recent funding to scale our processes and keep up with this demand, while expanding into new cannabis markets.”

North American consumers spent $6.9 billion on legal cannabis products last year, according to market analyst firm AMR. Of this total, California represented more than 30 percent of the market, with forecasts that the state will see more than 20 percent annual growth.

Furthermore, on a national level, New Frontier Data, a cannabis market research and analytics firm, predicted that two dozen states will have fully operational medical marijuana or recreational marijuana markets by 2025, with California accounting for more than a quarter of the country’s total sales, reported The Cannabist.

“The industry is losing its taint as a drug industry and is becoming a much more sophisticated market,” Scott Greiper, president of Viridian Capital Advisors, a firm that tracks the industry, told Fortune in July 2016.

The advancement of cultivation systems and supply chain technologies, as well as research and development into new strains that could aid in the treatment of various health ailments, are providing more credibility to the market and capturing the attention of seasoned investors, Greiper told Fortune.

This is the exact intersection where FRB’s technology will make a difference in the industry.

“The cannabis industry is transforming, and science is playing an increased role in finding better techniques for cultivation,” said Brett Finkelstein, managing director at Phyto Partners. “We believe FRB is on that path. They have a defensible and enduring competitive advantage, as well as unique processes that set them apart. In the cannabis industry, and especially with FRB, we see market leadership in this niche growth vertical. The team at FRB will continue to make great strides and provide the industry with their much-needed processes.”

However, it was not just the company’s position in regard to being able to capitalize upon the trajectories evident in the legal cannabis industry, but as is the case in any agtech startup, it was the company’s team that attracted capital.

“FRB has all of the right pieces for a successful business – a stellar team, clear differentiated offering, early customer validation, and a rapidly growing pipeline. However, what attracts us the most to FRB is the management team,” said Finkelstein.

Micah Tapman, managing director at Canopy Boulder agrees.

“The cannabis industry raises a number of challenges for all businesses so the quality of the leadership team is of paramount importance when evaluating investment opportunities. We have reviewed well over a thousand deals and FRB stands out as the single most promising company because it combines intellectual property development, strong cash flows, executive vision, and operational expertise. Simply put, this is a great opportunity and we are proud to be a part of the team.”

-Lynda Kiernan