In this episode, Hall is joined by Paul Rosen, Executive Chairman for Global Go, a consulting firm specializing in the U.S. and international cannabis/hemp market. Paul began as an attorney in Canada, before turning to a career as an entrepreneur in a number of sectors. In 2010, Paul entered the cannabis industry in Canada, which ultimately led to an investment career.

In this episode, Paul talks about the cannabis industry, highlighting both the pharmaceutical and CPG sector applications. He talks about the risks and idiosyncrasies of the emerging cannabis industry. In addition, Paul discusses the state of startup investing in general, and as it relates to emerging, high-profile industries. Paul details his early-stage investing thesis, highlighting the importance of team, a growth market, and a strong go-to-market strategy. Finally, Paul discusses the regulatory side of the cannabis industry and focuses on some of the most promising opportunities and applications in that industry.

In raising funding, valuation is a key number the CEO and investor must come to agree with. As a startup you must determine your target valuation. There are several methods.

One method is the Risk Mitigation Valuation Method. The Risk Mitigation method assigns dollar values to the startup’s accomplishments in each of four categories: Technology, Market, Execution, and Capital.

Technology Risk Mitigation -- 125
• Prototype developed: $75,000 
• 3rd party validation: $25,000 
• IP filed: $25,000 

Market Risk Mitigation -- 175
• Market research: $25,000 
• Early adopter program in place: $100,000
• Channel partners established: $50,000 

Execution Risk Mitigation -- 500
• Experienced founders: $200,000 
• Prior exit: $250,000 
• Detailed execution roadmap in place: $50,000 

Capital Risk Mitigation -- 150
• Early funding: $50,000 
• Only two angel rounds needed: $100,000

If you add up all the values you get a pre-money valuation, $950,000 in this example.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!