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Crowdfunding Cannabis & herbalfund

Ryan Allway

May 10th, 2016

News, Top Story

The cannabis industry could reach $35 billion by 2020, according to GreenWave Advisors, but many start-ups face hurdles raising capital and investors have limited opportunities.

The most popular way to raise private capital for the past 80 years has been through accredited investor offerings. Using platforms like Cannafundr, cannabis investors making over $200,000 per year or with at least $1 million in liquid assets can view investment opportunities and purchase stock in private companies before they go public. These transactions still account for the vast majority of market when it comes to raising private capital.

In recent years, there have been a number of changes to these rules aimed at opening up the market for private investments. The first major change made back in 2013 was Rule 506(c), which is an exemption that allows general solicitation for investments. The catch is that companies selling stock under the new rule must take “reasonable steps” to verify that investors are accredited rather than simply taking them at their word.

herbalfund connects cannabis start-ups with investors under this new rule, opening the market to privately held opportunities. For investors, this means that they have easier access to companies that can reach out to them. For companies, this means that they can proactively reach out to investors and solicit them rather than waiting on the sidelines. The process occurs entirely online, which makes it easy to invest and track investments over time.

“At herbalfund, we saw the global cannabis market developing with creativity, excitement and great opportunities, we realized that there was another private investing revolution of crowdfunding taking place, and that intersecting these two has the potential to create huge success,” said herbalfund’s Avi Cohen.

herbalfund is currently adding new projects and seeking more before officially launching in July for funding. The platform will be open as of May for registration and uploading of projects and updates before the funding process begins.

Title IV of the JOBS Act – also known as the Crowdfunding Act – is the second major change that hit the market. Under these new Reg A+ rules passed in June of 2015, start-ups can raise up to $50 million from the general public. While it still costs start-ups $50-100,000 to audit their financial statements and make regulatory filings, the process is significantly cheaper than a reverse merger, SB-1 transaction, or traditional IPO that can cost millions of dollars.

Med-X Inc., a provider of all-natural products through its patient cooperative, became one of the first companies to raise capital through Reg A+ back in December of 2015. The company used the StartEngine platform to raise $15 million in capital through the sale of 25 million shares of common stock at $0.60 per share with a minimum investment of 700 shares – or $420 in a nod to the industry that it operates within.

Investors interested in the cannabis industry may want to take a closer look at crowdfunding opportunities available on platforms like herbalfund. As more companies pursue this fundraising path, investors could see better opportunities in the private market than the public market, while companies could realize significant cost savings.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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