Fundraising dos and don'ts Henry Finkelstein CEO of Cannabis Big Data has gained valuable fundraising experience from completing many rounds including, Friends and Family, Seed and Crowdfunding Campaign. He joins Dan Humiston to provide fundraising guidance. He also talks about how the proper use of data can help companies overcome most problems. To help cannabis employees to solve problems with data and become Most Invaluable Player (MIP) he's launching the first six-week Cannabis Retail Data Mastery course on April 28th. Produce by PodCONX https://podconx.com/guests/henry-finkelstein https://cannabisbigdata.co/ https://retail.cannabisdatamastery.co/
Fundraising dos and don'ts
Henry Finkelstein CEO of Cannabis Big Data has gained valuable fundraising experience from completing many rounds including, Friends and Family, Seed and Crowdfunding Campaign. He joins Dan Humiston to provide fundraising guidance. He also talks about how the proper use of data can help companies overcome most problems. To help cannabis employees to solve problems with data and become Most Invaluable Player (MIP) he's launching the first six-week Cannabis Retail Data Mastery course on April 28th.
https://podconx.com/guests/henry-finkelstein
https://cannabisbigdata.co/
https://retail.cannabisdatamastery.co/
[00:00:00] Dan Humiston: Today on raising cannabis capital. We are joined by Henry Finkelstein, the president and CEO of cannabis, big data and cannabis retail data mastery course. And our first three time guests, Henry. Welcome back to the show.
Henry Finkelstein: Thank you very much, Dan, it's always a joy to be here with you.
Dan Humiston: Great to speak with you too. And normally we're discussing raising money for cannabis, big data, but today I'd like to start off by talking about your fundraising experiences. And then I'd like to talk about your latest project, the cannabis retail data, or mastery course. And so for our listeners, if you want to learn more about cannabis, big data, if you came here to hear more about cannabis, big data, go back and listen to episode 77.
And episode one 14, Henry let's begin with fundraising, starting with your friends and family round. Can you walk us through your fundraising journey?
Henry Finkelstein: Yeah. Before we even hand raised, I did a lean methodology [00:01:00] approach doing three months of market validation, working with individuals to understand what their data needs are. If this even exists as a need in the marketplace. And we sold two contracts before we ever wrote a line of code. And I think that's key for any of the younger startups or entrepreneurs in the industry.
There needs to be a validation of the idea. Vis-a-vis actual transaction of dollars for value before trying to raise money. The days of selling the dream in cannabis are long gone. There needs to be proof of concept and the proof is in the dollars. So that's where we started after we completed those contracts and had some validation under our belt, we did the canopy Boulder accelerator program, where we got a very small chunk of changeand subsequently raised a seed round. With some larger institutional [00:02:00] investors based out of Toronto. And most recently we tried to do a a booster on the series seed, and I've got some funny stories from there,
I created a pretty rigorous pipeline. Of questions that I asked prospective investors to understand how serious they were. Because one of the things that I experienced when we raised our seed round was that I was spending inordinate amounts of time on fundraising. If I was working 50, 60 hour weeks, . Probably 40 plus hours were spent on investor conversations, scheduling, the dance. And that lasted for about six months. And it became clear that this was very unsustainable because even though I had co-founders. Our job as entrepreneurs is to build a business, providing value for our client, not doing the rounds with investors that doesn't actually move the business forward. It does if we can raise around, but [00:03:00] the success rate is so low from this side of the table, it felt like a waste of time.
And I say that with all due respect to the individuals that we spoke with, because they asked great questions and they helped us refine the pitch and work through the concepts and all that. But at the end of the day, when I was pitching investors, I couldn't. Pitch customers on the sales cycle.
I couldn't do my marketing to feed the top of our sales funnel. I couldn't even do product development to refine the product. So I had a better thing to pitch when we got in front of our customers. And so when I went back for my second round of fundraising, I tried to systematize this as much as possible.
We're process people. We are data people. So we. Got together and created a questionnaire that could create a matching algorithm internally to say, you are an investor, you have interests. We have certain things that we provide that we could add to your portfolio. Let's answer these [00:04:00] seven, eight questions, and we can see if we stitch together in a coherent, meaningful way. We had, close to 80 investors. That went through our questionnaire. And one thing that I realized very quickly throughout this process is that the vast majority of people that say they want to invest in cannabis, don't actually, they. Think it's sexy. They think it's fun to talk about with their friends over dinner price.
, but one of the very first questions on our questionnaire was how many companies in the cannabis industryhave you invested dollars in today and do something like 15%? And what I found more often than not when I was on calls with these individuals, is that they were looking to get educated about the marketplace through the entrepreneurs that they were quote unquote, doing due diligence on.
Dan Humiston: Okay,
Henry Finkelstein: And so I think that's a cautionary tale for the entrepreneurs out there. It is not our [00:05:00] job. To educate maybe investors that is a waste of our time. Any investor that expects an entrepreneur to educate them about the marketplace is being disrespectful to the relationship.
The sophisticated investors are all about the metrics.
They're all about how many customers, what's your market, penetration and monthly or annual recurring revenue. And really every conversation boil down to those two metrics on some level, are you making money? And if you're not, do you have enough customers to suggest that you will be soon?
And it's hilarious because part of our questionnaire was what is the floor of monthly recurring below what you will not invest in? What is the floor of number of customers below, which you will never invest and. Nine times out of 10. When I asked that question, there was a lot of hemming and hawing and it was okay.
Oh we don't have floors. And we don't really, and that's not how we, and that's not our portfolio philosophy either. It's okay, I have no [00:06:00] customers. Would you invest meat? No, of course not. Okay. I have one customer. Would you invest in me? No. Okay. I have 10. Would you invest in meat?
No. A hundred. Would you invest in me? Maybe so now we found our floor. Yeah. So . The biggest lesson I learned was to cut through the crap as quickly as possible and ask the six questions that I know.
We'll delineate whether this is meaningful to continue forward in this relationship, that old sales principle of yeses and nos build businesses may be sink ships.
Dan Humiston: Man. This listening to you as reminds me of why I really wanted you back on the show, because the information that you just shared in that briefs overview is so valuable. It's not about that eager puppy approach. That is, it's such a good characterization of what goes on. And many times it's more the other way around.
There are fewer entrepreneurs, there are fewer people with great ideas. There's a lot of people with money. You're the special one. And I think that's what [00:07:00] people raising moneyneed to be constantly reminded of that. Let's shift gears. We talked about fundraising, but I'm really excited about Unleashing the power of your cannabis data and from your website, it's apparent that you believed in just about every problem.
A company faces can be resolved with data. Can you just elaborate briefly on what you mean by that?
Henry Finkelstein: Yeah. So very often in the cannabis industry, we talk about data tools because the only relevant data is actionable data. If we can't use it, then heck what's the point. It's a waste of time and the key perspective there is that we need to know how to use the tool.
Now, if I put a hammer in your hand, Dan, but you don't know which end is the business end. You'll be sorely disappointed when you take a swing. And that's a dynamic that over the last five years of working in the cannabis industry, building data ecosystems for single store. Owner operators all the way up to very large enterprise companies.
We have seen time and [00:08:00] time again, across the industry that a lot of folks don't know which end is the business end of their data hammer. They don't know how to swing and in what direction, and that poses challenges for individual businesses for their success rates. That poses challenges for individuals and that poses challenges for the industry at large.
And I'll speak to those individually when it comes to a business, if they are not operating with best practices that are informed by the data in their company, they will lose the race in the long run there is a new breed of companies that is growing in the cannabis industry.
We see it particularly where outside individuals that are trained in other verticals and other industries are coming in with a degree of sophistication that the historical folks that have been in the industry for their entire lives just don't. Haveyet generally speaking.
And so if someone is coming in from rip curl to run a [00:09:00] retail store or from Walmart or from Amazon, you better believe that they're going to have a particular perspective on what retail optimization looks like. That is not the same as someone who started as a bud tender and knows no other world and has grown up entirely in a dispensary, professionally speaking.
from that perspective, the folks that have been at it for so long, the trailblazers are going to struggle. And we're seeing that with the wave of mergers and acquisitions, where deeper pocketed players are coming in and gobbling up underperforming properties. And the way to address that imbalance, that power dynamic from deeper pocketed, more sophisticated players to legacy operators is with data. When the legacy operators can master their data. Then they can play at similar higher levels of output , then the larger players.
And so when we think about. Problems at the store level things like we're not profitable, or I [00:10:00] can't pay my bills or I have too many products on the shelf for things that are related to the business
Dan Humiston: Okay.
Henry Finkelstein: data is so often the answer. Then if we zoom down to the individual, the person working at the store make no mistake.
There's a glass ceiling in the cannabis industry. And. That glass ceiling is related to the capacity of the individuals and the way that management perceives their capacity. And it's a dance between those two there is a dynamic where if your boss doesn't believe that you can do more than you can do, you're not going to get promoted and.
If you can't actually do or prove to your boss, that you can do more than , your current responsibilities, you're not going to move forward. And so often that comes up symptomatically as a culture problemthat looks like people not taking ownership that looks like no accountability.
That looks like unclear directives. That looks like a toxic workplace [00:11:00] environment where people complain all the time.But in fact can solve those because if I am empowered to understand what is happening in the store, and I can effectively communicate that to my manager
let me show you, let me tell you the story and let's collaborate on how we can change that story. What are the specific action items? What are the specific next steps that we can take to improve the outcomes that our store with the data-driven methodology that we can then validate by reviewing the numbers after the intervention has taken place.
Now that dramatically changes the flavor and context of the workplace. Now I have much more capacity I'm proving to my management that I can move forward. And they started giving me more at bats. because well, Henry seemed to do well this time. Maybe I should throw him this question.
Oh, he did well that time, maybe I should. And so it's this flywheel of career acceleration where. By proving, they are so critical to [00:12:00] the operations of how that business works. That management will do anything to retain them. Oh, and by the way, the MIP is the most invaluable players. They can leave at any point and have a job tomorrow. And the way to become an MIP is by mastering data.
Dan Humiston: I want to just jump right in here, because a lot of courses are designed for the CEOs orthe key decision makers, butyou've made it. So everyone in the organization can benefit from this six weeks online course.
Which I just think is. It's so important right now. , I don't want to jump too far ahead, but can you give us like an overview of what's involved during those six weeks and what type of topics that they can expect to cover?
Henry Finkelstein: Yeah, it's a six week cohort based course. So there are a lot of courses out there now where you pay your 50 bucks or a hundred bucks and you watch your three videos and call it a day. This is specifically not that. And the reason why is because datacan be complicated, it can be confusing.
And so it was really important [00:13:00] to me to create a safe container where people can ask questions in a vulnerable way and grow their capacity by learning from not just the person on the screen, the Sage on the stage, but also from their peers and colleagues to create that. Community and that coherent dialogue with other folks that are going through the same struggles.
So it's a six week based course. Each week covers a different topic, a different module. We cover things like product selection and strategy, inventory management, including vendor selection, customer segmentation, and understanding how to do cohort analysis. Marketing ROI and campaign organization, understanding benchmarks, and how to think about third-party data in the context of the store, and then zooming out more globally to forecasting budgeting and looking to the future of what is happening in the store.
And so we cover it from a very comprehensive perspective, going through [00:14:00] individual functional units, individual departments, so to speak. In the store from the supply side to the demand side from yesterday to tomorrow, from the bottom up to the top down and in each one of those modules, we think about data storybooks and data playbooks.
The storybooks are, how do we tell the narrative of what's happening in the store? What are the most common stories that we observe in canvas retail stores? And how can we prove out those stories and tell the narrative using our data today? The data playbooks are, how do we change the story? What are the specific action items, the specific next steps that we can do to change that narrative and then prove it out and validate it by running the storybooks again.
Dan Humiston: Okay.
Henry Finkelstein: That's what folks that come out of this. And then the last piece is there's a capstone project and the individuals that complete the capstone project will do a series of storybook and playbook analysis that they will then present to a panel [00:15:00] of former CEOs and individuals that ran dispensary's or currently run dispensary's and retail stores.
So that they can try to pitch their answer to someone that isn't their boss. Again, this safe container, where they can practice and try giving the presentation to the very tip top head of the company. And then the panel will say, I buy it. Let's pull those three levers and change the margins on our product selection
or I don't buy it.The last piece, just to round it out. Dan, is that the folks that do the capstone will become a certified cannabis retail data analysts. And I think this is huge to have a certification that's specific to data mastery so that those individuals. Can then prove in the marketplace, their capacity, not just with a badge that they paid for on their resume, although that is a signal, but with a specific portfolio piece, from their capstone project that they can show future [00:16:00] employers and say, I don't need to tell you how good I am with data.
Let me show you.
Dan Humiston: Yeah, on your website, you have a great quote. It's just behind every top player as a coach and a trainer, and that's just. Jumped out at me when I was looking at this, the different specs on your course where I could see that there was a lot of interaction. Like you said, it wasn't just staring at videos for three hours and then getting a certificate in the mail.
, we could go on a lot longer, but . We have to wrap this show up, but I have links to the cannabis retail data mastery course in the show notes. I also have links to cannabis, big data. If you want to take your company to the next level, or you're an employee and you want to become an MIP, check out the cannabis retail data course, because it's the course starts on.
April 28th. So we don't have a lot of time. go there today, check it out. Because like I said, it starts on the 28th, the first course, and I have a feeling Henry, you're going to get a lot of response to this because it's so needed. I [00:17:00] really appreciate you being on the show today.
Thanks for doing this.
Henry Finkelstein: Thanks. Dan it's such a joy to be here with you. And looking forward to the fourth time that we connect on the show.