Hundreds gathered at the Reuben H. Fleet Science Center in Balboa Park Wednesday night (January 25) to celebrate the completion of San Diego's first cannabis-focused business accelerator program.
"We're taking entrepreneurs just starting a company and teaching them how to build infrastructure — making sure they've got all the non-sexy business components in place, like legal and accounting," explained Eric Gomez, CEO of Canopy San Diego, an investor group providing seed funding to "legal cannabis-ancillary" businesses.
"We're putting them in a free shared working space. Within that space, we bring in a number of mentors and we have social events several times a week along with bringing in investors looking to develop within the cannabis industry," Gomez continued. "The goal as an accelerator is to produce companies that can go out and compete with other startups and raise money quicker from strategic partners that are going to help them get to the next stage. We're right at the beginning of the life cycle, when a lot of companies fail before they ever get out of the gate."
The program culminates with a demo day, where the first eight program participants (ultimately four groups of eight to ten companies will receive funding to attend the 16-week program) gathered to pitch their products and services to dispensary operators, growers, and others directly involved in the marijuana business.
"You couldn't say that we're directly in it, but we're in big support of it," says Gomez of his group's "hands off the plant" requirement for aspiring accelerator participants, who give up an ownership stake of between 6 and 9.5 percent in their venture in exchange for $20,000 in working capital and guidance from the investor group and help establishing a business plan that will attract further investment. The most promising companies can get up to another $50,000 upon completion of the program.
"Although I rushed for more than 10,000 yards in the NFL, made the Pro Bowl, was an All Pro in 2002, I'm most known for failing drug tests," joked Ricky Williams, the event's guest emcee and a longtime marijuana advocate, before introducing presenters.
Presenters at the demo day pitched a range of products. LoudCloud offered a digital alternative to gathering the paperwork medical marijuana dispensaries need before admitting patients. Apothecarry, purveyors of "high quality cannabis accoutrement," say they've already sold 230 of their $259 wooden pot humidors and have another 800 on order (Williams quickly volunteered his name for a celebrity-endorsed product line), while the locally based Direct Cannabis Network is a startup cannabis news site reporting on startup cannabis businesses.
But Icarus RT, a venture promising that its liquid-cooling system can double the efficiency of solar panels.
"One wholesale cannabis operation consumes as much energy as 200 homes. This power hunger is only comparable to a data center, or a small coal-mining operation," said Ilya Shoniya, explaining his reasoning for offering Icarus to marijuana growers first before expanding into the broader renewable energy market. "For indoor cultivation operations, power bills account for as much as 25 percent of operating cost. Can you think of any other business where energy makes up 25 percent of total costs? It's crazy."
Though only three of the initial eight companies came into the program as San Diego–based operations, Canopy managing director Jack Scatizzi said as many as five may end up with local home bases.
"The hope is to create a beachhead for cannabis tech companies to base themselves out of San Diego which could, if the market takes off as expected, create the next wave of tech companies that amass in the region," Scatizzi told the Reader.
"We have a real diversity in our founders," Scatizzi continued, noting that three of the startups are women-led and four fronted by minorities.
While a few of the companies pitching their wares to customers and other potential investors were already operating or ready to begin, Gomez said it could take as long as six months for others to bring a product to market.
The group is currently soliciting applications for the program's second round.