Cannabis
We got an exclusive look at the pitch deck luxury-edibles startup Hervé used to raise $3 million in a bid to become the ‘Dom Perignon’ of cannabis
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- Hervé, a cannabis-infused edibles maker, closed a $3 million funding round in May.
- Founder Sebastien Centner says he’s targeting cannabis consumers who want a unique, luxury product.
- See below for an exclusive look at the pitch deck Hervé used to close the round.
Cannabis-infused edibles are having a moment as much of the US digs itself out of the pandemic.
Edibles sales grew by more than 60% across seven state markets in 2020, according to data provider Headset. Edibles, particularly the lower dose varieties, are seen by many consumers as a healthier way to de-stress from long days working from home compared to smoking marijuana or drinking alcohol.
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To capitalize on that trend, Hervé, a Toronto-based maker of what CEO and founder Sebastien Centner calls “luxury” infused edibles, closed a $3 million Series A funding round in May. Sol Global Investments led the round and private investors such as family offices and high net worth individuals also participated.
Centner declined to disclose the other investors to protect their privacy and the company declined to provide its valuation.
Centner says Hervé’s products, including lower dose, THC-infused macarons, are deliberately targeted toward higher-end consumers, rather than those that consume cannabis daily and may want more potent products.
“We add a different value proposition,” Centner said. “Our macaroons aren’t going to replace the smoking and vaping that someone’s doing on a regular basis”
His target market, Centner says, may choose to consume Hervé products when “they’re out with their girlfriends or they’re hosting a dinner.”
“It’s just like somebody who consumes a Jose Cuervo tequila because they like tequila soda,” Centner said. “They’re not going to drink 1942 every day, but they might do it for a special occasion when they really want a premium quality product.”
Check out Hervé’s Series A deck below:
Note: While the deck is posted in full, some financial information has been removed at Hervé’s request.
Centner said that raising capital is not his favorite part of running a business.
“You just don’t feel like you’re accomplishing anything in terms of moving the company forward except raising capital, but it’s very necessary,” Centner said.
Centner said Hervé is the first business he’s started where he’s raised outside capital.
Prior to Hervé, Centner ran events businesses in Miami and Toronto, including Eatertainment Special Events and JECKL Creative.
For Hervé in particular, he wanted to work with investors that bring more than just money to the table.
“There’s apparently a lot of people out there that’ll just write a check, and you’ll never hear from them again,” Centner said.
“And you know, they’ll write a check and ask basic questions, like ‘what’s the return?'” Centner said.
Centner said he wants investors that he calls “active-passive.”
That means they’re available when needed — to make introductions, open doors, or get a “10,000 foot view” on a certain business plan — but they’re not necessarily involved with day-to-day decisions.
That’s especially important in an industry like cannabis where everything is moving so quickly, Centner said.
Centner said 90% of investors from the seed round returned for the Series A round.
The key to effectively pitching investors — and keeping them in your network — is communication, he said.
“I believe very strongly that communication is key internally and externally, whether it’s with our investors or whether it’s with our employees, poor communication leads to problems,” Centner said.
Hervé’s products range from macarons to its collection of Le Mirage candies.
Hervé sells products in Nevada and non-cannabis products in Canada now.
Centner says launching products in California is his top priority.
“California is the biggest cannabis market in the world right now,” Centner said. “It’s where brands live or die.”
“We are looking to attract what we call the emerging cannabis consumer as part of our target,” Centner said. “That means the soccer mom, the business executive.”
In Centner’s other business — which does catering and events — after legalization, customers began asking about cannabis.
“That really struck a chord with us, because these people were not stoners at all,” Centner said. “These are high-powered executives.”
Part of what makes operating in the cannabis space so difficult, Centner said, is that legislation changes quickly — and it differs state to state.
Nevada and California, while neighboring, have different packaging rules and supply chain requirements.
Because Hervé is a startup, Centner says he can’t afford a situation where he orders hundreds of thousands of dollars of packaging — only to have regulators say the packaging doesn’t comply and he has to toss it out.
“If a problem like that ever comes up, we have to figure out ways it won’t handicap us,” Centner said.
That’s why staying on top of his network of investors is so important — they have a view into things like changing legislation that he may not.
All things considered, Centner says flexibility is key to running a cannabis business.
“This is a business that you can get very frustrated if you try and apply conventional thinking to this industry you’re in for a huge disappointment,” Centner said.
While Centner declined to disclose the startup’s valuation, he says he’s worked to keep it in line with actual forecasts as he’s seen some cannabis startups achieve valuations that make “zero sense.”
Centner understands that Hervé is niche and that the company’s products won’t necessarily be something that every cannabis consumer buys.
“Yeah, we are niche, but so is Hermès. So is Dom Perignon. So is Chanel, Louis Vuitton,” Centner said. “But these are some of the most valuable brands in the world.”