Growing like weed: Pot tech startups bloom as Pacific NW becomes hub for cannabis innovation

Growing like weed: Pot tech startups bloom as Pacific NW becomes hub for cannabis innovation

11:58am, 20th April, 2019
An example of iUNU’s computer vision technology for monitoring cannabis and other indoor agriculture operations. iUNU’s cameras and AI monitors minute movements in plants to increase greenhouse efficiency. The company is based in Seattle. (iUNU Photo) If you happen to be searching for pot sales analytics today, on the annual celebrated by marijuana aficionados, look no further than the Pacific Northwest. Seattle startup , a marijuana retail business data intelligence provider, knows that sales grew by 111 percent on this day last year. , a Kirkland, Wash.-based cryptocurrency company serving the cannabis business, found that dispensaries in Washington, Colorado, and California saw a 91 percent increase in customers during last year’s festivities and a 22 percent increase in average transaction value. Headset and POSaBIT are just two of countless cannabis-related startups based in cities such as Seattle, Portland, and Vancouver B.C. Not only has this region been “the epicenter of cannabis culture in North America,” but it is also a “hub for innovative tech companies,” said , who recently an executive role at Amazon to become CEO at Seattle-based marijuana discovery platform . As a result, Leslie said Seattle is “well positioned” to be a cannabis tech hub. That’s helped along by the Northwest’s granola-crunchy, free-spirited culture, which is also somehow home to a Type-A, finish-it-yesterday tech culture. “People in this area get it,” said , POSaBIT’s co-founder and CEO. “They understand [cannabis] is a true business opportunity. As I travel around the United States … it blows me away on how the social stigmas and everything around cannabis are so much stricter.” Hamlin said he loves being in Washington, an epicenter of technical talent thanks to homegrown companies such as Amazon and Microsoft, for giants including Google, Facebook, Oracle, Uber, and others, and hundreds of smaller startups. Sure, the Bay Area is seeing a similar cannabis tech renaissance thanks to its own blend of expertise and culture. But Washington legalized recreational pot six years before California. That gave Northwest cannabis tech companies a head start in learning the industry’s needs and developing their products and business models. One of POSaBIT’s cryptocurrency point-of-sale units for cannabis retailers. (POSaBIT photo) The cannabis business is growing up — the legal marijuana industry grew to in the U.S. last year — and the tech companies serving pot enterprises are growing right along with it. And where cannabis-tech companies have typically sought to connect a fragmented, cash-only business emerging (more or less) from the black market, many are now talking about even more sophisticated systems — AI, computer vision, cryptocurrency and big data. Cannabis tech is entering a new era, and the Northwest is a key hub. Call it “Northwest Cannabis Tech 2.0.” “You’re seeing a second wave of noise,“ said , the co-founder and CEO of , a Seattle-based company that uses artificial intelligence and computer vision to increase the efficiency of greenhouse operations, including indoor cannabis farms. ”What you’re seeing is a market that’s become much more mature than the other markets around the country, around the world.” In Seattle alone, there’s Leafly, the online cannabis directory, which was bought by Seattle cannabis investing firm in 2011. Just across downtown in Capitol Hill is , another online cannabis directory, acquired in 2016 by Nesta.co, a Canadian pot private equity firm. In March, , a Redmond, Wash., provider of cannabis point-of-sale and tracking software, Seattle pot sales software company Soro, which came out of beta only last year. Together, the companies have set out to build what Soro founder and current Dauntless chief product officer calls “an entire ecosystem around what it means to be a cannabis business.“ There are plenty of British Columbia tech companies as well, and they’re theoretically on steadier ground because Canada legalized recreational pot at the federal level last year. One of the most prominent is , the medical marijuana manufacturer also owned by Privateer Holdings and helmed by Privateer co-founder , who upwards of $31 million in compensation last year — more than Satya Nadella or Jeff Bezos. And to the south, there is, of course, Portland, which has its own celebrating the city’s Bohemian sensibility and is perhaps an even pot-friendlier town than Seattle. There, you’ll find , a point of sale product for dispensary owners, as well as the pot genetic testing company , among others. Phylos Bioscience sells a kit that identifies cannabis plant seedlings seven days after germination. The company is based in Portland. (Phylos Bioscience Photo) Anyone who got a front-row seat for the dot-com boom of the 1990s will surely recall all the hype — big words and jargon that, as it turned out, weren’t backed by actual revenue. By the end of the decade, tech stocks imploded, wiping out a wave of tech 1.0 companies whose shares had once soared. While there hasn’t been a pot-tech implosion (at least not yet) and there is certainly still plenty of hype, Greenberg said cannabis customers are demanding better tech, which is placing more demand on vendors to move beyond talk and develop fast, powerful software. “You have to really perform in Washington,” said the IUNU CEO, adding that pot tech companies in this new phase increasingly face “pressure to put up or get out.” That pressure, and the expertise of startup founders and workers jumping ship from Microsoft and Amazon to work in the cannabis business, means Northwest tech companies typically build very solid pot software, Greenberg said. POSaBIT CEO Ryan Hamlin. (POSaBIT Photo) “I’d definitely put the companies in the Northwest in a favorable position,” said Greenberg, whose company $7.5 million in February in a round led by Bootstrap Labs and NCT Ventures. Total funding in IUNU is more than $13 million. “You’re going to have a lot of winners and successful companies in the Northwest around that tech,” he added. POSaBIT began trading April 8 on the Canadian Securities Exchange under the ticker symbol PBIT. It opened at $0.28 per share and closed Friday at $0.37 cents per share. U.S. pot companies such as POSaBIT have been flocking to the CSE because it’s far more liberal than other exchanges when it comes to cannabis stocks. POSaBIT makes it possible for customers to walk into a cannabis store and convert their cash to Bitcoin, which they can then use to buy pot. Because of federal prohibition, legal cannabis is still a cash-only industry, which has produced any number of headaches, from difficulty banking cannabis revenues to the security concerns that come with any cash enterprise. Hamlin, POSaBIT’s CEO, said a lot of those problems can be solved with cryptocurrency. POSaBIT was born during a campfire chat with friends about about the technology needs of the emerging marijuana business. “It was the combination of, OK — cash-only problem, massive industry, cryptocurrency. How could they all come together?” said Hamlin, a former Microsoft general manager. “And that’s when the ‘aha!’ moment was. Well, you can use a debit and credit card to purchase cryptocurrency. And you can use cryptocurrency to buy cannabis.” Leafly co-founder Cy Scott and his colleagues celebrate the App of the Year award at the 2014 GeekWire Awards. (GeekWire File Photo) POSaBIT launched in 22 Washington cannabis stores in 2017. In 2018, it had expanded into Colorado, California, Oklahoma and Nevada. By the end of the year, POSaBIT had processed nearly $22 million in sales through its payment system. Like Greenberg, Hamlin said his cannabis industry customers are demanding a new level of sophistication from his software. One of the ways he’s trying to meet that need is to leverage bitcoin transactions to gather anonymous customer spending data and provide his clients with market research, a much-coveted service in an industry that has been cash-only since, well, at least the Monterey Pop Festival. “I can tell you precisely who a manufacturer is,” Hamlin said. “I can tell you (the ages and genders of those) buying. Males from 45 to 55 tend to buy edibles and they tend to buy them on Thursday night and they also live in these zip codes … that’s a gold mine.” Headset, the Seattle pot analytics and market data company started by Leafly co-founder , is providing similar metrics. Last month, Nielsen, best known for its TV ratings, and Deloitte forged a with Headset to provide U.S. and Canadian pot manufacturers with one of their first looks into how their customers think about cannabis, how often they use it and which brands they buy, among other data. Headset is an example of a Pacific Northwest pot tech ecosystem that’s already maturing. Scott originally founded Leafly in Irvine, Calif., but the company relocated its headquarters to Seattle after Privateer Holdings — the Seattle-based marijuana investment firm — acquired Leafly. Scott has stuck around town and is building another fast-growing cannabis tech company. Hamlin, POSaBIT’s CEO, noted that “you come to Washington and you don’t think twice.” “It’s part of doing business, so to speak,” he said.
EY reveals Pacific Northwest finalists for 2019 Entrepreneur of the Year

EY reveals Pacific Northwest finalists for 2019 Entrepreneur of the Year

11:29am, 18th April, 2019
Winners of the 2018 EY Entrepreneur of the Year Awards. (GeekWire Photo / Kevin Lisota) EY on Thursday the Pacific Northwest region finalists for its annual Entrepreneur of the Year program that recognizes top business leaders. The nominees lead companies across various industries such as healthcare, marketing, logistics, and more. This year’s regional winners will be announced at a special June 14 at the King Street Ballroom & Perch and go on to compete in the national competition, which is now in its 33rd year. Several of the nominees and their companies are also among the finalists at the , including folks such as Rajeev Singh, Jessie Woolley-Wilson, Ty Collins, and Mike Radenbaugh, as well as startups such as Flexe, Highspot, and Zipwhip. Last year’s included Auth0 CEO Eugenio Pace; iSpot.tv CEO Sean Muller; Snap! Raise CEO Cole Morgan; and others. Here are the 2019 finalists, which were picked by a panel of independent judges. Rajeev Singh, CEO | Accolade, Inc. (Seattle, Washington) Aaron James, COO & David Steinberg, CEO | Adpearance (Portland, Oregon) Kabir Shahani, CEO & Derek Slager, CTO | Amperity (Seattle, Washington) Chris Moore, CEO | Concord Technologies (Seattle, Washington) Jessie Woolley-Wilson, President and CEO | DreamBox Learning, LLC (Bellevue, Washington) Bobby Balachandran, CEO | Exterro (Beaverton, Oregon) Karl Siebrecht, Co-founder and CEO | FLEXE, Inc. (Seattle, Washington) Derrick Morton, Co-founder and CEO & Douglas Pearson, Co-founder and CTO| FlowPlay Seattle, Washington) Jason Greer, President | General UI LLC (Seattle, Washington) Alissa Leinonen, Founder and CEO | Gourmondo Catering & Cafe Co (Seattle, Washington) Madeline Haydon, CEO | nutpods (Bellevue, Washington) Robert Wahbe, Co-Founder and CEO | Highspot (Seattle, Washington) Michael K Lester, CEO | LifeStance Health (Bellevue, Washington) Henry Albrecht, CEO | Limeade (Bellevue, Washington) Rajeev Agarwal, Founder and CEO | MAQ Software (Redmond, Washington) Kyle Stavig, CEO | Myers Container LLC (Portland, Oregon) Peggy Jarvis Miller, CEO | Pacific Star Communications, Inc. (“PacStar”) (Portland, Oregon) Ty Collins, CMO & Mike Radenbaugh, CEO | Rad Power Bikes (Seattle, Washington) Jacob Weatherly, Co-founder and CEO | SheerID (Portland, Oregon) Jordan Allen, CEO | Stay Alfred (Spokane, Washington) John Lauer, Co-founder and CEO | Zipwhip (Seattle, Washington)
More cash for Pacific Northwest startups: Founders’ Co-op raises $25M fund, its largest ever

More cash for Pacific Northwest startups: Founders’ Co-op raises $25M fund, its largest ever

10:15am, 15th April, 2019
Founders’ Co-op Managing Partners Chris DeVore and Aviel Ginzburg. (Founders’ Co-op Photo) More investment dollars are flowing into the Pacific Northwest startup ecosystem thanks to a new fund from . The Seattle-based early-stage venture capital firm just closed a $25 million fund, its fourth and largest ever since launching in 2008. Founders’ Co-op will follow the same playbook it has used in years past: being the first institutional check and anchor tenant in the seed round for companies it bankrolls. The firm focuses on writing checks in the $250,000-to-$750,000 range for budding startups across the Pacific Northwest. It has backed more than 90 startups, including companies such as Remitly, Outreach, Auth0, Crowd Cow, Apptentive, and others. Those companies have collectively gone on to raise more than $1.5 billion in follow-on capital. “We aren’t thematic investors but are focused on technical founding teams solving hard problems into which they have unique insights, which tends to lead us to enterprise software, from developer tools up through workflow automation and systems of intelligence,” DeVore told GeekWire last week. GeekWire previously reported on this fund , when Founders’ Co-op raised the initial dollars. The last clocked in at $20 million four years ago, which followed a $7.7 million fund in 2012 and a $2.7 million original fund. DeVore and Andy Sack started the firm in 2008, along with partner Rudy Gadre, a former Facebook and Amazon.com executive. Sack stepped away from day-to-day duties several years ago, leaving the Seattle firm in the hands of DeVore, who recruited Seattle entrepreneur , co-founder of Simply Measured, to the team as a venture partner. Ginzburg was promoted to general partner last year. Sack and Gadre are still involved as venture partners. Many in the Seattle tech economy have the lack of homegrown capital available in the Pacific Northwest over the years. DeVore is one of the biggest advocates looking to change that imbalance. “Somehow, all of a sudden, it’s ten years later,” DeVore wrote in a blog post. “We’re still doing the same thing we’ve always done, but the world has changed around us.” In his blog post, DeVore noted the growth of Seattle as a tech hub, with Amazon, Microsoft, and a flurry of remote engineering outposts helping increase the talent pool exponentially: “We’ve spent the last ten years honing our craft and building a community of founders, investors and mentors dedicated to our shared mission of making the Pacific Northwest the best place in the world to start a software company. Over the same period, our regional startup ecosystem has grown and changed in ways we never imagined, offering a more diverse and talented pool of potential founders than we’ve ever seen. As with our first fund back in 2008, it looks like we’re heading into another cycle of uncertainty in the global economy. We expect markets to slow, or even contract, over the next few years. We expect the last several years’ run of easy money for startups to end along with it. Putting that all together, we know for sure that the founders we back in this next cycle will be some of the best we’ve ever seen.” in Founders’ Co-op mostly come from the Pacific Northwest and are a mix of founders and tech executives, plus family offices and foundations. The State of Oregon, via its Oregon Growth Board, invested again in the fourth fund. DeVore also runs Techstars Seattle, which its 10th class in February. Ginzburg, meanwhile, leads the Alexa Accelerator, another Techstars program that Amazon helps operate in Seattle. Founders’ Co-op, Techstars Seattle, and the Alexa Accelerator are all run out of the University of Washington’s Startup Hall.