Funding in the Cannibis Industry
Hi everyone, I have a long shot question, but I thought I'd float it to see if anyone can give me some guidance.
My brother lives in Southern California and is a chemist by trade. He and a former colleague (also a chemist) are trying to start a cannabis testing lab. It seems that's the bottleneck of that industry in each state it's been legalized. They've formed a legal entity, retained an attorney, have a pitch book, business plan, etc. They are well credentialed as chemists.
They are looking to raise $1 million (while making $100K contribution each on their own) to get started. They've been talking to individual prospective investors, but they are already behind schedule for when they wanted to launch.
I've tried to give them advice, but this is not what I do, and I have zero knowledge of the cannabis industry (it's not legal in my state).
I feel like they are way hung up on giving away too much equity, but WTF do I know. Does anyone on here, by any chance, have any insight, comment, or could point me in the right direction?
For what it's worth, their business plan seems viable and lucrative. They really think they are going to raise $1 million by giving up 10-20% of their company, and I just don't see it. Profitable, sure. Great IRR if it works, yes. But it's a lab, not the next Facebook.
Thanks in advance for any help. My apologies if this is a whacky post. Trying to help family is touchy and I'm trying to stay neutral.
Their cash flow must be like super high.
I see what you did there! :-D
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