Today's featured Cannabis Investor is Alain Banker The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Angel Investor, Alain Banker. Produced by PodConX TWO12 - https://www.two12.co/ Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Alain Banker - https://podconx.com/guests/alain-bankers
Today's featured Cannabis Investor is Alain Banker
The Cannabis Investor Series Sponsored by TWO12 is back for the Fourth year. This year, the Series will feature eighteen of the cannabis industry's top investors, reviewing the previous 12-months and sharing their 2022 investment strategies. On today's episode Dan Humiston is joined by Angel Investor, Alain Banker.
TWO12 - https://www.two12.co/
Raising Cannabis Capital - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Alain Banker - https://podconx.com/guests/alain-bankers
RC CI4 Alain Banker
[00:00:00]
Dan Humiston: Today on MJ bulls, we are continuing this year's cannabis investor series sponsored by two 12 with angel investor, Alan Banqer. Alan. Welcome to the show.
Alain Banker: Thanks Dan.
Dan Humiston: I'm glad you could you could join us today because you take the cannabis investors series and you took a little different direction. Everybody that we've had up until now has been a cannabis VC, and you're an angel investor. So I thought maybe we'd get things started by asking you to explain the difference between an angel investor and a VC.
Alain Banker: Well, an angel investor is somebody that first of all is investing their own money. They tend to come in. Very early, everybody has their own theory, but usually after family and friends, usually after you set up a company and things are up and running, you've got some good ideas about where you're going to go.
You're building your management team. So depending on where you want to call family and friends, either the first money in or second money in behind [00:01:00] family and friends, and then we'll stay involved until VCs really kick in today. VCs have tended to come lower and lower into the food chain or earlier and earlier.
And so , there's VCs that, are also early stage. But even they will usually come in either after, or some of the smaller ones with angel investors. But the other difference is that VCs are managing other people's money and sometimes part of theirs as well. So , there are a little bit more institutions.
And, , with that comes taking more time, maybe just having a different approach. Angel investors come at all flavors, but they tend to be, less institutional and able to make quicker decisions. That being said, A lot of angel investors, especially more professional investors , do pretty thorough, due diligence.
And at the end of the day, when you're a [00:02:00] startup or couple of steps in, , due diligence, you're just trying to make sure that everything is legit and everything , is on the right track. Cause usually these companies, aren't a been around a long time, but you just want to make sure that you're not getting into something that might be little.
Dan Humiston: It's very diplomatic way of saying it. you mentioned. Professional angel investors. And I was just thinking, geez, that angel investor category. I mean, that is just such a broad statement. What's the difference between having somebody that does this day in and day out versus somebody that dabbles on the weekend?
Alain Banker: So, just a little background, I got into this, , in the late nineties, , when the tech boom started happening and I got together a couple of my friends and we created this organization called the New York angels. And a lot of the guys around the table were tech guys. Because I was fascinated by that.
But I didn't really know a lot about it. So we brought together a group of guys [00:03:00] and women, and we started looking at deals and I think in my mind, the biggest difference is that a professional does this in a systematic formulaic managed process versus just, kind of ad hoc.
This isn't just like, Hey, my college roommate is starting a company I'm going to throw in 25 grand, If he goes through all my steps, but I'll be much more rigorous that kind of quote angel investing is more friends and family and my cousins doing something I'm going to help him out , but my version of angel investing is. That, I work I'm part of a group called the New York angels. Although I do things a lot alone, New York angels do not invest in cannabis. So all my cannabis work has been alone. I was also at one part time, part of a group that is shifted a little bit, which is called Arcview.
So, that was also a professional, , angel group at w as one division of it [00:04:00] was. And so I like working with us. And having the rigor and the analysis, which makes it a little tougher for entrepreneurs. They've got to be more on their toes and really be buttoned down.
Dan Humiston: I think it's important though, because if they're going to bring out an angel investor, chances are, they're going to have another maybe series a and hopefully series B and so on and so on. So you might as well get your ducks in a row early on. And I've read in your bio that you like to be part of the organization, you'll like to roll up your sleeves and really provide the guidance, especially for a lot of these younger entrepreneurs, is that , pretty typical for most angel investors that they actually want to roll up their sleeves versus the VCs who says here's the money let's go.
Alain Banker: , yes, many do. It's kind of across the board and personally myself, I don't only invest in cannabis. I invest in early stage companies and, , pretty much across the board. So I'll tend to get more involved, [00:05:00] whether it's an observer seat. I'm not always crazy about going on the board because I'm very conscious of a director's and officer's insurance.
And. That sort of thing, but a either as an advisor , a board member and get involved and help I don't particularly like getting involved at the operational level, but sometimes that happens, but I tend to want to do that in areas where I have knowledge, where I can. Something other than just, Yeah, I know about finance.
So, that's what I'll do VCs, especially , the earlier stage VCs, they can also help. They can help a lot with introductions. They can help opening doors, but it's a different kind , of health,
Dan Humiston: Yeah, that's a good
Alain Banker: more institutional health. If you will.
Dan Humiston: Sure. Sure. And entrepreneurs are good at what they do, but they're not good at everything. And like you said, if you can provide financial assistance or helping them work through the next round, all that stuff is super helpful, especially for early [00:06:00] companies.
there's one common misconception that I. I think people believe that, angels usually do it by themselves. They're like lone wolves, but it's pretty common for, one guy to be the lead. And then, invite a couple of his other friends in on the deal.
Alain Banker: Yeah, absolutely. , since the late nineties, when I started was one of the co-founders in New York angels, a lot of really, really good angel groups have popped up all over the country. So wherever you are in the country, if you want to be an angel investor, There's probably an angel group in your area.
I'm a member in New York. I happened to live on Longboat key outside of Sarasota. And we have an angel group here too. It's called bridge angels and I'm a member of both and I work with both, but my view is that it's always helpful having other people. With you, when I see a company, even if it's in this industry, I know you always have a bias, you always have something, you like something you don't like, maybe it's based on your own [00:07:00] business, past experience?
And it's great to have people that give you counter views and say, oh Yeah.
You like That but did you think of this? Oh, you don't like that. But , look at this aspect. So I personally value the process and at the New York angels, everything is done in a group. The screening is done in a group, the, what we call discovery, which is as we learn more about the company that's done as a group, and then the due diligence has done as a group itself.
And sometimes it's parsed out to, okay, you call customers, you look at the technology, you do this, you do that. But then we all report back, and that's the way I like to work. And often people in these different angel groups will look and find deals. They'll source deals on their own, and they'll bring them to the group , that's the number one source of deals for for angel groups is somebody bringing you.
So, if you're looking for angel money, the best thing to do is to find somebody that's part of one of these [00:08:00] groups and talk to them and then say, Hey, this is what I'm interested in. And then see if they'll bring it in because it helps it keep efficient to go through the process.
Dan Humiston: That is a really good tip. And , hopefully people are paying attention to that because a warm introduction goes out so much further than the cold call, if that's okay. Now I've heard a couple interviews that you've done and you're always impressed with me. But the one thing that , I just love is somebody asks you the question, what attributes you look for in a founder.
And you took it a little different than most people say, we're of course you want to experience, but you said, . I want people that have experience solving problems, which I think is the essence of being an entrepreneur. Can you maybe expand on that a little.
Alain Banker: Sure. So, when you start a company, when you're an entrepreneur, you're starting a company and I have to tell you I've been an entrepreneur, but it is the hardest job in the world. You're starting a company. Nobody knows you except a handful of friends and [00:09:00] family. And then you have to convince people that
you have the great company. You have a great idea. You have to convince people to write a check. You have to convince customers to take your product. You have to convince people that you're looking for the best people, because that's my other big thing is people to join you. And so usually those people are pretty good jobs at other places.
And now you went, oh, you want me to come and join you for a cut in salary? And this magic money called equity. And we've got nothing except you, me and this other lady. So, it's a hard job. So, you have to have charisma and you have to have that special energy, and then you have to be able to resolve everything that comes at you and in the cannabis business.
We can talk about that some other time. It's over the top, , all the issues, which makes it such a hard industry, but solving problems. , is the number one business thing. , , as an entrepreneur, everything[00:10:00] is a problem. You have to do everything, you have to set everything up.
And as in life, everything takes longer and everything takes more money. And you never know where are you going to get a curve ball? Pandemic you show me one economist that in 2019 was saying, oh wow, we're going to have a pandemic down the road here. A lot of people now say, oh, we knew something was coming.
We all know something's coming. Right. We all know we're going to die. The question is when.
Dan Humiston: Yeah, that's a good, that is such good advice. And I hope people are paying close attention. And also if you're one of those people that are in that position and you're ready to take on that round of funding, you want somebody with some expertise? Can you do a lot worse than reaching out to bank EA?
I have his contact information in the show notes and Also@podconnects.com. So please reach out. And one thing, one, just one note for everybody. I know he mentioned it, but New York [00:11:00] angels does not invest in cannabis. So let's make sure we don't flood New York angels with a request because they do not invest in cannabis right now, but
Alain Banker: Yeah.
Dan Humiston: I hope we covered everything.
Thanks for being on the show today.
Alain Banker: Thanks. Dan. Talk to you soon.