If you’re looking to sharpen your social edge while making a buck or two, get in line: marijuana is flowering and Chicago venture capitalists have picked their first blooming cannabis startup.
HerbFront is a freshly-funded startup devoted to the legal cannabis real estate market and one of the newest members in seed-stage accelerator Elmspring’s second class of accepted startups, housed in the 1871 tech incubator. The companies, chosen based on leadership and scalability, received $20,000 in exchange for a six percent equity cut.
Minted in the Merchandise Mart, HerbFront compares to the ancillary businesses that sold picks and shovels during the Gold Rush and made a fortune. The startup connects cannabis entrepreneurs to qualified real estate owners, and supplies zoning and mapping tools to iron out the logistics.
With impending legalization of recreational marijuana on the tipping point, fervently backed in Illinois by Rahm Emanuel among others, many investors believe it won’t be long before the inevitable legalization of the drug will sweep the nation.
According to the Marijuana Business Factbook, the meteoric growth of the retail marijuana industry (outpacing even the smartphone market) could reach sales of more than $8 billion by 2018. Others, including cannabis investment group ArcView even estimate up to $10 billion. Should marijuana become legal nationally, Harvard economics professor Jeffrey Miron, quoted on HerbFront’s website, projects revenue upwards of $20 billion.
That’s a lot of money for some greenery.
Though the effect of marijuana is still hazy—a recent Northwestern study cites chronic use of cannabis to brain abnormalities—proponents are insistent, and HerbFront isn’t the first of its kind. Perhaps most surprisingly, even funding titan Peter Thiel’s venture capital firm has made a multimillion-dollar investment in Privateer Holdings, a private equity firm investing exclusively in the legal marijuana market. One of these companies includes Marley Natural, a global pot brand launched by Bob Marley’s family projected to launch in late 2015.
Other startups in Elmspring’s class of five include CondoGrade, which grades the financial health of condominium associations; PeerRealty, which connects investors to real estate developers; Megalytics, a comprehensive portal for business risk evaluations based on real-time third-party data; and CampNative, a platform to book campsites around the world. All go through an intensive three-month program starting this fall with access to high-tech office space, mentors, and legal and professional services in preparation for an investor pitch day.
(Image via HerbFront.com)