Howard Schultz gave up his executive chairmanship of Starbucks two years ago. but after testing the waters for a presidential run – then backing away – he has apparently switched from coffee to cannabis.
Both Schultz and fellow luminaries NBA star Kevin Durant and rapper/media personality Snoop Dogg are investing heavily in the online cannabis ordering platform Dutchie.
Not just that, but Durant and Snoop are sinking significant cash into the Bend, Ore., startup for the second time.
Snoop’s Casa Verde Capital, Durant’s Thirty Five Ventures and Schultz have joined with Gron Ventures (another investor-returnee) plus lead investor VC firm Thrive Capital, for a $35 million Series B round for Dutchie. That follows close on the heels of a $3 million seed round and a $15 million Series A round. The total to date: $53 million for a company founded just three years ago.
No wonder CEO Ross Lipson sounded happy in a phone interview on Monday. “When your investors follow on with their investment – they invested in a prior round and continue to invest – it’s a really good sign. It shows the investors are aligned with your goals and your execution,” Lipson said.
“What this allows you to do, this capital, is to really build on this team, to hire top talent and [boost] the innovation to the product.”
The product at stake is Dutchie’s ecommerce platform for online cannabis orders. Dispensaries use the platform to process their products for delivery or pickup in both recreational and medical states. And consumers can visit the website themselves. According to Lipson, Dutchie works with more than 1,300 dispensaries in 25 states and Canada, performing an average 75,000 orders a day and chalking up $2.4 billion in annualized sales through the platform. Not bad for a startup that Lipson, as CEO, and his older brother Zach, as chief products officer, co-founded just three summers back.
Yet despite the big-name investors and mega millions raised, Lipson insists that he hasn’t given up that much in equity (he declines to disclose those figures). “It’s a business arrangement, of course,” he says. “Investors invest capital for equity in the company, [but] I can say it’s very aligned with both Dutchie, myself and the investors. I feel strongly that any business deal arrangement needs to be win-win, that we both feel this is a win-win for everyone involved.”
Apparently, the cannabis delivery (performed by the dispensaries only) and online ordering business is a big win-win despite the negative economic forces going on in general. Lipson credits his company’s timing. “It’s definitely a unique time and a very uncertain time,” he allows. “However, with the pandemic, we’ve seen a big consumer shift to purchasing products online in all industries; and cannabis is definitely an industry where we’re seeing consumer behavior shift from stores to online.
“Fortunately, Dutchie offers the tools that allow consumers to easily and safely order cannabis products online, and for dispensaries to offer a tool that keeps up with the times, offers a contact-less way to reach that dispensary. So it is uncertain times, it is a difficult time to raise money: However, I would say that Dutchie is in a strong position.” So strong, he says in response to a question, that a Series C round is not out of the question.
Despite that optimism, Lipson still describes the difficulties inherent in being a cannabis startup navigating the complicated and constantly shifting array of regulations out there. “It’s something we’ve been able to do up until this point, but we know that road is long and it’s not an easy journey, and we’ll continuously fight an uphill battle,” he adds.
Meanwhile, he’s confident that Dutchie is meeting its goals precisely because it’s remained uber-focused on its particular cannabis space even as other companies have pursued multiple opportunities — at their peril. That doesn’t make running a new company easy, Lipson says. Indeed, he likens his task to “running a marathon in quicksand – that’s how I look at running a startup.”