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Peter Thiel’s Venture Fund Invests in Cannabis

Group shot of 3 men in suits from Christian Groh of Privateer Holdings company, who believe in investing in the cannabis industry.
Photo courtesy of Privateer Holdings

Economics

Peter Thiel’s Venture Fund Invests in Cannabis

Efforts to turn marijuana from taboo to mainstream have gotten a bolster as one of the world’s most successful venture capital firms has announced an investment with the world’s first private equity firm that invests exclusively in the legal pot industry.

Founders Fund, started by Peter Thiel, invested millions in Privateer Holdings, which is undergoing a round of Series B funding that could be worth more than $75 million. The exact amount of the investment hasn’t been released by the company, although over $50 million of the Series B round has been reported closed. Thiel is a co-founder of PayPal. This is the first time that an investment firm has placed money directly into the cannabis commerce.

Founders Fund made its name by being early investors for some of the most innovative companies.  Investment ventures with Facebook, AirBnB, Spotify, Lyft and Space Exploration Technologies Corp, a space transport company started by Elon Musk, enabled it to procure $1 billion in investment money in 2014. Geoff Lewis, a partner with the firm, became interested in the weed industry in 2013 after a close friend living in California was diagnosed with an illness and subsequently prescribed marijuana as treatment.

In an interview with Fortune.com , Lewis stated that Privateer fascinated him by not only navigating a field where people were looking for a “quick buck” or were “at some point operating illegally” but also by doing exactly what the company said it would do.

“Privateer Holdings has emerged as the market leader in legal cannabis, which we believe will become a massive industry within the next decade,” said Lewis in a statement from Privateer Holdings website. “We’ve been evaluating the cannabis industry for several years and we haven’t seen another company that comes close to Privateer Holdings.”

The funding acquired is considered landmark for Privateer Holdings because it not only became the best-funded marijuana company in an industry that’s estimated to be worth more than $30 billion, but it also found approval from established venture capitalists. Historically, larger firms have been cautious when investing in marijuana companies even in medically and recreationally legal states such as Colorado.

In a recent interview with the Daily Caller News Foundation, Leslie Bocskor, founder of the Electrum Report suggested that the investment from venture capitalist firm Founders Fund is a marker that the weed industry has reached a tipping point.

“It takes time to build a brand,” Kennedy says. “We skipped five to 10 years with that announcement.

Privateer Holdings began in 2011 after the company’s CEO Brenden Kennedy was able to round up $7 million after pitching the firm to over 500 investors. Nearly four years later, the firm operates several cannabis companies such as Marley Natural, Tilray, and Leafly. The firm has accomplished a list of firsts that no other private equity has, including launching the world’s first global cannabis brand and owning and operating the only federally-licensed weed cultivation facility. Tilray is currently seeking a license for a growing-operation in Uruguay.

 

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