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Filing with the Securities and Exchange Commission this morning, the company disclosed it has closed $2.32 million of a $25 million round of funding. According to the filing, the new capital comes in the form of debt and options contracts which would grant Leafly’s creditors the right to acquire company securities at some unspecified date in the future.

附近上门 News reached out to Leafly for comment, but did not hear back prior to publication. This article will be updated when we hear back.

Leafly was founded in March 2010 and was acquired by cannabis-focused private equity holding company in December 2011. It’s unclear how much capital Privateer Holdings invested in Leafly over the years, but the firm has raised from its financial backers including Peter Thiel’s .

Leafly was spun out of Privateer Holdings in February 2019 and is once again an independently operating venture. The new capital comes at a time when Leafly is trying to pare down expenses as it finds its bearings as a rapidly-growing company under new leadership. took over as Leafly’s CEO . Prior to Leafly, Leslie most recently led Amazon Prime Video’s global expansion efforts as the last act of his 20-year tenure at Amazon.

Last week, Business Insider obtained and Leslie sent to the company, notifying current employees of a hiring freeze and requesting that travel that is not business critical be either cancelled or postponed. Leslie wrote that the company has doubled in size, adding 150 people to its organization in the past seven months, since he took over as CEO.

Headquartered in Seattle, Leafly will not be flying satellite staff in for its end-of-year holiday party. Remote staff and those working in Leafly’s local offices will instead be flown out for the company’s summer party next year, and each local office will host its own holiday party. For the holiday season, fully-remote employees will “be receiving a gift certificate to take yourself and a friend or significant other out for dinner.”

Leafly may be putting a pause on hiring for all but the most important engineering and product roles right now, but there was no word of layoffs.

Competition is fierce in the legal cannabis recommendation business, which has grown rapidly as more states opt to legalize the plant and its derivatives. And it’s looking like a winner-take-most niche in the industry. Leafly’s principal competitor, , (approximately 25 percent of headcount) two weeks ago.

Though most states allow for some type of cannabis use, most often on medical grounds, expansion of the market has been somewhat slow over the past year or two. THC-containing cannabis remains federally illegal in the United States. Though the current U.S. administration is unlikely to liberalize federal drug policy, several Democratic challengers are promising to reschedule or fully legalize cannabis if elected in 2020 which would usher in a new wave of growth for the industry.

滨濒濒耻蝉迟谤补迟颈辞苍:听

But as the bud scene bubbles down nationally, , a cannabis retail management startup based in Denver, has raised a $23 million Series A. The round was led by , and . Other investors such as and participated in the round as well.

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, Flowhub鈥檚 CEO, pointed to location as one of the company鈥檚 strengths.

鈥淐olorado is ground zero for regulated cannabis 鈥� both medically and legally,鈥� he told 附近上门 News. 鈥淭here鈥檚 a lot of intellectual property coming out of the state that is shaping the way forward for cannabis legalization across other states.鈥澨鼺lowhub, founded in 2015, works with 700 customers across 11 different legal markets to make the retail process听 of purchasing cannabis easy.

鈥淧urchasing cannabis should be no different than walking into your favorite department store, selecting the right product for you, and then completing the transaction,鈥� Sherman said.

Using Flowhub, dispensaries can use handheld devices to scan consumer ID at the door. From there, 鈥榖udtenders鈥� can verify the data and use a Flowhub point-of-sale Cashier application to complete a transaction.

Budtenders have access to demographic data and purchasing history to help customers have a personalized experience. The company integrates with other industry tools and partners,

鈥淥ur ability to integrate with […] other cannabis industry partners and tools allows cannabis businesses to stay on top of crushing compliance mandates and to create the ideal cannabis tool stack that best serves their business needs and delivers the best consumer experience,鈥� Sherman said.

As cannabis is under further crackdown by local governments, the venture scene has reacted by making slower, more stable bets. In return, cannabis-related startups have needed heavier capital to combat regulation, compliance, licensing, and legal work.

The new raise from Flowhub signals to us that there are startups that are jumping in on this pain point, and taking on fixing up legal transactions themselves. Flowhub鈥檚 goal is more than just giving customers needed access, Sherman said, but also taking a 鈥渟tep toward ending cannabis prohibition鈥� as a whole.

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鈥淩egulation and compliance has brought on, in most cases, the need for larger amounts of capital from the start, which can be more difficult to come by,鈥� he told 附近上门 News. 鈥淓xpenses are higher for legal, licensing and compliance work that is now needed at the onset.鈥�

Regardless, those complexities have brought more mature investment options.

鈥淚n the early days, [cannabis investment] was mostly angel investors/high net-worth individuals, small family offices, and small cannabis-specific VC funds,鈥� Autera said. 鈥淣ow, you see larger and more sophisticated players: large established VCs and institutional capital, coming into the space.鈥� It means there are less people willing to make riskier investments, he added.

In this piece, we鈥檒l get into Autera鈥檚 claim of how the investment scene is maturing, and see how that impacts the ever-changing intersection of cannabis and technology.

A Budding Industry

As pointed out in our last pulsecheck on this greening industry, a cannabis company isn鈥檛 just one that handles the flower or bud; it鈥檚 the auxiliary businesses as well. Those include ventures that help with transportation, packaging, regulations, and more. For example, Cannalysis is an accredited cannabis testing facility.

With that nuance out of the way, let鈥檚 dive into the numbers.

According to 附近上门 data, funding for cannabis companies has slowed down dramatically from some super giant rounds from 2018.听Deal size has also decreased significantly. It is notable that private market reporting lags may account for the quarter-over-quarter decline.

But for a second, let鈥檚 turn back to Autera鈥檚 point about the rise of cannabis-specific funds. His company raised a $22.6 million Series A from after fundraising for eight months. He said that beyond capital, the company wanted an investor that 鈥渨ould be in our corner鈥� as the cannabis industry grows and evolves.

It鈥檚 worth noting that Snoop Dogg鈥檚 venture capital firm led the $1 million seed round in Cannalysis, .

Another investment fund that popped up recently is Vice Ventures. You can probably guess its focus from the title, but if not, it鈥檚 a $25 million fund to invest in untraditional verticals. Cannabis fits into that focus.

Vice Ventures, led by Catharine Dockery, is backed by Marc Andresseen and Bradley Tusk. Back then, we caught up with Kerin Law, the chief scientific officer of , which verifies cannabis products to make sure they are safe using DNA testing.

LeafWorks and Cannalysis are in a sector with blossoming interest; seven recent cases involving hospitalization have been directly linked to 鈥渃annabis cartridges purchased from unlicensed pop-up markets,鈥� according to Leafly, a cannabis news website.

Akerna Corp., a publicly traded cannabis company, has even teamed up with an anti-counterfeiting technology company,, to protect consumer safety.

鈥淵ou鈥檙e making a good investment because you鈥檙e able to get into the cannabis space [through] a genetic test, [and] you鈥檙e not facing as much federal scrutiny or uncertainty if you were a plant-touching company,鈥� she told us.

A Greening Path Forward

鈥檚 David Kutcher told me that while 鈥渞isk is inherently higher鈥� if you deal directly with the flower, without companies that do it, 鈥渢here is no cannabis industry at all.鈥�

Torian Capital is a private equity firm that invests in cannabis companies; the firm claims it is the largest 鈥渃annabis-only Private Equity Firm鈥� and has provided more than $300 million to emerging cannabis companies.

鈥淲hile [auxiliary businesses] may be the first to take advantage of growing interest from outside the industry in funding..there is also the risk that more established companies outside the industry enter their specific market area,鈥� which adds competition, he told 附近上门 News.

When reviewing deals, the firm expects portfolio companies to have a basic plan of execution, but beyond that, they also need a core understanding of cannabis regulations on a state by state basis.

Growing pains, especially as an industry matures, are common. Thankfully a little green can go a long way.

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That鈥檚 not exactly the plotline of a great science fiction movie. However, if you spend a lot of time reading seed funding data, it is the vision startups seem to be collectively bringing to fruition.

At least that鈥檚 where the money is going. A 附近上门 News analysis of North American startups 1 that have raised disclosed seed rounds of $200,000 or more in 2019 shows that certain sectors are getting a lot more investor love than others.

Fintech, in particular, is collecting an outsize share of seed dollars, an amalgamation of the rise of neobanks, crypto and AI. Other areas, including cannabis, agtech, real estate and security, are also big investment recipients.

Below, we look at the spaces that are generating the most enthusiasm from seed-stage investors, complete with lists and speculation as to what this all might mean, futuristically speaking.

Seed Investors Really Like Fintech

By far the biggest chunk of sector-focused seed investor money this year is going to, well, money. Startups offering tools for managing and moving money are attracting some of the largest rounds this year.

Altogether, startups tied to fintech and financial services pulled in a total of over $340 million. That鈥檚 roughly one-fourth of total U.S. and Canadian seed funding for 2019, per 附近上门.

Finance-focused rounds are also the most numerous. At least 137 known seed rounds in 2019 were in some form of fintech or financial services, per 附近上门 data (see ). That鈥檚 roughly 20 percent of all recorded North American seed rounds for the year. Funds are going to a broad array of startups, with some of the larger rounds running the gamut from an听 , to a platform, to upgraded tools.

What鈥檚 the draw? , managing partner at seed firm NFX, posited in a that there are a lot of factors at work. In particular, models for underwriting debt, insurance, and loans are becoming increasingly powerful thanks to AI and increased data availability. Startups can also compete with legacy companies with online tools that outperform in speed and ease of use.

Much of the enthusiasm can also likely be attributed to 鈥渟pray and pray.鈥� This is the popular but publicly disavowed seed investment strategy of making lots of bets destined for failure in the hopes that a tiny number of successes will pay back huge multiples.

In fintech and financial services, industry leaders generate huge valuations, both privately and on public markets, so the payoff for big wins can be enormous. For the S&P 500, about of the famed large-cap index is financial services, trailing only behind healthcare and IT.

Moreover, given the size of late-stage funding rounds, seed is still looking pretty cheap. All the 2019 seed rounds for fintech, for instance, aren鈥檛 too much more than funding to date for a single, hot, money-losing startup – – founded less than three years ago.

Here鈥檚 What Else Is Hot

So, enough about fintech. What other areas are hot for seed investors? Let鈥檚 look at some more standout sectors:

Cannabis: Startups in the legal marijuana space are still hot — but we鈥檒l avoid calling them smoking hot, as many are veering into drinkable forms of their favored plant. 附近上门 counts at least 17 North American cannabis companies founded in the past three years that raised seed rounds this year. (See .) They include , a marijuana marketing and compliance platform, , a cannabis beverage maker, and , a kit for growing plants at home.

Agtech: Agriculture is also proving fertile ground for seed investment this year. 附近上门 counts at least 25 companies in the space that made our seed funding list. (See .) Top funding recipients include , an automated indoor farming platform, , a self-described developer of 鈥渟trong and intelligent bees鈥� for pollination, and , developer of a robotic platform for agricultural work.

Real Estate: Real estate has been a hot sector for seed deals for a few years now, and investors continue to favor the space. So far in 2019, we counted more than 50 real estate-related seed rounds meeting our criteria, pulling in more than $100 million altogether (see .) Large funding recipients include , a developer of software for property managers, , a co-living startup, and , a platform for co-investing with wanna-be homeowners.

Security: Everyone could use a little more security, and seed investors intend to help us get it. So far this year, they鈥檝e poured over $130 million into more than 50 known seed rounds for companies in the digital security and identity management sectors (see .) Recipients of some of the largest seed rounds include , a cryptographically protected digital wallet, , a provider of real-time attack prevention, and, a developer of software to detect gun threats using camera images.

What Does All This Say About The Future?

It鈥檚 probably not advisable to spend too much time forming opinions about the future based purely on seed funding data. Nonetheless, here are a few trendlines.

Machines are getting smarter, and so are bees. People are getting more convenient options to enjoy a chemically altered mental state. And there are a lot more ways to move around our money and assets, even if we鈥檙e not actually getting wealthier.

It doesn鈥檛 look like the utopia that technophile futurists talk about. But on the bright side, there are worse things than cannabis and quick loan approvals.

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Current investors London-based as well as U.S.-based firms , and also participated in the funding alongside . LeafLink has now raised a total of $51 million since it was founded three years ago, according to the company.

Its first raise was a $3 million seed funding in early 2017, led by Lerer Hippeau. Today, LeafLink鈥檚 e-commerce marketplace connects more than 1,200 licensed cannabis brands to over 3,500 cannabis retailers and it has facilitated more than $1 billion in annualized orders.

Dispensaries use LeafLink to order inventory from multiple brands and the company also offers vendors services such as order management, customer relationship management (CRM), inventory tracking, and customized reporting.

The company charges a $299 minimum monthly subscription fee for that software. That makes LeafLink an SaaS startup, or looking at its cannabis focus, more precisely a vertical-SaaS startup

Growth

The New York company said it plans to use the new capital toward speeding up its expansion roadmap and toward improving its technology. It also says it鈥檚 begun 鈥渁 massive recruiting effort鈥� to hire in both its New York and Los Angeles offices. Currently, it has more than 65 employees.

LeafLink in particular is also eager to scale its LeafLink Financial unit, a payment and credit management solution it created for cannabis retailers and brands. So far, the service is live in four states in the US.

For context, many companies focused on cannabis marketing cannot access traditional banking resources. This forces many companies, operating legally in the space, to use cash more than they otherwise might. If LeakLink can provide better banking tooling to cannabis companies currently locked out from regular services, it could improve their operational efficiency.

The company launched in Colorado in 2016 with Zoots as its first brand and with $40 million in annualized orders. By August 2017, LeafLink had reached $100 million in annualized orders via its platform.

Others In The Market

LeafLink is not alone in raising capital as a cannabis-focused startup. The 附近上门 graph below has nearly 700 investments into cannabis companies recorded.

A few, for context. raised last month after . The company deals with delivering 鈥渨holesale cannabis鈥� to individuals at a discount to market pricing. And, sticking to recent investments, raised , also in July, helps folks find the correct cannabis products for their needs.

But the most interesting among the recent cannabis-focused venture rounds that we came across was another software-focused investment. raised a Seed round earlier this week, a from . The capital was invested into a company that 鈥済ives cannabis business owners the power to manage and optimize their operations while complying with regulation standards.鈥�

Investments in the space are going up. In April, we reported that funding for cannabis companies more than doubled from 2017 to 2018 with more than $1.3 billion directed toward startups and other private companies in the industry last year, according to 附近上门 data.

M&A activity also seems to be taking place. In March, Holden Page covered how Arizona-based , a publicly traded company with dispensaries in many legalized states, acquired , a Chicago-based operator and grower of Cannabis, for $850 million.

Clearly, there are several cannabis startups raising cash that are moving beyond the flower and into software. The fact that these startups are actually getting funding tells us that innovation, within a highly regulated industry like cannabis, is welcome.

Illustration: . Data and charting: .

, maker of cannabis vaporizers, is in the process of raising more than $400 million in a funding round that could value the company at about $1.3 billion, The Information on Monday.

The publication said it saw a presentation that PAX had put together for investors which showed that the San Francisco company was looking to only raise $150 million. PAX apparently revised its target 鈥渁fter encountering strong demand from investors who wanted to contribute more,鈥� The Information reported.

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The increased interest in the company is likely due to investors betting on the fact that marijuana will be legalized for recreational use. PAX, in particular, estimates it will notch $113 million in revenue this year with potential for that to grow by more than ten times by 2023, according to The Information.

So far, PAX has raised a total of 听and counts , , , and among its backers. It $20 million just last October in what CEO Bharat Vasan to Bloomberg as 鈥渁 deliberately small round.鈥�

The goes back to 2004 when and , as Stanford grad students, began developing an e-cigarette prototype out of foam. They ultimately formed an e-cigarette company called . Ploom鈥檚 ModelTwo product was acquired by Japan Tobacco International in 2015. The duo bought back JTI鈥檚 stake in their company and renamed it , of which e-cigarette company was ultimately spun out. In December, we wrote about how reports that Marlboro maker Altria Group Inc. was going to take a 35 percent stake in JUUL . As such, Bowen and Monsees were set to become .

In general investments in cannabis-related startups have picked up steam in recent months. In February, marijuana producer and distributor closed on in what was touted as for a U.S.-based cannabis company.

In January, San Jose, California-based announced it raised $75 million in an 鈥渙versubscribed鈥� financing. What made that round interesting were the investors. Both , former CEO of Yahoo and Autodesk, and three-time Super Bowl MVP and Pro-Football Hall of Famer , participated in Caliva鈥檚 initial round of funding.

Last October, I wrote about how a company that tracks and traces cannabis plants and products across the supply chain raised $50 million in a growth funding round led by global investment giant and rapper/investor .

Lakeland, Fla.-based was founded in late 2013 to serve Colorado鈥檚 cannabis enforcement division. (For those who didn鈥檛 know, Colorado was the first state to ). And finally, last June, our own Savannah Dowling put together a list of the 鈥渢op 10 cannabis startups with the most green.鈥�

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The deal marks a milestone for cannabis that鈥檚 gone capitalist. It is one of the largest known consolidations of marijuana companies in the United States, giving Harvest Health 鈥渢he right to operate up to 200 facilities across 16 states and territories,鈥� according to .

The deal is also notable for the potential impact it could have on private startups. Venture capitalists are notoriously motivated to disrupt the status quo, often flouting regulations in pursuit of growth. Yet cannabis startup investment has remained mostly muted due to its status as an illegal federal substance. However, as the narrative and laws around cannabis usage and distribution changes, the potential for returns is likely to become more attractive.

Verano, according to 附近上门, raised a last October, likely returning a significant sum to its known investors and in its sell to Harvest Health.

The deal marks at least the third large cannabis-related deal since the start of 2019. Last month, we reported on marijuana producer and distributor closing on n what was touted as for a U.S.-based cannabis company. In January, San Jose, Calif.-based announced it had raised $75 million in an 鈥渙versubscribed鈥� financing that included participation from , former CEO of Yahoo and Autodesk, and three-time Super Bowl MVP and Pro-Football Hall of Famer .

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It tops from last July.

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New York-based private equity firm led Flow Kana鈥檚 latest round for a second time as it also headed up the company鈥檚 $22 million last July. Unnamed private investors also participated in the latest financing, according to a Flow Kana .

鈥淪ince our initial investment, Flow Kana has continued to execute on its mission of developing a robust and inclusive California cannabis supply chain,鈥� said , a principal at Gotham Green Partners, in the听press release. 鈥淲e are excited to participate in this recent raise, which will enable the company to鈥roaden its reach and message across the state.鈥�

Redwood Valley-based Flow Kana is already considered to be one of the largest legitimate cannabis distributors in California. The latest financing will be used to 鈥渄ouble down on the supply chain strategy and allow Flow Kana to expand into other categories,鈥� CEO told . 听The company is focused on the Northern California region as it prepares for eventual federal legalization, according to the Business Daily.

Five-year-old Flow Kana distributes sun-grown organic cannabis from small craft farmers. The company has said it aims 鈥渢o transform cannabis into the world鈥檚 first fully sustainable agricultural product, advancing a farming ecosystem rooted in transparency, integrity, and shared equity.鈥� Originally from Caracas, Steinmetz previously built and sold a Venezuelan national food marketing and distribution company and worked as an investment analyst at Merrill Lynch as well as a data analyst at NASA鈥檚 jet propulsion laboratory, according to his 附近上门 profile.

鈥淲e strongly believe the cannabis industry is a catalyst for social change and are grateful to have found investors and partners aligned with this vision,鈥� Steinmetz said in the company鈥檚 news release.

Flow Kana said it is also on track to complete the buildout of its manufacturing operations at its Mendocino County headquarters, The Flow Cannabis Institute, which opened processing and white-label services last . 听听

The raise marks the second large cannabis-related funding announcement in 2019 so far. In January, San Jose, California-based announced it had raised $75 million in an 鈥渙versubscribed鈥� financing that included participation from , former CEO of Yahoo and Autodesk, and three-time Super Bowl MVP and Pro-Football Hall of Famer .

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