Salveo Capital Re-Launches Cannabis-Focused Salveo Fund I
July 28, 2016
Chicago-based venture capital firm, Salveo Capital announced the re-launch of its cannabis-focused Savleo Fund I.
The fund’s primary investment space will be in early stage ancillary businesses that enable the legal cannabis industry and that are not subject to state regulations. Key investment areas will include financial, payment, and banking businesses, grow systems, agriculture and operations, software, digital and IOT, genetics, chemistry, and business services.
Salveo (which translates to “good health” in Latin) initially announced its debut fund in February of last year with a target corpus of between $15 million and $25 million.
At the time, Salveo president and CEO, Alex Thiersch said, “I want to bring more sophistication and maturity to the industry.”
Connected to the re-launch, Salveo also announced the addition of new team members that were chosen to strengthen the firm’s existing team through their wealth of investment, fund management, and due diligence experience.
Joining the firm will be Michael Gruber in the role of managing partner, Jeffrey Howard, also serving as managing partner, and Achint Prabhat who will assume the role of Director of Fund Operations.
Michael Gruber was a founding partner of Independence Equity, a venture capital firm with a focus on water, agriculture, energy efficiency and material science. He also founded Cornerstone Angels and its affiliate Cornerstone Opportunity Partners, which collectively raised $2.5 billion in capital.
Jeffrey Howard has 21 years of experience in the investing space; most recently as Managing Director – Global Head of Prime Services with the Royal Bank of Scotland. Mr. Howard led a team of 90 across North America, Asia Pacific, and EMEA, and managed a $50 million front-to-back budget.
The firm did not provide information regarding Achint Prabhat’s experience.
State-level legalization of recreational and/or medical marijuana has now spread to 24 U.S. states, with five more states voting this fall on the matter. This adoption is driving the sector to achieve greater recognition as a viable space for investment and growth. The legal marijuana industry is expected to see sales of $6.7 billion this year compared to sales of $5.4 billion last year according to ArcView Market Research, reports Market Watch, and if key states such as California join in legalization, sales could top $25 billion.
“The industry is losing its taint as a drug industry and is becoming a much more sophisticated market,” Scott Greiper, president of Viridian Captal Advisors, a firm that tracks the industry, told Fortune. 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 has been evident in the increased investment activity by a variety of market players.
In November 2015 the Canna Group announced the launch of Sugar Leaf Capital Fund I, which, like Salveo, will invest in early-stage, cannabis-related businesses that are generally ancillary to the production or processing of the cannabis plant, including businesses active in chemistry, science and genetics, business services, software, grow systems, payments and banking, and agriculture and operations.
Then, in June of this year, full-service legal cannabis management company, MedMen announced the launch of its $100 million MedMen Opportunity Fund, followed in quick succession by the July announcement by Seventh Point that its $750,000 friends and family round of fundraising closed oversubscribed. Meanwhile Florida-based Phyto Partners is in the process of building a $10 million cannabis-focused private equity fund.
Although the industry still faces distinct challenges including U.S. tax code regulations, a ban on inter-state commerce, a lack of financing from banks, and a need for high security, signs are pointing toward expanding legalization and liberalization of sentiment toward the business.
“The opportunity to be a market leader is wide open,” Troy Dayton, CEO of ArcView Group told Fortune.
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