Raising Cannabis Capital 0100: Alt 36 - Success Story

Ken Ramirez the CEO of Alt 36 tells the story of how he raised ten million dollars.  Ken was a guest on the MJBulls "Raising Cannabis Capital" series in October, talking about how to invest in their Blockchain cannabis payment platform.   Fast forward six months and they've successfully completed their Series A Round of funding.  Ken talks to Dan Humiston about the process and shares advice for companies that are preparing to raise capital.

Produced By MJBulls Media

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Dan Humiston:
Today Show and the following message are brought to you by Trevor Hill cannabis investors expect big returns from the companies that they invest in. Unfortunately not all cannabis investments succeed. Trevor Hill's management team works with investors to help turnaround or in some cases purchased their underperforming portfolio companies to learn more. Go to Trevor Hill dot com

Ken Ramirez:
Let me make sure you get their attention at the same time be listening to the feedback that they're giving you and incorporating it to just keep moving forward. Advice is one of our advisors that stick with us is always moving forward.

Dan Humiston:
It's MJ bulls podcast show about raising cannabis capital.

Dan Humiston:
I'm Dan Humiston. And this is the MJ Bulls one hundredth episode. So to celebrate today's show is a success story. It's about a former guest who just completed a very large Series A round of funding.

Dan Humiston:
Today they're raising Canada's capital series. An old friend is back in the studio with us Ken Ramirez the CEO of alt36. Ken welcome back to M.J. bulls podcast.

Ken Ramirez:
Thank you. It's good to be back.

Dan Humiston:
Well this is a really exciting time and I for one am looking for. So looking forward to this interview because your first big success story. For those of you that may not have heard Ken was on our show back in October. Ken I can't remember newsman been a while and you were just in the beginning of the process of raising capital in laying it out for all of our listeners and we'll fast forward and finally put that to bed it's so cool. Well before we jump into that for people that haven't heard the show don't know anything about all 36. Quickly tell everybody what all 36 does.

Ken Ramirez:
Yeah absolutely. Thirty six is a digital payments compliance platform for the cannabis industry. So we allow cannabis operators to interact with their customers and their vendors suppliers and so forth without having to rely on physical cash. So we provide the most secure and efficient way all within the compliance policies and regulations of federal and state governments.

Dan Humiston:
So you and you still work with the dash network.

Ken Ramirez:
Absolutely. So we're great partners with the dash network or probably their number one partner. We work very closely with their core engineering team and they're the block chain that they built out the project in its entirety has allowed us to do so many things including building out the entire ecosystem that utilizes the dashboard chain as its ledger.

Dan Humiston:
You're in Arizona but you're off California dispensaries and Arizona dispensaries are within your network.

Ken Ramirez:
Yes sir. Yeah. And we're branching out into Oregon Washington and Nevada.

Dan Humiston:
It's just a matter of time. All right. So here's what everyone wants to hear you went out to the market to raise some capital. Give us the whole story start finish highs lows everything in between. What's the process.

Ken Ramirez:
How did it go. So you know when we started at the beginning the projects just like most companies there were highly reliant on seed funding you know close family friends in order to get us to the point where we could actually prototype out the entire project and get it to a working functioning model for us to kind of continue to build off up until that point we had raised about five hundred thousand. And this was about two years ago. Once we got the concept finalized we submitted a proposal to the dash network that was set up in a way to where it has a budget system. They're able to fund projects that will add value to the network or help increase the number of transactions on the dashboard chain which committed the large proposal that's ever been submitted. And it was approved in a record amount of time. We were granted four hundred ninety six thousand to begin building out this plan. We wanted to make the funding based off achieving specific milestone. And so we had about 10 milestones across the entire project over a 10 month period. We successfully executed and hit every single milestone in fact coming out a month early on the files milestone. Once we got to the end of the project we realized that there there's a lot of other pieces that need to go into play in order to achieve a long term sustainable competitive advantage.

Ken Ramirez:
And so since the first funding that we submit to the dash network we've submitted a series of proposals. So we submitted six to date and have successfully been approved on all six which brings the total amount of funding thus far from the dash network to approximately 2.5 million. Probably the last year we've been basically putting in all of the different pieces that compliance had at the same time beginning to raise our Series A. We initially started raising you know 5 million for our series a about a year ago and it was absolutely a tedious process. It wasn't easy whatsoever. In fact being in two areas was called cannabis. Block chain now or more people confuse it with cryptocurrency. It's extremely hard to raise capital. It's probably the hardest thing. If it wasn't already hard enough to do raising capital as it is trying to raise capital and to very great industries while one is still federally illegal and classified as one drug that cancels out any opportunity of sale like institutional funding or a lot of DC funding as it stands. And so you know we've we've probably met with about 100 different investors within the industry both private and D.C. and for the first six months we had made some progress and it looks like the firm that we were working with had let's call it not so favorable terms but we understood that we had to deal with what the industries were working.

Ken Ramirez:
And so we got pretty far into that view. We've had kind of really evaluate as business partners they were going to be the best. We made the decision to keep moving forward and entertaining other options. Over the last six months while we were entertaining the options for the five million we decided to raise more seed funding in the meantime. We felt that the progress that we were able to make on the platform way to justify the increase in valuation. And so we started working with the gentleman who has significant experience within the industry and was able to help us really refine the pitch help. Really kind of paint the right picture. We worked with him we worked with our our controller our advisors very closely on is really making sure that we had our realistic projections and then the other one was really painting the right picture so you know working with a consultant he was able to really help us get all of the information condensed. We have the long form which is our very detailed investment documentation and that's broken down in two of the shorter 10 page stack. But then what was really really helpful was getting that down to a two page fact sheet. OK.

Ken Ramirez:
When you're pitching this idea and you think about today's world of information and on and think about on a daily basis like a firm or even just a private investor. Right you're traveling the country there and there's a lot of different circumstances that can go on. Being able to put the pertinent information that screens what you're doing and be able to summarize that real quickly for them so that you can see everything in a snapshot. It really provides them with what they need to really get excited about looking deeper into the pitch dark where the long document shredder. But I would say that was probably the number one thing that helped out. It's not an easy thing to do. Our investment documentation is about 20 pages taking that condensing it down to 10 was hardening itself. Now taking a 20 page you're try to put that down in it to allow painting a more clear picture form a more comprehensive picture of what's going on. It will really provide them an opportunity to provide very valuable feedback criticism right without just Hey I only have this little piece. Oh you guys. What what about this. What about it. You cover all of those objections within two pages. And now they're really providing feedback on strategy or they're providing feedback on product development or market expansion. Not like stuff they're not familiar with.

Ken Ramirez:
Right. You haven't covered.

Dan Humiston:
I want to take a minute to remind all of our listeners about a new podcast produced by MJbulls media appearances a weekly show about the company's products and entrepreneurs who are using this amazing plant to create and improve the products we use every day. You can listen to her parents every Tuesday on Apple I iTunes Stitcher Spotify wherever you get your podcasts from.

Dan Humiston:
You put all that together. Everything's done everything's done.

Ken Ramirez:
And so we basically went out and we we've met with the top v.C. firms in the cannabis industry within cryptocurrency block chain. We've got a lot of feedback and we've got a lot of criticism. And we kept refining for. We finally got to a point where we started receiving term sheets and that's probably the most satisfying piece. And once you start receiving multiple term sheets that's what's even better. We were started working with two different investors. We were working with a D.C. firm and we're also working with the private equity group. We were initially raising five billion and then the private equity group came in and said listen we want to be your exclusive funding arm. We want to put in 10 million. We believe that it's going to be the optimal number that you need to really achieve critical mass adoption. And so we wanted to 10 million for 2012.

Dan Humiston:
Say they doubled the amount that you were trying to raise.

Ken Ramirez:
Exactly. And so our perspective is very nice to be able to go with private equity because it's called processes are faster. There's not so much political red tape. So basically we came to an agreement with them. We got the terms you signed and now we're able to really start receiving the first tranche of funding so that way we can start building out the infrastructure because the amount of demand that we have right now is kind of daunting.

Dan Humiston:
So I can imagine that's crazy.

Ken Ramirez:
So building that foundation that's the motor and right now we're about 20 employees and we're going up to about 35 over the next month and a half as well. We're basically expanding our market strategy. We're rolling out about another six to eight states on the East Coast and Midwest. So that way we're able to really kind of cover all the different geographical regions of the country.

Dan Humiston:
So I'm so proud of you guys. It's a tough road to hoe but you did it and you came out the other side with ten million dollars. Now it's time to start work. Yeah yeah exactly. This plug this in there. I have all your information on our Web site for all 36 so if anybody is listening and wants more information about your company. Thing is go to MJbulls web site. But hey before I let you go this is for you is fresh off of this. I know you gave some advice on there but like one or two key things that you would tell somebody that's just about ready to start this process you know definitely keep going at it.

Ken Ramirez:
Don't give up a lot of people they get discouraged almost kind of like a sales process right. It takes on average about 12 to 15 contact attempts and in order to close a deal. So don't be afraid to follow up. Don't be afraid to be aggressive especially if you if you have a validated problem and you know that you have validated problem that's backed by research and that you're providing a very good solution to that problem. Yeah definitely be persistent. Make sure you get their attention at the same time be listening to the feedback that they're giving you and incorporating it into this. That's really good advice. Just keep moving forward. The advice is one of our advisors that sticks with us is like always voting for.

Dan Humiston:
Fall forward. Keep going. Okay. Congratulations. It's just really great news and we now are expecting some big things from you guys.

Ken Ramirez:
So we will have a number of press releases coming out with some very very big announcements.

Dan Humiston:
I expect you back on the show again soon because I know this will not be the last time you're on this show so keep it going. Keep us posted if anything big happens and good luck.

Ken Ramirez:
Thank you so much. Appreciate it.

Dan Humiston:
Just a quick reminder that you can become an MJbulls member for just four dollars and ninety nine cents per month and enjoy exclusive access to companies pitch decks and the MJbulls Cannabis capital directory joined today at Mbulls.com.

Dan Humiston:
Thanks for listening to the MJ bulls podcast. To learn more about today's guests or to become a guest. Visit our website at MJbulls,com.

Dan Humiston:
Today's show was produced by MJbulls media with original music composed by Jamie humiston. I'm Dan Humiston and you've been listening to the MJbulls podcast.

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