MJBulls 0015 Vividgro

Dan Humiston: [00:00:00] Today's show and the following message are brought to you by aGriscience labs the largest most established cannabis testing network in Colorado. To find out how you can get the most accurate and reliable test results visit AgroScience dot com.

 David Friedman: [00:00:15] Consolidation usually comes after growth. I Think the cannabis industry is one of the first industries where you're going to see consolidation simultaneous with growth and it does create a challenge. I've never really looked at it in that way the way that you just stated it but I would say yeah we're both in growth things consolidation mode at same time

Dan Humiston: [00:00:39] From Buminit media. It's the MJ bulls podcast a show about raising Cannabis Capital. 'm Dan Humiston and on today's show how David Friedman from Vividgrow is raising capital to acquire cannabis of his companies.

 Dan Humiston: [00:01:05] Hey David.

 David Friedman: [00:01:06] Hey Dan how you doing.

 Dan Humiston: [00:01:07] Great. Hey we're here with David Friedman the CEO of vivid grow And we're at the Cannabis World Congress business expo here to give me a lot of noise in the background. David you talked to me a little bit about this. Yes sure sure.

 David Friedman: [00:01:22] So vivid growth was division of Lighting Science Group Corporation lighting sciences 15 18 year old company leader in the development of LCD lighting and like a lot of people in this industry they tripped over the cannabis space and realized that LSD lights something that the industry was looking at to move to the next generation of cannabis grow. As things legalized and the production of cannabis started to move indoors for a lot of different reasons and so they sort of set up a bit of an experiment within the organization about now it's close to about 10 years eight years ago I think and initially started manufacturing lights for some of the other popular brands so initially we manufactured for Uloom bio's came out of Lighting Science Group and then eventually decided to begin manufacturing under our own brand and got to a point where they realized after building a patent portfolio at Lighting Science of about 400 patents they wanted to move into the monetization phase Pegasus which is the private equity group that owns Lighting Science it's about a 2 billion dollar mainstream institutional private equity group out of New York decided to come out of the closet and said they were willing to back spinning off a company into the cannabis space.

 David Friedman: [00:02:41] And so they were looking for somebody who had experience in venture startup. That's how you got Canibus yet and there's like four of us I think in the world who have that combination of experience and the other three were busy so I ended up getting the job had some really good leadership and guidance from within the Pegasus organization and we went out and did a couple of very small acquisitions on the software side and that's been recent while we closed one deal earlier this year a company called we grow which is an app for home growers in the cannabis space. And then we acquired the rights to a building automation software technology that we call grown. And that was earlier this year and about a month or so ago we spun off which was the plan from lighting science group as a standalone company. We raised capital from Pegasus and merda one other institutional cannabis private equity fund probably the largest fund in the space also based out in New York with the idea of putting together a very aggressive m&a strategy growth strategy to take Vividgro. I think aggressively to run rate. I think our goal of about 100 million dollars in the next 18 to 24 months and.

 Dan Humiston: [00:03:55] So you're supplying the home Growers and you're supplying the commercial grower with lighting every stage of the growth.

 David Friedman: [00:04:03] Yes we have what we call very agnostic philosophy right. So we are Krop agnostic on both the hardware and the software side. So what we manufacture from a lighting perspective and even from a software perspective can be used to grow any crop indoors. We are hardware agnostic from the software side. So while we build our lighting products to interface with our software it's kind of the apple philosophy it works with anything hopefully it works a little bit better with our stuff but somebody wants to buy our automation control system but put in somebody else's lights which is the case in a couple of situations then that's fine as well. We're also geographically agnostic so we service companies that are based in the U.S. in Europe and Canada. And then finally we're agnostic in terms of whether or not that Growers is a commercial grower or a home grower or somewhere in between.

 Dan Humiston: [00:04:54] Right now you're growing through acquisitions.

 David Friedman: [00:04:58] I guess that's probably the best way to say Yeah I mean we're still laying the groundwork for our expansion plans but acquisitions are going to be a very aggressive part of expansion. We don't have the time to grow organically even with an unlimited amount of capital. The space is just on fire and it's moving too fast to sit and grow through organic growth. And so we know m&a has to be an integral part of our growth strategy.

 Dan Humiston: [00:05:22] In some ways you're sort of acting almost as a consolidator.

David Friedman: [00:05:25] You know nobody really put it that way. But I think that consolidation is something that is going to take place in this industry. Simultaneous to the growth of the industry which is a typical coming out of the technology industry consolidation usually comes after growth. I think the cannabis industry is one of the first industries where you're going to see consolidation simultaneous with growth and it does create a challenge. Never really looked at it in that way the way that you just stated it but I would say yeah we're both in growth consolidation mode at the same time.

Dan Humiston: [00:05:57] Just a quick thank you to one of our sponsors Bridge West LLC is one of the first accounting firms in the world to focus solely on the cannabis industry. It is your one stop provider for accounting audit tax and advisory service. They're offering a free 30 minute intro call to one of their leadership teams to all MJ Bull's listeners go to bridge west CPA dot com and now back to the show.

 Dan Humiston: [00:06:22] What type of companies would you be targeting for acquisition.

 David Friedman: [00:06:26] We're looking for hardware and software companies that are technology based so we're not really looking to acquire shelving and tracking and you know those are our channel partners. Service based companies that are consultative in nature we work very closely with a group out of Florida called Hagen's. We've struck a partnership with Grow generation which is a chain of about 20 hydroponic stores. We're looking more for technology based hardware and software and obviously we've used to fund this.

Dan Humiston: [00:06:54] Tell us what you're raising and how people can get involved if they're interested.

 David Friedman: [00:07:01] So one of the things that's also kind of interesting is that the reason that I agreed to take this job was that Pegasus was in my opinion the first institutional investment firm that agreed to step into the cannabis space. We've really focused on raising institutional capital for a couple of different reasons. Number one we want larger check sizes. But number two we want strategic investors and not strategic investors in terms of how they're defined in the Capital Markets Corp.. You know has a strategic role within a company but strategic investors that can really help us get to the next level people that are experienced in m&a transactions and that can help us accelerate the growth of the company and so we haven't priced the round or settled on a target I believe we're going to be somewhere between 8 and 15 million dollars in this next raise it's primarily going to go towards growth capital we are under L.O.I with a company that I can't disclose at this point but I'll come back on and tell you what to do and so we'll need some growth capital and operating capital as well as some dry powder to continue to do more acquisitions.

 David Friedman: [00:08:02] Obviously you want to try to do some stock based acquisitions where private company and I believe we expect to stay that way for the short term public companies in the conversation but we're going to need to continue to raise capital to execute m&A strategy. So our next round here is like I said it's going to be somewhere between 8 and 15 million depends on how the  out and what type of capital we need to close that deal and then how much more dry powder we want to have on hand to be able to move to the next ones.

 Dan Humiston: [00:08:26] So if people are interested in getting involved with your growth they should contact you directly.

David Friedman: [00:08:31] They can contact me merda who is our institutional capital partner is going to lead the rays through me I can put them in touch with the guys at merda who will do the initial kind of diligence around the right types of investors in Europe.

Dan Humiston: [00:08:51]  we've been talking to David Friedman from Vivid grow in a noisy Hall. it is well Congress business expo in Los Angeles. All David grows information  on the MJ bulls dot com website. David thanks for being with us.

 David Friedman: [00:09:06] Yeah my pleasure. Thanks for having me down. It was great.

 Dan Humiston: [00:09:07] just a quick thank you to one of our sponsors Trevett Hill: managing and supporting a Cannabis investment is both time consuming and expensive Trevett Hill provides Cannabis investors with an external team to help their investment reignite growth. To learn more. Go to Trevett Hill com

 Dan Humiston: [00:09:31] Thanks for listening to the MJBulls podcast to learn more about today's guests or to apply to be a guest. Visit our Web site our MJbulls.com and if you like our show give us or you on iTunes. Today's show was produced by Buminit media I'm Dan Humiston and you've been listening to the MJBulls podcasts.