Three months in the cannabis industry is a long time. And, especially in the last three months, it feels as though the market has shifted dramatically.
But what has this meant for venture capital?
Canopy Rivers Inc (OTC: CNPOF) (TSX: RIV) dove deep into data powered by Pitchbook to examine some big trends at the intersection of venture capital and cannabis.
Data shows that the amount of capital invested and amount of deals completed in cannabis-related deals has been steadily increasing since 2016. Notably, LeafLink’s $35 million Series B ranks among the top deals (by size) that took place between July and October. However, median deal size has dropped 49% compared to the third quarter of 2018.
Median valuations have increased 77% over the same period to $42.5 million, but over the long term, these valuations have gradually decreased alongside median deal size.
“We see these changes as encouraging signs for the cannabis industry as the industry shifts away from high valuations that induce volatility and diminish long-term value,” Narbé Alexandrian, President and CEO of Canopy Rivers, told Benzinga.
“While the data shows that Canada and the U.S. continue to drive the majority of venture capital deal flow, it also suggests that more activity could flow to European cannabis markets in the near-term.”
Images by Canopy Rivers.