This article will be the first among many from Koach where I will seek to cover the real stories behind the marijuana capital markets and all the crazy mergers & acquisitions. Rob Feldman, my partner in Koach, will be interviewing some of the OG's to help explain the back stories of how the best brands have been built and share all the funny stories that happened along the way.
A few years ago my long-time business partner Rob Feldman and I decided that we were going to join one of the fastest growing industries - Cannabis. It has a 30% compounded annual growth rate and is expected to be a $50B industry in the US within 5 years. The problem was that I didn't want to bear the brunt of the many negative connotations from my neighbors and friends. Even though the prohibition of cannabis is over, we didn't want to be judged. More importantly, we didn't know how to grow anything, we never have built a brand and we really don't know retail. So, we focused on what we we are experts at: As serial entrepreneurs with a few exits - we know business and we know financing, especially that new businesses need start-up capital...and LOTS of it. So, we started out by giving a mortgage to a small operator and realized real quick that it was hard syndicating a mortgage to a federally illegal operation. Our first deal only had a few subscribers but it quickly made it apparent that regardless of the federal status, people wanted a safe investment with above average yield. That was when it dawned on us that we could arbitrage the delta between the perception and actual risk by buying the building and then leasing it back to the operator. Everyone wins - operators don't have to lay out as much CapEx (if any) and our investors get an above average return on a relatively lower risk profile. Fast forward a few years and our company, Koach Capital, has completed a $100 Million raise for our third fund, with many more to follow.
Thanks for taking the time to learn about us and we promise to share lots of pearls about the industry while having some fun along the way!