In this episode, Hall welcomes Jon Trauben of Altitude Investment Management. Altitude Investment Management, LLC is a U.S.-based global venture capital fund manager investing in the legal cannabis industry. The manager's strategy is to invest in a range of early-stage to growth companies that support this rapidly-growing industry, both in the United States and globally.

Jon is an active participant in the cannabis industry as an investor, association member, mentor, and board member. He brings a wealth of experience and management expertise with a 25-year record as a seasoned commercial real estate, capital markets, and finance executive. Jon has held senior positions on Wall Street while at Barclays, Credit Suisse, Cantor Fitzgerald, and Hunt Companies where he was a business leader, lender, trader, and investor. While at Barclays and Credit Suisse he was a Managing Director and senior member of the real estate finance group and was a participant in all major business management, strategic growth, and capital allocations.

In this episode, Jon shares what he finds exciting in the cannabis industry as a whole today. According to Jon, there is a massive built-in customer base that is estimated in the US to be $50 billion dollars of demand. The customer base exists and the creation of this industry is all about creating a legal channel for safe, tested quality products.

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 VC Quick Valuation Method
This method starts with the exit of the startup.

You assume the exit value your startup is being acquired for.

You then work backwards to calculate what your startup must be worth now based on that target exit value.

Here’s the VC method by steps:
1. Estimate your exit value.
Use simple exit value estimation using industry trends or estimate using Price/ Earnings multiples.
2. Calculate the post-money valuation
3. Calculate the pre-money valuation.
4. Finally, calculate the equity percentage owned by the investors.

Remember, option pools can have a big impact on valuation

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!