Peter Vogel, Entrepreneur, CEO of Leafwire
Peter is a serial entrepreneur, having co-founded several companies in the fin-tech/loyalty space. He jumped head-first into the cannabis industry a year ago and co-founded Leafwire, an investment platform specifically built to help investors meet cannabis companies who are fundraising. Peter is a thought leader in the cannabis entrepreneurship and fundraising space and has been published in TechCrunch, VentureBeat, Dope Magazine, and Entrepreneur.com, among others.
Peter is recognized as a fundraising and start-up expert has also hosted Leafwire Pitch contests in cities, nationwide including Denver, Miami, Oakland, Los Angeles and will be heading to Vancouver in early December.
As CEO and Co-founder of Leafwire, Peter has created a membership base that includes leaders from most of the top funds in the cannabis industry. The funds on Leafwire have already made more than $300 Million in cannabis investments.
EPISODE TRANSCRIPT
[00:00:01] You're listening to Thinking Outside the Bud where we speak with entrepreneurs investors thought leaders researchers advocates and policymakers who are finding new and exciting ways for cannabis to positively impact business society and culture. And now here is your host Business Coach Bruce Eckfeldt.
[00:00:30] Welcome everyone. This is Thinking Outside the But. I’m Bruce Eckfeldt, I'm your host and today's guest is Peter Vogel. And Peter is a serial entrepreneur has worked with many fintech and loyalty startups and has recently co-founded Leafwire and we're going to find out a little bit more about that at its investment platform specifically suited to investors in the cannabis space. And I'm looking forward to that conversation and hearing more about Peter and the Leafwire business and where they're at. So Peter welcome to the program.
[00:00:55] Thanks for having us Bruce. So why don't we start with learning a little bit more about you.
[00:00:59] So you've been a serial entrepreneur are you. This is not your first rodeo. When it comes to starting up a company. Tell us a little bit about your background how you got to be an entrepreneur or some of your experiences you've had. And then then we can get into life a little bit. Sure.
[00:01:10] So over the last 20 plus years I've been in the online startup space mostly in online advertising and marketing helping co-found in the lead variety different companies affiliate marketing companies advertising companies loyalty programs where people earn points online and got gift cards. So I've been in and out of about five different companies. We've had successful exits. I've had companies that have not had to run out of money as you know a lot of people have helped. We've raised millions from bases in Angel's family offices have kind of run the gamut of starting companies seeing companies succeed seeing companies fail raising money. But for me it's been primarily an online marketing advertising so cannabis is new to me about a year ago.
[00:02:04] Got it. And how did you get into cannabis like what was the precipitating set of events that got you into this industry.
[00:02:10] So a good friend of mine who is CEO of a company called simplify. Oh yes. Jordan you look at you interviewed in Jordan a while back. So the CEO of that company Mary and Mariah they said and used to be CEO of a company in the loyalty space online about a decade ago that we were in a similar kind of industry. Mary I got to be friends about 10 years ago just stayed in touch and about a year and a half ago we had lunch and he told me he had jumped into cannabis and what he was doing a symbol of fire and a group of investors that came up with this idea of four leaf wire and they needed someone to run it. So he wants me to quit my my job and jump right in the canvas and just start a company from scratch.
[00:02:53] Then I'm curious I'm always kind of a question I always ask people about you know getting into the cannabis phase how you know how is it for you kind of personally in terms of you know getting involved in a kind of US company. Was there any kind of family or social impact in terms of who would want to hang out with you or who wanted to or who didn't want to hang out with you.
[00:03:12] You know I think maybe I was a little spoiled because I live in Denver Colorado. You know it's been it became recreational legal back in 2012. So I mean it's literally been six years at this point that people have kind of been getting used to it and it's kind of each year it's kind of a little less of a big deal that people don't care. So me jumping in in two thousand the very end. Lacey right in the beginning of 2018 you know the the entire state was kind of already. I mean I knew lots of people that had jobs and cannabis there were lots of people who knew how much money there was. I knew investors so it wasn't really that big of a jump.
[00:03:51] Yeah all right. So and I think that the pattern or the trend that I've seen as you know folks that are in geographies and states that have had you know various forms of legalization for some time it's a much easier jump. I've spoken with folks that are in less kind of cannabis progressive states and it's it can be more of an impact on them personally when they make an eyeball sometimes they know it upfront sometimes they're surprised. But it is it is always a factor and I think it's a it's it's a nature of the industry as where we are sort of culturally and socially about about this about this industry and this particular plant product.
[00:04:23] So let's talk about fire. So what what. I mean I guess getting recruited into this what was interesting for you.
[00:04:29] I mean I'm from thinking you know as a serial entrepreneur. Like what were the things. What were the boxes that got tech for you in terms of you know this is something you wanted to get involved in. Why was it attractive.
[00:04:39] What I thought it was a really interesting concept because I had been involved with raising money for various startups and I mentioned I've raised millions of dollars for venture capital firms from angel investors from family offices. I've been involved in fundraising efforts many times. So I understood that it's hard it takes a while.
[00:05:00] The more help you can get the better. And once they start learning more about cannabis I learned that one obviously there's a little less money available right which makes sense because of the social stigma because the laws because of lots of reasons. So the pool of money is a little smaller that's available to cannabis entrepreneurs.
[00:05:18] And it's also very common that cannabis entrepreneurs are not quite as sophisticated or as experienced as some of their tech counterparts. And that's merely merely because for a lot of. People it's their first time starting a company. They haven't done it. They don't have a network. No they haven't. They don't have 20 investors waiting in a lot of times in tech especially nowadays. I mean the whole tech startup industry I mean it's been around since the 90s. For some people they've been in 30 40 years. It's a long timeframe. You talk to people in tech a lot. They're starting a company you know like oh it's their fourth company. You know they're going to go back to X Y and Z investors. Yes the times already yes. In canvas.
[00:06:00] It's you know someone's inventing the newest vape pen or a technology to power H R for cannabis or payroll or whatever. Everything's new. So typically a lot of these people are younger for some entrepreneurs so you have this this gap between you know one little less money and then this group of entrepreneurs who don't have the infrastructure or networks set up or ready but a lot of other people do. So there's this big gap. It's hard to raise money. It's hard to connect with people. Like how do you find the people. So that really intrigued me. And then it was a combination of the the team of people. So in addition to marrying and I mentioned the CEOs of the fire there was another investor Alan bank Yay. Who is on the board a new frontier data. 19 years on. He was on the board of Abu. We just had a big big outcome. So he's on the board of multiple different companies an investor and many more. In addition to the the law firm of the Center universe. Brian was sending Kristen Soderberg who helped write the laws in Colorado back in 2012. One of the first most credible experienced reputable law firms and cannabis. They were some of the first investors along with Alan and Mary. So I knew that I was coming in and joining a team of people who were actually old school you know respected cannabis professionals investors business people. So it wasn't just hey let's just leave this idea let's just start it. It was Hey here's a group of four or five people that have been in cannabis for 10 years invested a lot of money and they actually know what they're doing and they want to bring you in to do this.
[00:07:42] Yeah and I think it's like like any kind of investor or any kind of seasoned entrepreneur that's coming and I'm looking at you know what is the recipe for success. You know making sure that it's not only a great idea but you've got the right the right people in the right kind of network and stuff behind it.
[00:07:57] Good. So let's talk a little bit more about leaf wire and and what specifically is the goal like what what are you focused on creating in terms of helping with the investment matchmaking process. Like what role do you want to play and how are you looking at it from a model point of view.
[00:08:14] So we kind of serve a couple purposes in the industry. We started off with the vision of just being kind of like an Angel List type platform for cannabis and for people that don't know that Angel List does a Web site from the tech industry that basically creates a platform where you're accredited investors can meet startup companies that are raising money and that's very much focused in the tech space. So we wanted to create that same kind of platform where accredited investors could come on they could look at deals they could reach out to people that are fundraising and they could all connect. We've kind of realized over the last couple months that we're also reserving is kind of like a LinkedIn of cannabis as well as reality because everyone's not fundraising all the time. A lot of people come on the platform just like leaves and we read news feed people post news to load their company. People ask for help people post jobs. So it's really the whole business of cannabis. So whatever business needs you have it's all about connecting with people finding partners finding employees vets announcing their newest products and connecting with investors. So the initial concept is really very focused and just investing part. And we realize that hey there's a whole entire business there's a whole industry of people that need to connect and meet each other and fulfill multiple business needs. So it's turning more and more into kind of this platform that's serving all these different business needs for people.
[00:09:47] It's interesting because I think one of the dynamics I keep seeing playing out in this cannabis space is companies that are solving a problem that other companies would naturally solve existing companies wouldn't actually solve. But because it's in the cannabis space they don't want to touch like this idea of becoming like the linked end of the cannabis space you know to what extent do you find that platforms like LinkedIn are not serving the community either well or as well because of the dynamics of cannabis.
[00:10:17] And then so. So these kind of operators that come out like I think of like Yelp and I think what weed apps you know where it's like yelp basically said look you can't do anything with cannabis on our platform. It was like well OK I just got to start. Especially Yelp for cannabis. And it creates a situation where these kind of vacuums that end up getting created or companies can come in and fail. Do you see that as part of the dynamic that you're finding with far.
[00:10:40] 100 percent. It's interesting you asked that question because the whole reason I got brought in is the group of investors that I was working with had invested in simplify and simplify as a company that does compliance for cannabis companies. And there's plenty of other companies outside of cannabis to do the same sort of thing but nothing for cannabis. So they created that solution for a gap in the industry. Now several same investors also invested in work w York which does H R and payroll specifically advocates. And then you have companies like you know MJ Freeway which does pure systems and tracking and stuff like that that you know other places do but not in cannabis.
[00:11:21] So they were looked around for gaps in the industry that are fulfilled that are are solved in other industries. One of the big opportunities in cannabis is to look at what are the services that are being provided to the industry that are available in every other industry but not cannabis. And one of the ones they found is fundraising finding some platform some way to help people connect meet and raise money. So that really was the impetus to what caused leaf y to be formed is looking at what are the gaps in the industry that need to be filled.
[00:11:52] Yeah. And I think I'm seeing a lot of that kind of dynamic now.
[00:11:55] You know obviously or maybe not obviously but they'd be you know that's being driven by this whole issue of you know federal legislation and that is being is still federally illegal. What do you see as being the the shift in plate tectonics here when things go federally legal. I mean what's what's your stance on how some of these businesses in general but you know you're specifically how does the world change how does the map change for you once federal legalization assuming that it comes in some foreseeable future say it in the next five years. What do you see happening or what's the what's the strategy for you.
[00:12:28] Yeah. So what I think the the immediate effect would be a massive amount of people coming into the industry. So one you're going to have a lot of money and a lot of states. People already see dollar signs right. So once you're state what's the government loan no longer makes the legal year a bunch of these huge institutional investors looking for opportunities there is they're pouring money into different companies. I think there's gonna be a ton of consolidations that are buying up a lot of little ones. A lot of groups will start forming they'll go buy up four or five six companies and try to go public and some big private equity firm will bankroll the whole thing. So I think you'll see a lot of money pouring in and you're going to see a lot of you know angel investors all of a sudden individuals are going to say you know my for K is all in oil and gas and energy stocks like maybe I should look at cannabis now it's actually legal. Yeah I think you're gonna have a ton of people who all of a sudden are very interested and also you know the other side you're going to have people who have been in states where it's illegal that suddenly see opportunity you're going to have hundreds of new companies in every state start popping up so you're going to have lots lots more companies to start forming because suddenly they're allowed to do it in their state and they want to. They want to you know jump on the wave the initial the first year effect is going to be a huge amount of money pouring in huge amounts of investment consolidation and a huge amount of new companies. So I think for us there'll be a big boom. And obviously you know leaf why I would love for a big company to come acquire us like you would like.
[00:14:07] Billington given the company like an angel linked in any large networking company Yeah it seems to me the strategy for for a lot of a lot of folks now in this industry is it's kind of this can I.
[00:14:18] Can I get big enough and do my own roll up to combat the forces of the big companies that are going to come and want to go federal or can I carve out enough of an Asian value that it's easier to buy me in than it is to compete with me. So I think that seems to be our things are kind of playing out out the question as always when I figure if I don't really go in six months that's very different than if we do it in five years so you know part of what makes it interesting industry right now.
[00:14:42] So let's talk a little bit about the investor side because I think that there's a lot of nuances given the legislation given the laws about investing in the space. Me being an investor of the different types of investors would help us understand why this is a little. This isn't like just putting money into a tech startup and then what is it what are the considerations that you really need to have.
[00:15:02] Thinking about investing in the space you know a lot of things a lot of the newer investors seem more comfortable with looking at ancillary companies. So I mean obviously obviously you're familiar with I'm sure most of our listeners are you know the plane touching company is a non plane touching the last numbers I heard and these were probably a little old.
[00:15:23] So you know correct me if you know better but I think there's about 30000 licenses out there issued. States each state by state. Maybe maybe a little more.
[00:15:32] I think it's a little more of. Yeah I think that you're you're within six to twelve months of the licenses.
[00:15:36] Yeah OK. Thirty five forty thousand maybe something like that. Yeah I think that's what I heard. So that's plant touching companies. So those are companies that can either grow mu transport process or sell. So companies that actually take the plant that do something with it or sell it at most people accept it. No I hear it normally is there's about three to four times as many ancillary companies. Yeah I would be curious to hear if you heard doing different but that seems about right.
[00:16:05] I think there's you know for every plant touching company on a space there is probably about three to five. I would say cannabis based company that is not plant touching you know until our products and services around it kind of depends on how far you got on the product chain. But you know it's significant.
[00:16:18] Yeah. And you think about it's everything. Think about how many service riders one company has whether it's legal accounting tech development media you know cleaning security lighting.
[00:16:31] It just goes out of that.
[00:16:32] So I mean there's so many companies. Each one company needs to support it. So if you you know let's just use the number forty thousand forty thousand licenses and there's four times as many as one hundred and sixty thousand ancillary companies. And when you're investing in those companies you don't necessarily have to worry about state by state laws. You don't have to get your attorney doesn't spend as much time figuring out if you're investing how it's legal etc. state laws. I think one of the I found that especially the newer investors it's easier to jump into cannabis and invest in a non plant touching company and there's so many of them to it and they're also for a lot of people. These are very intuitive logical like you know everyone else obviously has experiences working outside of cannabis whether you're in advertising banking law you know logistics. So it's sometimes easy to find a company that makes sense to you were you. You might work in a technology company that creates widgets x y z and you you learn about a company that's creating some sort of technology for cannabis that's you know in the same world you're in somewhat.
[00:17:45] So you can kind of you can learn about it understand it analyze it and it makes sense to you you're growing you know on a facility with X amount of acres and this and that like if you're not a farmer you just kind of guessing like. Sure that sounds great. Right yeah.
[00:18:04] Investing in an industry that is at least tangential to what you do for a lot of people is comfortable and easy and doesn't require as much legwork.
[00:18:13] Yeah I think a smart idea that's kind of the advice I get for people entrepreneur is for founders who want to start a business and kind of us and everyone's like oh I want to I want to start and grow or I'm going to do a dispensary. And I was like why does it take. Take what you know really really well. So if you're a staffing company or you're a marketing consultant or you know how to do product development you know just just pivot that into the kind of space and find an opportunity to leverage those skills because yeah. I mean it's gonna give you a grounding that's gonna give you. And honestly the industry needs all these experts. I mean it's you know quite honestly I don't think we need anymore growers and dispensaries right now. We've got a lot of what we need are all the products and services around it that support those businesses so I can make sense in terms of what you've seen.
[00:18:53] So in terms of the investments themselves what have you seen in terms of the structure of the style.
[00:18:58] I mean are people doing. This is mostly equity equity positions are people doing debt is our blended investments here. What do you see as driving the investment side for this industry right now.
[00:19:08] You know it's most common for the ancillary type companies are definitely equity investments. Oftentimes it's a convertible note in the beginning whereas someone will invest and there'll be a devaluation is not set but oftentimes there's a cap that's not going to go above x. And if you you know invest early you get a 20 percent discount to whatever the valuation ends up being. That's pretty common. I would say equity just straight equity investments are pretty common. I hear occasionally about there's a lot of companies offering debt coming in and they typically want you know it's like a hard asset loan they want either some sort of real estate some sort of collateral something backing it up.
[00:19:54] And the problem most ancillary companies don't have a license. They don't have real estate they don't have you know a patent they don't have anything that has that value. So I think it's more and more common. You see some growers or dispensaries will do some of those that deals because they actually have a facility they have a they grow they have a dispensary or they already have revenue or they have a license or they they have something that can be can be used as collateral. So you see that a little more often I think for the plant touching companies but the non play and touching. Equity is much more common.
[00:20:31] Not make sense and in terms of how you've kind of modeling your business or the kind of product services that you've created. So your goal is to be kind of a matchmaker a conduit between investors and entrepreneurs and company founders who are looking to get capital into their business. What have you guys how have you actually done that. Just purely online I know you've got online stuff. Are you doing live events or are you doing or consultative more consultative things like what has worked for you in terms of actually fulfilling on that purpose.
[00:21:02] Yes we do. I mean obviously we have the online platform that's mostly like a self serve platform so we people go on and use it how they want and connect with each other and we hear anecdotally people tell us they met people they raised money X Y Z we're actually going to put together kind of like a testimonial type page to show some of that we're working on that right now. Other than that we have actually done events and I think events are really important in cannabis.
[00:21:28] The person person connection seems to be more important in cannabis than almost most other industries have been in meeting people shaking their hand seeing them time and time again really creates this sense of credibility and people start to know you and trust you. I think there has been in cannabis you know there's been good and bad actors right. There's been some people that kind of come and go pretty fast and are just in awe for a quick buck and they commit it out and so not everyone trusts you immediately when you're when you're joining the industry. You kind of have to prove yourself a bit because there has been a lot of years of people that have been in and out pretty fast these events I think are super vital to create those relationships to show consistency to really show people that you are.
[00:22:15] And so we've done seven shark tank style events over the last six months or so we've done like all across the country. We did one in Vancouver. We've done Miami. We've done San Francisco. We did two in L.A. two in Denver. This year we already have planned New York and may Boston shortly thereafter. I think we're going back to San Francisco for another one as well. So we will have three probably coming up the next three or four months that we're still kind of finalizing the dates and so yeah. So we've found that we can do about six companies and we'll do what we do. This is after you know a little bit of trial and error. We do three minute pitches and then three minute Q and A from the judges and we've got almost all these events. So we have five six judges. Crowds are typically about 100 to 150 people so there tend to be pretty well attended ends up being standing room only in most of them. But almost every single one we get. Managing directors of some of the biggest investment funds we've had Emily taxi from Poseidon find we've had to hear a remote teller from a hyper M tech.
[00:23:30] Actually we just added Jessica Billingsley CEO of MDA freeway. We've had the CEO work. We had a Brian was sent a founder of essentially cedar bird Matthew Nordegren from our Acadian fund and we have Evan Edelman one of the founders of Costa Baradei capital. So we've had a lot of the biggest names in cannabis these events and it's a great way to kind of for us to get to know them but also to let all the companies ringing also get to know all these CEOs and investment fund managers and just kind of bring the industry together. I think it's been a really good way for us to show that leaf wire kind of believes in the industry and we were helping the industry and we don't charge the companies to be in it. You know we don't charge people we're you know we're not we're not trying to make money from it we're just trying to bring the community together yeah kind of that network effect be the be the people that make the network sound smart.
[00:24:25] And in terms of in terms of your business model and how do you make money if you're not if you're not charging for the events and if you're not charging for people to kind of pitch in things like that like where where do you where do you take your cut. What is the what is a model for you in terms of creating a successful business.
[00:24:41] Yeah sure. So we are similar to kind of a LinkedIn type model where it's a freemium model meaning it's free for everyone to join and there's lots of things everyone can do for free. And then there's premium type features that people pay for. So for example where we're adding a job board where people can post jobs now we're asking a kind of a we're calling it we're calling it a marketplace but it's going to be kind of like a yellow page type listings where people can promote their companies and we're doing that because we we've literally was every day I have someone e-mailing me personally asking if I can recommend a lawyer in California who understands cannabis law you know like an accountant who knows how to deal with 280 or a bank or payment processing company that's. Comfortable canvas or hip. So when we get we get question this all the time and what we have right now is it's a news feed so people can promote their company but everything disappears slowly right to the courthouse. They go What. So the whole idea of a marketplace is having a static listing where companies can pay a monthly fee to promote their company. We're going to have a 50 different categories from technology like point of sale systems loyalty programs to to lawyers to account.
[00:25:57] Now back to shipping logistics packaging so all these categories people can put up their companies and then industry professionals who are trying to find someone love a place they can go look for it and contact them and that'll be monthly fee. We're going to have a couple other monthly fees that are similar to LinkedIn where you think of Linked In individuals pay a monthly subscription in order to see you know who's looking at their profile in order to send messages to people that aren't connected to them in order to use the you know the most thorough search functionality things like that. So it's like the premium levels of service. So we have four or five different revenue streams. Another one to actually get meshes is just advertising up on our platform or email. And you know it's inching to work right now. We just passed 7000 members. We have 7000 cannabis professionals regulations. Thank you. We're excited. It's been faster growth than we actually expected. And we'll be at 10000 by April. And so these are not consumers these are all industry professionals all working for Kendra's businesses and investors.
[00:27:03] So by the time we get to you know 10000 members we're one of the top three or four kind of marketing platforms out there. I mean you're looking at Marijuana Business Daily headlands which MJ biz on you're looking at someone like you know ganja producer does a newsletter cannabis business executive executive Cannabis Business Times. I mean once you get past a couple of those. I mean there's really not people out there that have scale and we're going to be at 10000 shortly so we're you know very shortly we're going to be in the top three or four biggest platforms to reach canvas business professionals. So advertising quickly became something much bigger than we really thought of in the beginning as we as we learned that there's it's hard for companies to reach other cannabis companies you know based on restrictions because of Google Facebook YouTube etc. Now you know so it's just not that many places to do it. So we just kind of unintentionally are becoming a big business media platform because there's not much else other.
[00:28:07] Yeah I mean I think that that's not an uncommon story for a lot of early stage companies. I think if they get into the business but the certain model and then they get started get some feedback they see traction and in different areas and they pivot and they address so I think that's not surprising.
[00:28:20] But it's always always kind of fun to hear hear where where things are working and how to leverage them. PETER That's great we're going to have time here. If people want to find out more about you about live fire what's the best way to get that information.
[00:28:32] One just to come on and join Leafwire. You know it's right now it's everything is completely free just join create an account you connect with thousands of other cannabis professionals so I highly encourage everyone to just come on and join and join our community. I mean we're really just trying to support the whole community and the whole industry and the more people the more effective it is. Come join us. And anyone that wants to reach out to me specifically my email is Peter@Leafwire.com and happy to communicate and get more information anyone who wants to chat and definitely welcome and even reach out to me.
[00:29:06] Perfect. I'll make sure that the link and the email and stuff is in the show notes so people can get easy access to that. Again Peter this has been a pleasure. Thanks for taking the time. I love the platform idea and I love the fact that you're bringing this community together. I think it's much needed and I've learned a lot.
[00:29:22] Awesome well thanks for having me. I appreciate it.
[00:29:25] You've been listening to Thinking Outside the Bud with Business Coach Bruce Eckfeldt to find a full list of podcast episodes. Download the tools and worksheets and access other great content. Visit the Web site at thinkingoutsidethebud.com. And don't forget to sign up for the free newsletter at thinkingoutsidethebud.com/newsletter.