Cannabis Investor Sees Strength in Numbers

In 2016, the NFL Players’ Association reported that the average career lasts 3.3 years. Of those players, 78% would lose all their career earnings within three years of leaving the league. Matthew Nordgren would play just two years as a backup quarterback, but he wouldn’t go broke post-retirement. Instead, as the founder of venture capital (VC) cannabis investing firm Arcadian Capital, Nordgren and his team are helping grow the industry’s ancillary, or non-plant touching side, of the market.

Since launching in December 2017, Arcadian Capital has amassed a range of significant cannabis industry investments. The firm’s investment process is billed as being “predictable, scalable and profitable.” The company has had activity in numerous ancillary marijuana sectors, including tech services, media, e-commerce, consumer product platforms, agricultural tech (agtech), life sciences and supply chain, among others.

“We’ve had a lot of success, and there’s more work to do,” Nordgren said, adding that Arcadian’s leadership, comprised of professionals with institutional and family office investor backgrounds, is “desperately looking for quality” and often aligns with plant medicine and innovators advancing the space.

Nordgren says his unique experience performing at a high level as both an athlete and investor has given him a valuable perspective for overseeing Arcadian Capital’s growth.

With previous success in sports and entertainment VC firms, Nordgren may have the pedigree to do the same in cannabis. While possible, the firm’s founder doesn’t seem to harbor a desire to be seen as the best. Instead, his focus is on building up the emerging market in a communal fashion.

Going From Gridiron to Cannabis Investing

Since his college days, Nordgren knew he wasn’t destined for a Tom Brady-esque career in the NFL. He always focused on a future away from football, earning his bachelor’s in government and business from the University of Texas at Austin in 2006. While at UT, Nordgren spent five years watching and managing the game from the sidelines. He’d dabble in the pros afterward, playing stints with the Detroit Lions in 2006 and the Philadelphia Eagles in 2006 and 2007. Never starting a college or pro career game helped shape his perspective and business acumen. 

“You learn servant leadership when that happens,” he said of his career, laughing. “I think that makes for a great investor.”

From 2006 to 2017, Nordgren worked with several management funds, consulting firms and capital partners, as well as with other offices in Texas and California. He honed his investing expertise along the way, focusing his attention on sports and media assets. His first cannabis investment opportunity was with the cannabis publication High Times. With a foot in the industry, he began attending cannabis events to conduct due diligence. The research revealed just how ample an opportunity cannabis could be, all without ever handling pot.

“We started to see if there was an opportunity to invest in the growth of this industry by not touching the plant,” he said.

Ancillary Solutions Providers Can Sustain

Nordgren’s findings proved vital in convincing investor bases to join the then-new cannabis industry. By investing in ancillary companies, investors could see potential gains from the nascent cannabis market without the risks attached to cultivators, dispensaries, processors or other pipeline components.

This discovery led to early investments in companies the firm saw as the market’s solutions providers. Arcadian Capital’s early investments included data firm BDS Analytics (now BDSA) and cannabis software developer Baker Technology (now part of Tilt Holdings Inc.).

State-by-state regulations are another concern for plant-touching ventures. With each state allowed to make its own rules, cannabis-handling companies are subject to various regulations. US brands also need to obtain licenses to operate in each state. With ancillary products, companies don’t face the same level of regulatory scrutiny, or the need for multiple state permits. The lessened risk appeals to investors like Nordgren, who prefer companies that serve the market on a national level.

“They’re not dependent on one state or another,” he said.

In addition to providing national solutions, Arcadian sought out qualified leaders when choosing its initial early-stage investments. An emphasis was placed on companies led by passionate, high-character entrepreneurs with a history of creating solutions in other industries.

“I think character and passion are a big piece of that success because when you’re investing early, you don’t know as much,” Nordgren said.

Those intangible assets would prove critical in the cannabis space, where regulations are constantly changing. Companies had to provide solutions and show that they could do so for the long, winding haul of cannabis reform. According to Arcadian Capital’s website, companies must meet the following five-point criteria to qualify for their portfolio”

• An ancillary cannabis brand with a proven business model
• At or near the breakeven with plans to achieve profitability
• A proven management team with equity leadership
• A commitment to environmental, social and governance responsibilities
• A proven market leader within a specific vertical

The criteria remain the same, but investments now often go to companies in later rounds of fundraising, a natural step as the market matures.

“Now that we’re late stage, it’s a little bit more of a science than an art, but the early stage, there’s still some art to it,” Nordgren said of the firm’s slightly changing methodology.

Since launching in 2017, Arcadian Capital has continued to use its criteria to find various emerging market leaders. Standout investments include the now-Nasdaq-listed enterprise software Akerna; dispensary tech Enlighten; and supply chain brand KushCo.

The firm’s ancillary market focus means that, unlike plant-touching ventures, Arcadian isn’t as invested in the plant’s legalization from a business standpoint. National legalization isn’t critical to the firm’s future growth, but instead, seeing annual revenue continuing to grow 25% to 30% is. Nordgren was adamant in his support for improved plant-based medicine access through federal reform. When it comes to cannabis reform regulations, Nordgren says he’d rather see the correct parameters implemented than have legalization rushed across the finish line.

“I think we’re more in favor of it being done right than a rushed job,” he said, noting the importance of diverse representation and environmental parameters being part of reform.

All Hands On Deck

Seeking out emerging sectors and their solutions providers may seem like a strategy to gain a competitive edge. While undoubtedly true, Nordgren says Arcadian Capital’s approach isn’t about becoming the top firm. Rather, the goal is about collective market success for investment firms and the companies involved.

Rather than viewing other firms as “the competition,” Nordgren said Arcadian considers each participant a member of the cannabis community. Together, they can achieve a more prosperous industry.

“With strength in numbers, we accomplish the goal, and that’s to have these products available to more people,” he said.

Accessibility includes access to athletes, a well-known segment of the medical cannabis community. Medical cannabis has shown the potential to help athletes address a range of grueling mental and physical injuries. Nordgren is a board director for the group Athletes for Care (A4C), a non-profit advocating for further research, education and compassion around athlete health issues.

Cannabis serves as a central component in A4C discussions. In January 2022, Nordgren sat down with retired NFL athlete, advocate and cannabis entrepreneur Ricky Williams to discuss natural wellness and their forays into cannabis.

Nordgren added that while he does fit into the organization as an athlete, he believes his value at A4C comes as an investor hoping to help grow companies and plant access. He cited Arcadian’s “influence as a firm, as an investor in having the ability to create impact in that way” as his primary contribution.