- Trym is the latest cannabis-tech startup to close a major funding round.
- The cannabis farm management software company closed a $3.1 million seed round, led by 7Thirty Capital. The round included a number of cannabis-focused funds.
- Trym CEO Matt Mayberry shared the pitch deck he used to raise the funds, as well as the insights he employed to help him close the round.
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Venture funding for cannabis-tech startups that do everything from helping grow better pot to connecting dispensaries with customers has been red-hot in recent weeks.
Trym is the latest cannabis tech startup to raise money, closing a $3.1 million seed round on September 29. The startup's product helps cultivators optimize cannabis-grow operations as marijuana can be a finicky plant, Trym CEO and cofounder Matt Mayberry told Business Insider.
Trym did not disclose its post-money valuation.
The first $1 million of the round came from friends and family, Mayberry said. The rest of the seed funding, $2.1 million, came from a group of cannabis-focused venture funds led by 7thirty Capital and included Welcan Capital, Arcview Collective Fund, and Delta Emerald Ventures, among others.
It can be difficult for cannabis startups to raise money because marijuana is still an illegal drug in the eyes of the US federal government.
Read more: Cannabis startup Dutchie raised $35 million from Josh Kushner's Thrive Capital and Starbucks founder Howard Schultz. Here's an exclusive look at the pitch deck it used to close the round.
Raising money was "not a very expeditious process," Mayberry said. His team first started raising funds at the end of 2019 — right as the cannabis industry got hit by a capital crunch and investors got leery of new deals.
From there, it was straight into the pandemic. "We were honestly concerned that we were going to get everything lined up," Mayberry said.
There was a silver lining for Trym, though. As cannabis was declared an essential service in California, where Trym is based, investors started looking to the industry as a way to offset the losses they were feeling in other sectors, like software for travel companies or restaurants.
"Cannabis again became this really attractive investment opportunity," Mayberry said, and they ended up oversubscribing the round despite the initial challenges with fundraising.
A limited pool of investors in cannabis
Still, the pool of investors that Trym could tap was small, Mayberry said, given that the startup serves the cannabis industry. Most large venture funds won't invest in cannabis tech, even if the startups don't actually grow or sell marijuana themselves, because their investors have clauses in their contracts that prevent them from investing in vice industries like gambling, tobacco, and increasingly cannabis.
Mayberry said many of his friends, entrepreneurs in the broader tech space, had a much easier time with the entire fundraising process than he did.
Read more: The cannabis-tech startup Fyllo used this pitch deck to land $26 million. Here's an inside look at how it's using AI to shape the future of cannabis retail.
"So the minute you say that you are a cannabis company, even if you are a cannabis software company, you immediately limit the amount of venture funds that are potentially going to be interested in you," Mayberry said.
In other words, the large circle of investors interested in funding a software startup becomes much, much smaller — and the pitch has to stand out, given that there are not many other places to turn for capital, Mayberry said.
Here's the deck Trym used to close a $3.1 million funding round:
Trym bills itself as a cannabis farm management software startup.
Mayberry says many cannabis cultivators have increased in complexity in recent years without the tech tools needed to manage their operations.
Trym's software has three distinct parts: 1) Regulatory compliance, 2) Task and team management, and 3) Environmental monitoring and analytics.
"When you finish a harvest, you can actually look back and see what's driving the success of this harvest, or why wasn't this harvest wasn't as successful as some of the other harvests," Mayberry said.
With the fresh capital, Mayberry said his team is working on overhauling Trym's mobile applications and adding new technical capacities to Trym's core software, including more advanced forecasting and analytics.
Trym's team has experience both inside and outside of cannabis, Mayberry said.
Trym has operations in 15 states and is looking to expand into new markets.
Trym requested that BI not include information on the company's early results.
Mayberry says the market for cannabis farm management software could exceed $1 billion in the next four years.
Though there are many cannabis software startups, Trym says it occupies a unique position in the market.
In closing this round, Mayberry said one of the key things he learned is that "you need to run your investor pipeline like a sales pipeline."
Mayberry said it's sometimes useful to deliberately withhold information so you have an excuse to arrange a new phone call — or Zoom meeting — with a prospective investor.
"That's going to keep them interested," Mayberry said. "If they ask for financials, say 'we can schedule a meeting and go over them live.'"
"Use things that will get them back on the phone," Mayberry said. "Theoretically, they're going to be investing in you, not the business, even though the business is the reason they're taking your call in the first place."
"The more time you can spend with them, the more time you have to win them over," Mayberry said.
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