Using media and PR to improve your capital-raising success A timely article or a thought-provoking post may be the key to opening the door to an initial investor call. Maxim Jacobs at . Russo Partners joins Dan Humiston to share media techniques that founders can use to increase their chance of getting funded. They also discuss the current funding market and why it is more important than ever to have a multi-prong find-raising strategy. Produced by PodConx MJBulls - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Maxim Jacobs - https://podconx.com/guests/maxim-jacobs Russo Partners - https://russopartnersllc.com/
Using media and PR to improve your capital-raising success
A timely article or a thought-provoking post may be the key to opening the door to an initial investor call. Maxim Jacobs at . Russo Partners joins Dan Humiston to share media techniques that founders can use to increase their chance of getting funded. They also discuss the current funding market and why it is more important than ever to have a multi-prong find-raising strategy.
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Maxim Jacobs - https://podconx.com/guests/maxim-jacobs
Russo Partners - https://russopartnersllc.com/
Russo Partners
enhanced_dan-humiston_1_06-29-2022_130633_#1:[00:00:00] today. In MJ bulls, we are joined by Maxim. Jacob's the senior vice president and head of investor relations at Russo partners. Maxim. Welcome to the.
Track 1: Thanks for having.
enhanced_dan-humiston_1_06-29-2022_130633_#1: Well, I really been looking forward to our conversation because normally we feature cannabis companies that are raising capital. But today we're going to talk about how those companies can improve their chances of actually getting funded maximum a few years ago. All a cannabis company needed was a nice deck and a good story to secure funding, but those days are gone. Why is it getting so difficult for cannabis companies to raise money?
Track 1: Honestly, it's difficult for all companies to raise money. , actually it's nothing personal. It's basically. Negative cashflow company in this market is having a hell of a time.
, I focus mainly on the healthcare space and it's been about seven weeks since we've had an IPO. And just market, Y [00:01:00] IPO's are down 94% in the first half of 2022 compared to the first half of 2021. , it's a Bismal. , so everyone's having trouble.
whether you're trying to go, obviously the normal IPO route, the SPACs are having a hell of a time because, it's, it's kind of easy to get into a spec, but it's kinda hard to dispatch.
Like, they think they're going to get a hundred million dollars at the end of the rainbow because there's like a hundred million in this back, but then like 98% of the investors redeem because they didn't want to invest in what was being actually, merged into this back.
So , it's just a disaster.
enhanced_dan-humiston_1_06-29-2022_130633_#1: well at Russo partners, , you help your clients get the type of media exposure that investors like tight sort help them out into this process and maybe make them have a little bit more competitive advantage than some of their peers. How are some of the ways that you do.
Track 1: Look anytime you're in this kind of market , you just have to be out there. And doing a variety of different things. So it's not just trying to [00:02:00] get someone at a, like the New York times to write an article on you.
There's only so many of those that are going to come around, but there's just a lot of venues that you can use, podcasts, you can do byline pieces. ,
You just keep it coming so that You're out there and people do notice and it's better than the other way, which I think a lot of companies naturally do this, which is they get into some bunker mentality, like, oh, , nobody cares what I have to say.
We should just sit this out and not bother well, , it's like a guarantee of failure. It's not gonna work. And really why would an investor. Invest in your company when they know you're going to be dead money, like I can just like, come back later, your stock is going to be half of where it is today and all of that.
what we tell our clients is, look, you have to be out there.
You might think no one's listening, but they are in the only companies that succeed in these bear markets. . It's the ones that are out there and they're doing stuff and they're keeping investors attention.
They're not just, Sitting in their office and lamenting their [00:03:00] stock.
enhanced_dan-humiston_1_06-29-2022_130633_#1: one thing that I noticed. It's hard for founders or CEOs to get their head around. Is that the messaging to investors? Isn't always exactly the same as what the messaging is to customers. for instance, investors get excited about your management team, but customers could care less about your management team. So , trying to craft a message that gets an investor excited a special skill. And do you sometimes find it challenging to convince , the founders that they have to tweak their message?
Track 1: Well, first of all, founders aren't necessarily living in the present. They might be living in the past. They might be living two years ago. So they think that, whatever their business model , or their expenses are, they're fine. They don't really need to change anything.
Well, we're in a different world. You can't just be the 90th company that's trying to do low cost cultivation of.
There's going to be some winners there, but it's a race to the bottom. [00:04:00] The prices are just going to fall.
The amount of money you're going to be able to get is just going to fall and we're in a period of inflation. So I don't think your costs are going to be falling down. And I remember seeing it was almost the exact same business plan, but just like the location of the cultivation would be different.
Like, Hey, we're going to do is Tanzania. We're going to, to, whatever locale where we argue, we can get, cheaper cultivation, reminded me of 20 years ago , when people were laying fiber and, for the telecom companies and you have like a million of them, it was the same business plan.
It was basically the same map of , what they're going to connect. And you're just like, Hey, , this is not going to work for 90% of them. So, the companies need to really be nimble. They need to be thinking about what is the world like today. And they can't assume that things are going to turn around this year.
And I that's a problem I've had with a lot of company. They have blinders on in terms of, let's say their expenses, like, let's say on the biotech side, , they could be burning a hundred million, 200 million a [00:05:00] year, and they're not really willing to cut anything more than on the margin.
And it's like, well, where are you going to get the money to actually fund this? It's like, oh, I'll turn around. It's like, you can't assume that. I mean, this is probably the worst macro economic setup. That we've had for, decades. This is worse than 2008. This is worse than 2000.
We have not had a fed raising rates, this steeply into a recession. For quite some time. , I don't, maybe the last time it was the great depression, I don't know, but it's been a long time. It's not like the old days when Greenspan or Bernanki at the first sign of trouble starts lowering rates.
That's not what's going to happen now. So it's going to be a very difficult situation for everybody, for investors, for the companies and they need to just be realistic. And If some companies within the cannabis space today are actually very well positioned, , the large companies the multi-state operators that have the [00:06:00] exposure in, in different locales who have positive cashflow and the ability to help consolidate the industry.
I actually saw some charts from Mike , who's this whilst. I'll call him a strategist. So he's been writing on basically innovation for about 27 years now and I saw, I charted most recent piece, which just showed that like in the case of like automobiles in the twenties.
And I think computers in the eighties as the number of companies fell production actually increased. it's like, look, you get certain economies of scale. You get this consolidation, , you get that critical mass as a company to really be able to expand versus, I mean, do you really need like 50 companies that are duplicating corporate GNA?
All of them have CFO's and CEO's all, that's like kind of wasted. And then, you could have like, just a few of those kinds of guys, and then a lot of people actually, who produce stuff rather than just [00:07:00] administrative stuff.
enhanced_dan-humiston_1_06-29-2022_130633_#1: Yeah.
Track 1: So, that's what we're going to need and you look at it.
, if you're invested in the cannabis space, you want to be invested in Amazon, you don't want to be invested in what.
enhanced_dan-humiston_1_06-29-2022_130633_#1: no one has a crystal ball, but , there are certain things that an excited investors that. Usually are a little different than what excites customers. And so that's kind of one of the things that we always have to keep in mind when you're raising money is that investors sometimes are motivated by different things.
Track 1: well, yeah, , they're naturally going to want it. Like, for example, investors generally don't ask about a company's customer service. They probably should because that's the question of,, what is their customer retention going to be? , and, the companies themselves are probably focused on that a lot, just like making sure that our customers are happy, but yeah, that's true.
That's true. Really care about that so much. Or that's not like the first thing they care, but look Investors are going to want to know that the people in charge have done this kind of thing [00:08:00] before, obviously in an industry like cannabis, it's going to be difficult to show like I've done exactly the same thing before, but if you can show, like, look, you're a successful entrepreneur who has this operational practicality.
That will mean that when things go wrong, you'll be able to keep your head. And get to the other side, because that's really what you need. , in biotech, for example, it's sort of like with real estate, it's all about management, management management instead of location, location, location.
That's the same thing with these the, these cannabis companies as well. It's about the management people that you feel like you can trust that, know what time it is. There are sensible and, We'll be able to solve the problem that will never really come up.
enhanced_dan-humiston_1_06-29-2022_130633_#1: That's exactly what everyone needs to hear right now, because , this is a scary time for a lot of companies, especially if they're in the race mode right now. And. I wish we [00:09:00] had more time to dig deeper in this, but we'll have the links to the resource partner information in the show notes. So if, if anybody that's listening right now wants to learn more or maybe jump on a call to speak with maximum. I'm sure somebody on his team. We'll be happy to talk to you maximum. This is good stuff. We could go out and out of. This has, and I wish it was more robust economy right now, but like you said, there's winners in this economy just like there's winners and other economies. And so keep your head up and let's keep, stay focused.
Thanks for being on the show today.
Track 1: sure. Thank you for having me. And look, if anyone does want to reach out, I'm always happy to tell.