One Of Silicon Valley’s Biggest Firms Now Investing In Marijuana

BN-FP627_Marley_P_20141118163507Peter Thiel is one of the biggest names not only in Silicon Valley, but in the investing world. Through Founders Fund, the investment firm he created, he has backed a number of superstar companies such as Facebook, Airbnb, SpaceX, and Paypal (which he founded). And on Thursday (January 8), he has officially given his multi-million-dollar support to a marijuana company.

Founders Fund has joined a funding round worth $75 million for Privateer Holdings, a company known for selling cannabis through its subsidiary Marley Natural. The investing firm has not disclosed exactly how much it has invested, but has described it as “multi-millions” of dollars.

The Series B round that Founders Fund has joined has so far closed more than $50 million, and will officially be closed in a few weeks. But already, this is a big boon for Privateer Holdings, which now becomes the first in the industry to secure this large institutional funding.

Privateer Holdings is primarily known for Marley Natural, which partners with Bob Marley’s family to offer recreational marijuana. The company also operates Tilray, which is a Canadian mail-order service for medical cannabis, and Leafly, a directory for marijuana dispensaries. Both are expected to turn a profit this year, with Tilray having shipped 35,000 packages in 2014 and Leafly having four million unique visitors a month.

It was Marley Natural, however, that brought Privateer its biggest exposure. The announcement that it has partnered with the Marley family has alone garnered the company two billion media impressions and instant brand recognition. It has also made it easier for the company to recruit talent and form partnerships.

But it has not always been easy for Privateer. After its founding in 2011, co-founder Brendan Kennedy spent some two years pitching to 500 investors. The company struggled and scraped together $7 million from high-valued individuals and family offices in its Series A funding round.

Privateer has made some big moves since, particularly the partnership with the Marleys. It also helps that in 2015, more investors are open-minded about weed, thanks in large part to the resolve of entrepreneurs. Founders Fund itself became comfortable with a cannabis investment after Privateer stayed diligent with them for a year and a half, says partner Geoff Lewis. He adds that Privateer impressed him because of how it delivered on its promises and how it navigated the complicated legal environment.

Indeed, venture capitalists and investment firms have been wary about marijuana companies because even though the herb is legal in some states, it is still illegal for the federal government. The $35-billion industry continues to burgeon, however, and major investment news like this one moves not only Privateer Holdings but the entire industry closer to legitimacy. Kennedy hopes that his toughest customers – investors and banks – will take notice.

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